It is an emblematic sign of German city centers. Although little known France, it is nevertheless compared to Galeries Lafayette. Department store chain Galeria Karstadt Kaufhof will close 52 of its 129 stores in Germany, the troubled company announced on Monday. "After intense negotiations with donors and cities, there is no prospect of continued activity" for these 52 establishments, scattered throughout Germany, the statement said.
Around 4,000 employees are threatened by these closures, as well as 300 jobs located at the headquarters in Essen, North Rhine-Westphalia (West) and in IT services. These employees "will be offered to join another company," promises Galeria, in safeguard procedure since November 2022. A first wave of closures will take place on June 30, the second on January 31, 2024.
An aging image
"This is a black day for the people of Galeria," the Verdi union said in a statement. He calls for a "urgent" change in the management of the company, because of which "employees are paying the price".
In search of profitability, the chain also plans to "thoroughly modernize" its remaining 77 stores over the next three years, so that they become "a popular meeting point in city centers".
These more than century-old brands have been in turmoil for several years. The impact of the pandemic has added to the disenchantment of Germans for this concept of generalist stores with dusty image, supplanted by shopping malls with multiple brands and e-commerce giants.
"The department store has a future"
Galeria now wants to offer "attractive catering offers [...] sewing workshops, dry cleaners or services to citizens". The subsidiaries will be more connected, autonomous and focused on local and regional needs, the statement promises.
"The department store in Germany has a future," says CEO Miguel Müllenbach, at a time of competition with e-commerce giants like Amazon. Galeria Karstadt Kaufhof also suffered from inflation fueled by the Russian war in Ukraine. In 2020, a first bankruptcy filing was filed, leading to the closure of 40 stores and 4,000 job cuts.