Five years after filing for insolvency, German department store group Karstadt is still trying to rise from the ashes.
German-American billionaire investor Nicolas Berggruen, who bought the middle class-focused chain for a symbolic one euro after the 2009 insolvency, will hand over the baton to another billionaire. René Benko, a self-made Austrian entrepreneur who made his fortune in real estate, will take over full ownership of the struggling retail group through his firm Signa.
Benko’s firm will pay one euro, Berggruen Holdings said, an indication that the business is not out of the woods yet.
Similar to department stores in other countries, Karstadt has been suffering from increased competition from cheap clothing and discount household stores, online shopping, and a retail offering which to a younger public might seem outdated.
In Britain, department groups such as House of Fraser and Allders had to close stores due to slumping sales. In the United States, Macy’s and Bloomingdale’s changed course years ago, allowing other retail brands to open shop inside the department stores.
“Benko is likely to produce something that the United States produced ages ago with Macy’s or Bloomingdale’s. Like Galeria Kaufhof, who have adopted similar business concepts, Macy’s offers shoppers a more mall-like experience,” said Christoph Schlienkamp, a consumer and retail analyst at Bankhaus Lampe.