After the tense financial situation of the Galeria department store chain became known, marketing expert Martin Fassnacht doubts its future.
“I’m very pessimistic. The question is: Who would miss Galeria? On the customer side, almost no one,” said the professor of strategy and marketing at the WHU Düsseldorf business school. “I’m sorry to say this, but Galeria is no longer needed.”
Fassnacht spoke of a “tragedy,” also for the 12,000 employees. After three bankruptcies within a short period of time, they would have to worry about their jobs again and look for new employment opportunities. He was skeptical that Galeria would be able to turn things around. “If the desire were so great, many more people would shop there. Then the company wouldn’t be in trouble again.”
The expert sees several reasons for this. The chain has no concept. In addition, more and more people are shopping online – especially products that are also offered at Galeria, such as fashion. According to Fassnacht, there are certainly successful business models in stationary retail. He cited Action and Müller as examples. Both have a clear concept and a competitive advantage. Müller is “a drugstore with a department store character” and a wide additional range of perfumery, toys, stationery and media, said Fassnacht. The discounter Action offers a bargain and discovery incentive that encourages customers to come by regularly.
Further branch closures possible
It recently became known that Galeria had asked numerous landlords to defer rent payments. The company justified this with fluctuations in liquidity and also confirmed that it had received a new loan from its minority shareholder Bain Capital. Some landlords complained that rent payments had recently been missed.
A request for a deferral is “not a normal commercial routine,” said restructuring expert Manfred Hunkemöller. He assumes that Galeria’s annual financial statements are currently being prepared. Auditors expected proof that a company would be able to pay its due liabilities in the next twelve months.
“Since landlords are among the largest creditors of a department store, a deferment may be sufficient to close an open gap that might otherwise exist.” He described the loan as a “drop in the ocean.” Hunkemöller is an honorary professor specializing in restructuring and insolvency management at the International School of Management in Dortmund.
Galeria had already announced in March that it would renegotiate rental agreements for eight locations that were expiring in the medium term. The company admitted that further branch closures are possible. Galeria currently operates 83 branches. At the beginning of 2024, the chain had to file for bankruptcy again. Nine houses were then closed.