If shoppers at the iconic Ludwig Beck department store in Munich venture up to the third floor, they will see portraits of the dozen managers who ran the store over the last 155 years.
Some managers lasted longer than others. In the early 1990s, for example, the company succumbed to grand expansion plans and wanted to conquer Germany with a chain of stores. It even opened an outlet on New York’s Fifth Avenue. But the venture ended in disaster and the company almost went bankrupt. The managers lost their jobs.
After that, the company, which is listed on the German stock exchange, concentrated exclusively on its Munich store, and has done well. Its profit margin before interest and tax amounted to 14 percent last year, outperforming rival Karstadt, a nationwide department store chain which has been making losses for years. Retail group Metro was delighted last year to be able to offload its Kaufhauf unit, purchased by Canada’s Hudson’s Bay.
Ludwig Beck shows that it’s still possible to make money with a department store in Germany in these days of online retailing. But its business model should prove hard to copy because one of its main advantages is its location on Munich’s central Marienplatz square right opposite the city hall and with direct access to the underground subway and city train network. That brings in thousands of tourists every day.