It is the announced end of an era. The names Karstadt and Kaufhof will apparently soon gradually disappear from the cityscape. Instead, department stores might be called Galeria for the foreseeable future, just as the department store company’s website is already called Galeria today. “It’s time you can see from the brand that we are now a company,” said Miguel Müllenbach, manager of the department store which still operates under the Galeria Karstadt Kaufhof (GKK) name, the Handelsblatt.
Standardization was already an issue when the two struggling companies merged in 2019. For the first time, however, a GKK official announced the move was imminent. “In the future, we want to be a company with one brand. It won’t take long either. According to Müllenbach, the move is going very well with the changes planned for this fall.
In many places, therefore, the old-fashioned department store was barely recognizable. The former sales areas for textiles or household items will soon be used differently. Instead of fashion and jars, GKK wants to offer its customers urban citizen services, electric bicycle stations or parcel counters. The renovation is only due to start in three branches: in Frankfurt, Kassel and Kleve. Overall, up to 60 of the 131 homes are planned to be fully realigned. The rest will only be partially rebuilt. The department store group, which is owned by the Austrian holding company Signa owned by real estate investor René Benko, plans to devote 600 million euros to the realignment over the next three to four years.
The department store chain is moving away from commerce
In Kassel, for example, the sales area of an average supermarket will give way to various new services, spread over several floors. It is planned to offer regional products on the ground floor. The city moves to the first floor with two counters for citizen services, and a pop-up museum of the Brothers Grimm is being built on the fourth floor. According to the plans, bicycles can be parked and repaired in the multi-storey car park, and electric bicycles can be recharged. There should also be charging stations for electric cars.
GKK now divides its department stores into three different categories: “Weltstadthaus”, “Regional magnet” and “Local forum”. According to this definition, Kassel is a “regional magnet”.
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The retail sector, including Galeria Karstadt Kaufhof, has suffered badly from the lockdown during the corona pandemic.
(Photo: Felix Kästle / dpa)
The department store chain seems to be turning away from pure commerce and at least partially expanding its offer to include urban or local services. Where possible, the regional specifics should also attract more customers to the department stores of all other locations and become a distinctive feature of the branch. This is not the first attempt at change. This time around, the department store group, which has been hit hard by the corona pandemic, describes the move as a “change in strategy.”
The department store model has struggled with declining sales for years. Last year, GKK had to file for bankruptcy. During the proceedings, the creditors had to waive claims amounting to more than two billion euros. GKK closed 40 branches and received a government loan of 460 million euros at the end of the procedure.
The company is currently negotiating a new loan with the federal government. Until now, Müllenbach has not wanted to say how much it is. In the April press, there was talk of 200 million euros. Also in April, in full confinement, Müllenbach responded, in an interview with Bild, to the question of whether GKK “burns 100 million euros per month?” : “The order of magnitude is not wrong”. Now he said GKK lost “at least 1.8 billion euros in revenue” as a result of the foreclosure.
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Kaufhof dates back to entrepreneur Leonhard Tietz.
(Photo: Bodo Marks / dpa)
Department stores are rarely worse off than they are today, mainly because of the booming online business, which only accounts for around five percent of GKK’s sales. The business model of department stores, which, like the two companies, emerged at the end of the 19th century, is considered obsolete. Kaufhof dates back to Jewish entrepreneur Leonhard Tietz, whose thriving business was expropriated by the National Socialists. In 1933 it was renamed Westdeutsche Kaufhof AG. Rudolph Karstadt founded his first boutique in Wismar in 1881 under the name Karstadt Cloth, Manufacture and Confectionery Shop.
Finding many, if not all, goods under one roof was a new approach at the time. After the end of World War II, in the years of the economic miracle, people flocked to department stores in Karstadt, Kaufhof and other vendors. Their names, Horten, Hertie or Quelle, have now disappeared from the urban landscape. From now on, the traditional names Karstadt and Kaufhof will soon come to the collection point for lost marks.
According to experts, the changing times have far passed them. Converting space is seen as a proven way to keep homes alive. Whereby Müllenbach makes a clear statement in this regard: “We are not dragging any zombie branches through,” he told the Handelsblatt.
Of the 600 million planned investments, 200 million euros will be devoted to digitization. GKK wishes to combine its own offers and those of its partners via an application. It should not only be possible to book a hairdresser’s appointment, a parking space or a bistro table with GKK. It is planned that an appointment can also be made with the city via the app, for example to collect your new identity card at a counter in Galeria.