Falke's managing partner: “We face challenges with tariffs that are economically damaging”

The hosiery and apparel supplier Falke KGaA, based in Schmallenberg in the Sauerland region of Germany, celebrated its 130th anniversary last year. The family business now employs the fifth generation and combines traditional craftsmanship values with continuous product development. The range includes sheer tights, trainer socks and functional textiles, as well as compression and shaping items.

FashionUnited spoke with Franz-Peter Falke, great-grandson of the founder Franz Falke-Rohen, about current challenges, what makes a brand, logistics, sales development and more. As a managing partner, he runs the company together with his cousin Paul Falke Jr. and CEO Martin Winkler.

You are leading a company with a 131-year history through a time of multiple crises (supply chains, energy prices, purchasing power). what specific virtues of a family business are proving to be your most important anchor?

Our company was founded in 1895. We have experienced many highs and lows over the decades. We have overcome these challenges through a traditional yet forward-looking approach. Our success is also due to our curiosity and openness to global developments, which has allowed us to help shape the future. Our family business signifies not only tradition but also a commitment to a modern approach towards our employees and the society we live in.

As a family business, we do not think and act in terms of short-term success, but in generations. Against this backdrop, we see crises not only as negative but also as an opportunity to proactively adapt to new situations time and again.

Supply chain issues are a major topic at the moment. We have established long-standing, positive relationships with our stakeholders, developing shared expertise and trust. This enables us to ensure a degree of stability and, consequently, a degree of independence.

You manufacture very close to or within Europe, specifically in Germany.

We believe in manufacturing as close to our sales markets as possible. The complexity of our product range, combined with our high quality standards, makes it difficult to outsource individual processes without compromising our brand promise.

They say perfection is in the details. what seemingly insignificant detail in a Falke product is, for you personally, proof of the highest quality?

You have to consider the entire process and the interconnectedness of the supply chain. This includes everything from yarn development with spinners to development with machine manufacturers, and most importantly, our internal expertise. We develop for the future together. These diverse inputs are crucial for our capacity for innovation.

It is not possible to single out one element. The combination, the sum of all parts, is what ultimately creates uniqueness. Every individual and every link in the chain must be perfectly coordinated to secure long-term trust and appreciation for the brand. This is a major challenge.

Competition from the Far East is flooding the market with products that offer little to no brand promise. how do you view this issue?

A brand is independent of the product itself; it operates on a different level. Many companies can make good products, but they lack the essence of what constitutes a ‘brand’. This essence is built on affinity. An exclusive focus on the product and its promise is no longer the sole decisive competitive factor. It remains a very important factor, the foundation of the promise. However, brand desirability and consumer trust are increasingly playing out on an emotional and affinity-based level.

At Falke, we have a triad of values. Alongside our quality promise, innovation is crucial. This innovation requires creativity in all areas, not just from designers but at every stage and in every part of the company. We cannot create a brand ourselves; we are made into a brand by our consumers. This is achieved through credibility, the trust built over many years and the affinity of our customers. The more consistently we pursue this, the more stable we become. Our mission is to create modern clothing for modern people.

You said that a company is made into a brand by its consumers. could you elaborate on that a little?

As a family business, we have our own mission and values that we live by, which are upheld by all employees across generations. Our mission, “to make modern clothing for modern people,” sounds very abstract and ambitious. When we delve into its deeper meaning, we see that modernity implies a constantly self-changing objective for any given period; the goal itself evolves. The understanding of modernity was different in 1950 than in 1980, and it is different again today. The core values of the brand, however, are a fixed point in a constantly changing world.

When we are curious and have the openness and passion to be a market leader that shapes the industry, rather than just a follower, our mission becomes a sort of “perpetuum mobile”. It presents a challenge and a responsibility to shape the company. Living our values and attitudes results in an offering that becomes synonymous with what the Falke brand represents to people.

In an inflationary environment, consumer spending is under pressure. how do you convey ‘value for money’ to customers when a pair of socks is priced significantly above the market average?

Our goal as a company is to offer “fair value” to our customers. This value is comprised of product performance and the appreciation for our brand. This appreciation ultimately leads to value creation, which allows us to ensure the company's viability.

Innovation and creativity require talented people who stay with a company long-term. do you face challenges with this in Schmallenberg, given that it is not Milan, Hamburg or Munich?

I see creativity as multidimensional. It stems from individual departments and from the collaboration between all departments and employees. We have employees who have been with us for generations. They not only possess technical expertise but also share a passion for continuous improvement. This identity, ingrained in our employees, is what makes us unique as a company and as a brand. A “brand” cannot be understood on a purely rational level; a “brand” must be felt, irrespective of location.

We must delve deep into the brand and understand its culture. It is also important to immerse ourselves in different cultures worldwide to fulfil our claim to modernity. In Germany, we often talk about the strength of the Mittelstand and craftsmanship. Sociologically, we have always been a nation of innovators. Their primary motivation was not initially to make money, but to prove to themselves that they could always improve something.

On the topic of globalisation, Falke operates as a global player in over 60 countries. how do you balance the need for global scale with the ‘Made in Germany’ or ‘Made in Europe’ promise that is core to your brand identity?

In my view, our European culture is unique and a great asset in global competition.

I am against the ‘Made in Germany’ and ‘Made in Europe’ labels. Other countries and nations are equally competitive. We therefore focus on our core brand, our brand values and our vision. Through brand appeal, we attract a ‘like-minded’ global customer base that we concentrate on.

Could you elaborate a little on the expansion of logistics in Schmallenberg? does this mean hiring new employees or investing in technology and automation?

Schmallenberg continues to be a development centre and creative hub.

Consumer behaviour and their purchasing habits have changed dramatically in recent years. We are experiencing serious structural weaknesses in the retail sector, which continues to be of great importance to us. The e-commerce sector is becoming increasingly important and now accounts for a significant share of our business.

This leads to increased complexity due to smaller shipments, requiring greater precision and speed. It demands new solutions in our logistics structure. Ensuring this requires significant financial investment, not only in technology but also in people.

So, if I understand correctly, a large proportion of goods are actually dispatched from Schmallenberg.

That is correct. The entire process, from yarn to finished product, is controlled in Schmallenberg. The quality of the yarns is checked here before they are sent to the various production sites. The finished products are then returned to Schmallenberg and dispatched to customers worldwide from there.

That is impressive. will you continue to invest in logistics in Schmallenberg?

The increasing complexity I mentioned can only be managed efficiently by people to a certain extent. Major investments in data collection and management, in particular, enable us to handle this complexity.

The human factor, however, remains crucial. Many things cannot be automated. The skills of our employees and their teamwork are still a decisive factor for our quantitative and qualitative productivity. The “craftsmanship mindset” of all our employees allows us to differentiate our offering and enables us to continually renew our brand promise.

How do you see sales developing over the next few years, especially after the decline in recent years?

As our company's history shows, there are always highs and lows. I believe that by living our core mission intensively and acting with caution, we are on the right path to achieving our ultimate goal: ensuring the long-term viability of our company.

Turnover is not everything. The crucial factor is sustainable value creation, which allows us to continuously invest in our future and secure our viability as a company.

How do US tariffs or the new EU free trade agreement with India affect a company like Falke?

All tariffs are inherently negative. They do not help with the global networking of societies, and they are certainly not helpful for globalisation. The rise of protectionism worldwide hinders business and prosperity. Yes, we face challenges with tariffs that are economically damaging to us.

We see new free trade agreements as an opportunity. The more freely we can operate as a company for the benefit of society, the more effectively we can conduct our business.

This article was translated to English using an AI tool.

FashionUnited uses AI language tools to speed up translating (news) articles and proofread the translations to improve the end result. This saves our human journalists time they can spend doing research and writing original articles. Articles translated with the help of AI are checked and edited by a human desk editor prior to going online. If you have questions or comments about this process email us at info@fashionunited.com