By Benedict Weimer
Germany’s largest department store chain in need – again!
Galeria Karstadt Kaufhof has applied for state aid for the third time in two years, as announced on Friday.
The retail giant (131 branches, 18,000 employees) is “again in a threatening situation,” Galeria boss Miguel Müllenbach warned employees. Russia’s war in Ukraine and high inflation hit Galeria hard.
For energy alone, the company will have to spend over 150 million euros more than previously planned in the next two years. In addition, people limited their consumption to the bare essentials. This endangers the future of the company.
In 2021 and 2022, a total of 680 million euros from taxpayers’ money had already flowed to Galeria in two payments. It is not yet known how much money the group has requested this time. But the aid is controversial.
► Trade expert Prof. Gerrit Heinemann (62, Niederrhein University of Applied Sciences) on BILD: “State aid for Galeria Kaufhof is wasted money. It has been clear for decades: The department store concept no longer works and has no future.” Galeria Kaufhof’s market share in retail has been falling for years, going “towards zero”: “The company actually no longer plays a role, is not worth restructuring.” Alone Last year, Galeria made a loss of more than 600 million euros, “while other retailers are doing well”.
Heinemann’s conclusion: “New state aid would distort competition and be unfair. I appeal to the responsible politicians not to let Galeria blackmail them.”
Galeria’s problems “homemade”?
Whether Galeria’s application will be approved is still uncertain. Trade expert Prof. Jörg Funder (University of Worms) predicts: “There is little to suggest that Galeria will be successful this time with the call for state aid.”
The situation is different than in the corona pandemic. At that time, trade and gastronomy were the main victims of the crisis. In the current energy crisis, the entire economy is affected. “Rescuing an ailing department store chain simply doesn’t have the same priority as it did a year ago,” he said.
In any case, the problems of the department store are “homemade”. Galeria is no longer attractive to customers because it has overslept the rise of online trading and offers too little shopping experience and advice.
Stefan Genth, General Manager of the German Retail Association (HDE), on the other hand, warned: “Department stores are and will remain one of the main traffic generators in our inner cities.” They are “important for our inner cities”.