RETAILER WOES

Kaufhof Pumps Cash into Latest Strategy

  • Why it matters

    Why it matters

    German department store chain Galeria Kaufhof is pursuing a bold but risky investment strategy, hoping to attract new, younger customers without alienating its existing customer base.

  • Facts

    Facts

    • Galeria Kaufhof is owned by the Hudson’s Bay Company, a Canadian retailing group.
    • The company is renovating many stores and expanding lines of merchandise.
    • It plans to invest €400 million in Europe this year, and about the same amount in 2018.
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    Audio

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For Galeria Kaufhof, the road to recovery is slow and steep. Source: DPA

Wolfgang Link is a man with a mission. The new boss of Galeria Kaufhof is hastening to revitalize the troubled German retailer, quashing speculation the company is slowly failing and being crushed by debt.

The owner, Canadian retailing group Hudson’s Bay Company (HBC), had previously emphasized spectacularly large projects in individual stores in cities like Berlin, Munich and Dusseldorf. But Mr. Link, on the job since May, wants to distribute investment more broadly across the network of stores, to effect changes in merchandise and presentation more quickly.

Renovations are underway at 14 of the company’s 97 stores in Germany. As Handelsblatt has learned from company insiders, the executive board is discussing plans to refurbish another 15 to 20 Kaufhof department stores in 2018. Besides the openings this year of Saks Off 5th (an outlet store of Saks Fifth Avenue) and Hudson’s Bay stores in Germany and the Netherlands, seven leases have already been signed for new Hudson’s Bay stores in the Netherlands. The company plans to invest €400 million in Europe this year, with a similar amount available next year.

The company also plans to expand its partnership with US cult perfume store chain Sephora. Shop-in-shop concepts have already been implemented in Munich and Bonn, and discussions are underway with Sephora for up to 50 additional stores. Some plans, such as for a Kaufhof department store on Schildergasse in Cologne, are already firmly in place.

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