Retail: Myth KaDeWe – Luxury department stores are looking for renewal

Retail: Myth KaDeWe – Luxury department stores are looking for renewal

Three letters have stood for luxury in Berlin for more than 100 years. Now KaDeWe is insolvent. But management and experts are confident about the future of the consumer temple.

60,000 square meters of shopping space in the middle of Berlin – that’s about eight football fields with high-quality clothes, shoes, handbags and delicatessen. The size of the “Kaufhaus des Westens” is impressive; hardly any travel guide can do without the KaDeWe, as it has been called for more than 100 years. For Berlin, the KaDeWe is a place of longing, a symbol of luxury, and a tourist attraction. Even insolvency cannot affect this feeling. Or is it?

Today the trading company of the same name, which also owns the Oberpollinger in Munich and the Alsterhaus in Hamburg, announced that it has filed for insolvency proceedings. The aim is to create a new beginning on this path under self-management. The good news for all customers: The three stores will not close. According to its own statements, the trading company primarily wants to free itself from high rents through the insolvency proceedings.

Because the business actually runs on luxury. Even at the height of the corona pandemic, luxury brands reported good sales – those who can afford it like to treat themselves.

There was no sense of crisis in KaDeWe itself. “It has a great tradition, it’s very big. We much prefer going to a department store than to a mall where there are just a few shops. You can also stroll here,” said a customer. “KaDeWe is just Berlin for me,” said a tourist from Rhineland-Palatinate. And those surveyed agreed: If KaDeWe had to close, the city would be missing something.

Trade association: KaDeWe “the great brilliant”

In the 2022/2023 financial year, the KaDeWe Group reported sales of almost 728 million euros, an increase of almost 24 percent compared to the pre-Corona financial year 2018/2019. “The KaDeWe is the gem, is the great brilliant in the crown of German retail and will always remain so,” enthused Nils Busch-Petersen from the Berlin-Brandenburg trade association on RBB Inforadio. The insolvency proceedings now give the company the opportunity to put connections and contracts to the test.

Rents in particular have become a burden for department stores. Compared to the 2018/19 financial year, they increased by almost 37 percent, explained the KaDeWe Group.

“The turnover rent burden is high at all locations, the highest in Munich at around 20 percent according to our estimates,” estimates Johannes Berentzen from the BBE trading consultancy. “We estimate the Alsterhaus at around 17 percent – that would also be far too high. The KaDeWe is still the best with a rent burden of around 13 percent based on sales.” He is also convinced that all three houses will remain: “Luxury works very well despite the current economic situation.” Berentzen expects that the Central Group will now try to secure the entire shares in the KaDeWe Group and the properties.

KaDeWe a purely Thai company in the future?

The Central Group, founded in 1947, currently holds 50.01 percent of The KaDeWe Group GmbH. The remaining shares belong to the troubled Signa of the Austrian René Benko.

The Central Group is a conglomerate owned by the Chirathivat family, one of the richest families in Thailand. Forbes estimated her fortune at 12.4 billion dollars (11.4 billion euros) in 2023. The group, based in Bangkok, is primarily active in the retail, hotel and restaurant sectors and operates, among other things, supermarkets and department store chains. In addition to its shares in department stores in Germany, the Central Group has interests abroad in, among others, La Rinascente in Italy, Selfridges in Great Britain and Globus in Switzerland. Now boss Tos Chirathivat (59) has the opportunity to grab all the shares in KaDeWe.

Delicatessen department with 35,000 products

This would probably make it one of the few department stores in its portfolio to have its own TV series dedicated to it – a good two years ago, ARD placed a lesbian love story between the clothes racks in KaDeWe in the 1920s. It is just one of the chapters with which KaDeWe became a flagship. The delicatessen department on the sixth floor is particularly popular with tourists and Berliners. Between luxury classics such as oysters, lobster, caviar and champagne, there are also unusual specialties. A pleasure for the senses, but not for the wallet.

The “Department Store of the West” is significantly older than the Cold War that its name sounds like. When it opened on March 27, 1907, Tauentzienstrasse and the department store designed by Emil Jaudt were located in an upper-class residential area, away from the shopping mile at Potsdamer Platz. However, founder Adolf Jandorf suspected that the nearby Kurfürstendamm would become a shopping address. The KaDeWe quickly became a destination for family trips. The strollers milled about in front of the house. “A boulevard for flirting girls,” wrote the chronicler Leo Colze in 1908 about the area at Wittenbergplatz. “The cosmopolitan air blows here.”

6.50 meter high giant cake for the 100th.

The KaDeWe is also a piece of German history. In 1927 Jandorf sold to the Jewish merchant family Hermann Tietz. During the Nazi era, the owners were forced out of the management and the merchant family’s name became “Hertie”. In 1943, an American plane crashed into the KaDeWe and the building was in ruins. The new beginning came in 1950; during the Adenauer era, the department store became a symbol of consumption and purchasing power. For the 100th birthday party, the Berliners stormed the house in March 2007 and picked up pieces of a 6.50 meter high giant cake.

A lot has happened in KaDeWe since the 100th anniversary. Most recently, the department store was renovated for tens of millions of euros starting in 2016 – the new start was then celebrated with plenty of bubbly. Conceptually, the department store is state-of-the-art. A few months ago it was announced that the Galeries Lafayette Berlin would be leaving at the end of 2024. One less luxury competitor – that shouldn’t have been bad news for KaDeWe.

Source: Stern

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