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Crisis at department store chain: Galeria Karstadt Kaufhof to close store in Bonn

Crisis at department store chain : Galeria Karstadt Kaufhof to close store in Bonn

The Essen-based department store chain Galeria Karstadt Kaufhof intends to close at least five locations in the region. The Karstadt store in Bonn is one of those affected.

Galeria Karstadt Kaufhof will be closing at least five stores in the region. According to information provided by the Verdi trade union and the local works councils, Kaufhof in the Rhein-Center in Cologne-Weiden is one of those that will be closing. The Karstadt stores in Bonn and Gummersbach will also be closed, as will the Kaufhof stores in Brühl and Leverkusen. A total of around 370 employees are affected in these locations. The fate of Karstadt Sport in the Cologne inner city will be decided in the course of the day. It was said that negotiations were still taking place with regard to that.

Other branches in the region could still be affected as well. According to the information provided, the ailing department store group in NRW will close a total of 20 stores. The stores on Hohe Strasse in Cologne, in Cologne-Nippes and Karstadt on Breite Strasse in Cologne as well as the store in Düren will definitely remain.

The department store group will close a maximum of 62 stores across Germany, according to Verdi. It will affect around 6,000 employees. The company had planned a ten percent reduction of staff in the remaining stores but this was prevented during the negotiations that took place for four days. Management had originally planned to close 80 of 172 stores.

The social compensation plans negotiated by the works councils will be applied to severance payments for those who are let go. According to Verdi, those affected by closures will be transferred to a transitional company for employment and training for at least six months if they so desire.

"The decision to close the stores hits people hard, their livelihoods are pulled out from under their feet. We will fight with all our might for the retention of the locations and the future of the employees", said Verdi board member Stefanie Nutzenberger. The last word has not yet been spoken. The employees and their families also rightly expect the full support of political leaders and that all possibilities, opportunities and paths available will be fully explored in this dramatic situation.

The corona crisis has exacerbated the struggles of the ailing department store group and it has been fighting for survival. Since April, it has been in a preliminary stage of insolvency, seeking protection from creditors. But the group, which is owned by Austrian real estate investor Rene Benko’s Signa Holding, has been in crisis for some time. Fewer customers frequent the city center, and discount stores and online retailers are luring away department store customers. Mistakes have also been made by Karstadt and Kaufhof.

Under the investor Nicolas Berggrün, an American management team was brought in which was not familiar enough with the German market, initially relying on a typical American assortment of products at Karstadt. Only after the takeover by Signa did Karstadt get back on track. The Canadian department store group HBC later made exactly the same mistake at Kaufhof. In 2018, Benko then took over the Kaufhof majority from HBC and in the middle of last year bought the remaining Kaufhof shares from HBC. The new department store group was run from the Karstadt headquarters in Essen by Karstadt boss Stephan Fanderl, who finally left the company.

(Orig. text: Ralf Arenz, Translation: ck)