The real reason for merging Karstadt and Kaufhof

The real reason for merging Karstadt and Kaufhof

Published at: 2018-09-13 08:52 | Author: CIJ Europe
Writing in Suddeutsche Zeitung, Michale Klasgen claims that the proposed merger of Karstadt and Kauhof is not driven by a belief that together, the two classic department stores can rediscover a winning formula. Instead, he claims that both retailers sleepwalked through the retail revolution that's taken place over the past ten years and are hardly positioned to recover "They almost never thought of the customer," writes Klasgen. "They got wrong everything Amazon gets right."
So what's driving the proposed merger? The value of the prime real estate the two companies control has been rising, and continues to do so. Klasgen claims that if it weren't for the merger, Kaughof would fall quickly into bankruptcy and Karstadt would have had to fight tooth and nail for years to come.

Both companies have been suffering under the onslaught of on-line retail, as Germans have come to realize what their options are when it comes to middle market fashion and accessories. Kaufhof, owned by HBC, has been making consistent losses, while Galeria Kaufhof turned its first profit in years (just over €1m) in 2017.

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