A - DESCRIPTION OF THE GOOD PRACTICE
Fair Trade Department Store - registered co-operative
FairKauf was established in 2006 as an experiment, positively received by customers, the press and the media. In collaboration with the public employment agency in Hannover, FairKauf is offering employment to unemployed people with a long-term perspective of being integrated into the first labour market.
Hannover and Hannover Region, Lower Saxony, Germany
Field of activity
S Other service activities
To create or conserve employment
To provide educational opportunities
To improve social cohesion/inclusion
19 July 2007
End date (if applicable)
Established as a second-hand store pursuing in fact social objectives, FairKauf define themselves as what is called a 'rara avis'. In times of growing social problems, it is important to open new perspectives for disadvantaged people. FairKauf does this by selling used goods at reasonably cheap prices rather than giving them away as gifts. In this way, people in need are not receiving alms but preserve their dignity and are invited to participate in social life rather than being excluded.
The concept of FairKauf follows the model of social department stores, which exist in Germany in many forms, following different concepts. However, the idea of FairKauf, implemented in a liberal market economy, is living from trade. Everyone buying in FairKauf contributes to making the idea sustainable, as a lasting enrichment of the City of Hannover.
Nevertheless, FairKauf's main objective remains to create the opportunities for, and offer, employment to unemployed people with a long-term perspective of being integrated into the first labour market.in collaboration with the public employment agency in Hannover. FairKauf's legal form is that of a non-commercial (not-for-profit) registered cooperative. Due to the steady economic growth FairKauf has been continually achieving since their foundation in 2006, there has never been a need for public subsidies. Instead, rather the opposite has been the case: with a constantly growing number of employees (currently to sum up 220), FairKauf has been further expanding, aiming to be represented at overall five facilities within the next five years.
- Social objectives: In collaboration with the public employment agency in Hannover, FairKauf is offering vocational training / employment to unemployed people with a long-term perspective of being integrated into the first labour market.
- Business oriented objectives: living from trading pre-owned goods, which means being able to cover all costs and investing the surplus in further vocational training of disadvantaged groups, such as long-term unemployed, people with disabilities, etc.
- Selling second-hand goods (e.g. furniture, clothing, household goods, and books), donated by those who do not need them anymore, to people with limited means at affordable prices;
- To the same end, offering other services, e.g. collection and delivery of goods, dissolving households and collecting salvage.
- Refurbishing the pre-owned goods, thus contributing to saving natural resources;
- Offering vocational training / apprenticeships in retail trade, logistics and administration. This is done in collaboration with the public agency for employment. Unemployed people are offered temporary or permanent, part-time or full-time jobs. Moreover, members of the co-operative society agree to participate as volunteers (for several hours or days per month), working for civil society in different fields.
A continuously growing number of employees (from 7 in 2008 up to 220 in 2013) are a good sign of success. A large number of volunteers experience day-to-day work in FairKauf and see this as a positive experience. FairKauf has become a trade-mark. According to a survey, 55 percent of the population of Hannover know FairKauf. From the beginning there were signs of success. The project won several prices, such as the Citizen Participation of Niedersachsen 2008, and the CSR-Seal of 2009 of Germany – Land of Ideas.
Success criteria were good Public Relations and a steadily growing number of customers. FairKauf is becoming a prosperous and growing enterprise, starting in a time when many other department stores are closing.
B - IMPACT ON SOCIETY AND ECONOMY
B1 - How has the GP impacted on the following?
Highly positive impacts
FairKauf will be socially sustainable not as a 'give-away shop' or 'soup kitchen'. It is not designed to react to immediate emergencies but to offer lasting solutions, e. g. employment and qualification. In this regard, FairKauf does not fight poverty but offers lasting ways and means to overcome poverty. Fighting against financial exclusion is reached by selling second-hand goods to people with limited means at affordable prices: furniture, clothing, household goods and books – donated by those who do not need them anymore. This social cooperative does not need any special public subsidies
Creation/conservation of local employment
Highly positive impacts
Employment creation means that FairKauf generates employment by profitmaking. It is more than a social institution. It aims at making profit in part of its operations as a successful business. Strong service and customer orientation are the central elements of economic sustainability around second-hand goods. Further services are collection and delivery of goods, dissolving households and collecting salvage. FairKauf introduces new conditions of work.
Enablement of social enterpreneurship
Members of the co-operative society agree to participate as volunteers (for several hours or days per month), working for civil society in different fields. For them FairKauf is a meeting place of different groups. In this way FairKauf combines work, money and used goods.
Amenities for local people
All goals FairKauf is pursuing have direct positive impacts on local people: offering exclusively second-hand goods at fair prices to all citizens, offering qualification to disadvantaged groups (thus, contributing to social cohesion and strengthening the community), re-use of pre-owned goos, reduction of garbage and refuse, sustainable development.
Highly positive impacts
FairKauf provides for qualification and employment by offering high-quality vocational training / apprenticeships in retail trade, logistics and administration. This is done in collaboration with the public agency for employment. Unemployed people are offered temporary or permanent, part-time or full-time jobs.
FairKauf does not aim at protecting the needy or saving victims of the financial crisis. It carries out ordinary business. Customers do not have to prove that they are needy. Instead of one helping the other, all are customers, all pay the same prices. FairKauf has to make attractive offers for the needy and for others. It is a place for redistribution of abundance, by using goods several times, bringing them back into the economic cycle. Interestingly, even during the times of crisis FairKauf has been steadily growing, constantly increasing their numbers of employees, while many other businesses were forced to reduce their numbers or even close their doors. In this light, all the more noteworthy appears the fact that FairKauf has never received public subsidies or any other form of public funding.
Local financial environment for social enterprise
Impacts not known
The new idea in FairKauf is economisation of social work, not being a department store for the poor, but a department store as an enterprise for qualification with mainly social objectives, aiming at inclusion of the poor into the labour market and society. Classification as charity is avoided, because charity leads to dependence and loss of dignity. An entrepreneurial approach allows financial independence by earning surplus (excess of income over expenditure) covering cost. Financial independence means building a stable base, by combining variable equity capital (contributions by members) and indivisible reserves. This might prove a useful model for other social enterprises to take on.
Local policy environment for social enterprise
Impacts not known
For FairKauf the choice was registered co-operative society (eG), which allows to reach all economic and social objectives of a social department store, with competent leaders accompanying people, encouraging and qualifying them and enabling them to find employment in the labour market. Furthermore, the self-financed eG is immune against hostile take-over. It allows limited liability, easy entry and withdrawal of members, integrating partners of different size or strength in a democratic internal structure, low capital contributions and accumulation of indivisible reserves from undistributed surplus. This might prove a useful model for local policy-makers to support and advance.
National financial environment for social enterprise
Impacts not known
National policy environment for social enterprise
Impacts not known
C - PARTNERSHIPS & GOVERNANCE
Inclusive governance? See below.
Influence on local / national decision makers
The team of leaders of FairKauf includes a former bank director with high professional qualification and social engagement working as the honorary general manager. Other qualified and motivated members form a planning group, communicating with politicians, economic leaders and non-governmental organisations (NGOs). They look for ways how to combine the economic and the social.
Partnership work involved
As a multi-stakeholder co-operative, FairKauf eG has a mixed membership (individuals, firms, private and public institutions, foundations) and mixed customers. It is a ‘normal’ department store open for all, in a good location, registered as a co-operative society and affiliated to professional associations (chamber of commerce) and a co-operative auditing federation.
D - PR & TRANSFERABILITY
Would this programme work well in another European context?
FairKauf's clear-cut concept proves not only well-suited, but highly recommended for transfer to other European contexts, since:
- FairKauf does not work outside the market,
- FairKauf sees themselves primarily as an enterprise and only in the second instance (or, in order to be) as a social institution. It contributes both to stabilise economic life and society,
- FairKauf's economic concept follows the rules of offer and demand,
- aiming to offer sustainable solutions and not short-term, stop-gap measures,
- aiming to benefit all, offering more than benefits in the economic meaning of the term.
Communication of experience and success to the public
Communication of concept, recent developments, and success remains quintessential to FairKauf. It is to some considerable extent due to their PR that the large department store has become the trade-mark that it is today. In 2012, 55 % of the population in Hannover said to know FairKauf.
FairKauf's PR activities range from continually updating their website www.fairkauf-hannover.de, holding events in co-operation with different partners (e.g. schools), sales promotion, and instore advertising, all the way through word-of-mouth recommendation. FairKauf prouds themselves to have happy employees, a success criterium that many other companies seem to have forgotten of recently, and customers, while connecting people, regardless of age, cultural background, gender, or education.
Communication with local/national decision makers
Not only the founding members, which include socially committed individuals as well as representatives of walfare organisations, such as the Diakonisches Werk, Local Committee Hannover e.V., the Caritas Association of Hannover, and Werkheim e.V., but also the members of the Steering Committee and of the Supervisory Board are affiliated to various bodies and play an active part in different networks and panels involved with both society and economic issues.
Elements that would transfer particularly well to other contexts
The idea of the economisation of social work along with the motto 'Earn money to do good' (instead of rather 'Do good to earn money'), the clear-cut concept and well defined objectives, and a managing board consisting of (former) business professionals are only few of the elements that appear best-suited for transfer to other contexts.
E - RESOURCES AND SUSTAINABILITY
Total income 2011/12
How is this made up?
All by retail.
There were 79 regular employees at the end of 2013 (permanent positions, full-time and part-time, apprentices and trainees).
Technology necessary within the fields of retail trade, logistics, and administration.
If public funding were withdrawn, could the GP continue to exist?
Yes, since FairKauf is independent from public funding.
Strengths, weaknesses, difficulties and lessons learned.
Strengths: Located in the very middle of the city centre in Hannover - right at the heart of Hannover's shopping mile - and stretching over 5 floors totaling a area of 1,000 qm, FairKauf has become a significant actor within the city landscape. Another particular strength lies with FairKauf's legal form as a registered co-operative society, as well as with the business professional managing board.
Social department stores are located on a continuum of forms between the extremes of “give-away” shops and charities on the one side and professionally managed commercial department stores on the other. They have a choice of legal frameworks between association / ‘registered society’ (e.V.), limited company recognised as common benefit / charitable organisation (gGmbH) and co-operative society (eG).
For FairKauf the choice was registered co-operative society (eG), which allows to reach all economic and social objectives of a social department store, with competent leaders accompanying people, encouraging and qualifying them and enabling them to find employment in the labour market. Furthermore, the self-financed eG is immune against hostile take-over. It allows limited liability, easy entry and withdrawal of members, integrating partners of different size or strength in a democratic internal structure, low capital contributions and accumulation of indivisible reserves from undistributed surplus. The democratic internal structure is being ensured, among other things, by each 'shareholder' having a single vote, independent of the size of their share.
Difficulties are to expect - and overcome - while expanding to other locations across the city. Lessons learned are that good PR mechanisms remain essential.
F - EXECUTIVE BODY AND CONTACT INFORMATION
Who set up the GP?
6 socially committed individuals + representatives of the Diakonisches Werk, Local Committee Hannover e.V., the Caritas Association of Hannover, and Werkheim e.V.
Who runs the GP?
A Steering Committee as executive body / managing board, which is being controlled by a Supervisory Board. Head of the Steering Committee is Mr Reinhold Falbusch.
Mr. Reinhold Fahlbusch
0049 511 35 76 59 0
Any other contact people
Ms. Nicola Barke
G - SUPPORTING INFORMATION
‘Co-operative Entrepreneurship – Profit for Everyone; Which 'principles' should be followed to become a good co-operative entrepreneur?’ - Paper presented by Hans-H. Münkner, Marburg/Germany at the conference of the Flemish Government in Gent on 19 June 2012
Walter Lampe, Ed (2009): FairKauf – the social department store, Hannover;
Weber, Thomas (2009): The social department store FairKauf in the social urban landscape of Hannover;
FairKauf Hannover - A Second Life for Your Good Values' - Company presentation held by Detlef Klein and Jörg Matthaei at MESSE meeting in Hannover on 4 February 2014 at the CVJM Hotel