Lars Schlecker, son of the firm's founder Anton, said the closure of between 500 and 800 branches was part of a strategy to improve the company's performance and improve its image.
“We have certainly made mistakes and cannot turn things around overnight. But already we sense a change,” he told the Frankfurter Allgemeine Zeitung.
Schlecker – which has roughly 8,000 branches and 34,000 employees in Germany – has come under heavy criticism for poor management practices and outdated stores in recent years.
Accusations emerged earlier this year that the company kept a secret list of poorly performing employees it wanted to fire.
Unions have also complained of a negative work environment where employees are underpaid and disparaged by managers.
Schlecker admitted the morale among staff led much room for improvement.
"A culture of fear has slowly slipped in at Schlecker," said Schlecker. The 39-year-old who has taken control of the firm along with his sister Meike, said he was personally attending leadership seminars where managers were being taught about dealing with staff.
"I made it clear that reprimands were not a method of developing staff," he told the paper. There were also clear rules which for example stopped managers from issuing reprimands when staff showed up to work late, and involving workers' representatives early in conflicts.
This has been welcomed by services trades union Verdi. "This is the first time that I can see reasonable management methods at Schlecker," said Achim Neumann, the union's trade secretary responsible for the industry.
Schlecker is also facing intense competition from dm, a drugstore chain that's widely viewed as being more trendy and modern.
“Those that know us know that we'll fight back,” Schlecker said.
It had already changed the management structure and increased salaries for frontline workers, Schlecker said, adding that cosmetic changes were also being made in a renovation campaign across the chain.
“We have revamped the design completely,” Schlecker said. “It's no secret that our stores previously looked a bit shabby at times.”
He said the revamped stores – there are about 60 so far – have seen sales increases of between 20 and 30 percent.
Once the company finishes with its closures and renovations this year, Schlecker told the newspaper the chain would start growing again.
“It is a year of transition, we must be patient,” he said.