Longtime struggling German retailer Galeria Karstadt Kaufhof is set to close 52 of its 129 department stores spread across Germany. The move puts 4,000 employees and about 300 jobs at risk between its headquarters in Essen, North Rhine-Westphalia (West Germany), and IT services.
As agencies report, the group promises to offer these employees a redeployment into another company. Galeria, which has been under safeguard proceedings since November 2022, plans to start a first phase of closures on June 30, with the second being on January 31, 2024.
The retailer, from 2019 owned by Signa Gruppe, plans to thoroughly modernize the remaining 77 stores over the next three years so that they become "a popular meeting point in city centers." Galeria wants to offer dining facilities, sewing stores, dry cleaners, and other services for citizens. The idea of management, led by Miguel Müllenbach, is to make the branches more connected, but also autonomous and focused on local and regional needs.
What seems to have put the company in crisis is not only Covid, but also the "dusty" image of the stores, as well as the propensity to shop in malls and online. Rising energy prices and inflation allegedly made things worse. Galeria Karstadt Kaufhof had first filed for bankruptcy in 2020, a situation that led to the closure of 40 stores and the cutting of 4,000 jobs.
At the end of 2022, the strategic business consulting firm BBE speculated that there was room for fewer than 100 department stores on German soil. More drastic is an analysis by the weekly Immobilienzeitung, according to which only 30 department stores out of 131 have reassuring perspectives. All others show something to worry about.
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