The intellectual flexibility of Galeria's managers and owners is remarkable. In the three bankruptcies over the past six years, creditors gave up billions of dollars, landlords gave up the income they were contractually entitled to, and taxpayers gave up a large sum of money that was wasted in the department store cosmos. Galeria received at least 680 million euros in tax money - and three additional insolvency payments from the employment agency, i.e. from the contributors. And each time the company leaders said: Galeria now has a future.
What a mockery. Especially for the more than 10,000 employees who - for whatever reason - still believed in what was promised to them. On Friday, the company filed for bankruptcy proceedings for the fourth time since 2020. In the first bankruptcies, the department store group was able to excuse itself by citing the criminal energy of its then owner: Benko, the Austrian billionaire, as an enemy who fleeced the department stores in prime locations with excessive rents and thus prevented profitable business.
Alone: What profitable business should this be? The department store has outlived itself. At least in the form operated by Galeria. There are successful large-scale retailers, electronics retail chains or fashion houses with entrepreneurs and management who understand how customers want to shop. Those who provide quality advice, who can combine stationary business with digital, who have a local presence and loyal visitors and can therefore also be successful in less frequented city centers.
There are some Galeria branches that have even shown how to do this. But such positive individual cases are of no use if the shareholders refuse to invest and really want to change something. They are the gravediggers of the department store.
Until the beginning of the 1990s, four addresses essentially dominated the scene: in addition to Karstadt and Kaufhof, these were Hertie (taken over by Karstadt) and Horten (taken over by Kaufhof). 25 years ago, these four companies still operated around 400 department stores. While in the mid-1970s an impressive 15 percent of retail sales flowed into the cash registers of various department stores, three years ago Karstadt and Kaufhof collectively achieved less than one percent.
In 1996, Karstadt presented its “virtual department store”. Thirty years later, the online portion of the business is still only in the single digits. For decades nothing was invested; the company only lived off its assets and moved from one loan to the next. Galeria not only missed digitalization, but also missed practically all shopping trends.
The problem of loss of meaning has not disappeared just because the names Karstadt and Kaufhof were deleted. There were still around 180 department stores when the companies merged in 2018. The bankruptcies not only meant thousands of employees had to leave, but the number of branches was also more than halved. Today there are still 83, of which Galeria recently had to negotiate rents with 33.
It's a burden for any city that has such a block in its city center that can hardly be rented out. It's bitter for the employees. Annoying for creditors. But with the fourth bankruptcy, no one should really believe in Galeria's future. Wind down the department store!
