After bankruptcy
Decorative chain Depot closes dozens of branches – but continues to fight
Since the corona pandemic, Depot has been fighting for survival. Online competition and thrifty customers are causing problems for the chain. In the future, they want to focus on experiential shopping.
The insolvent decoration retailer Depot is closing at least 27 branches in Germany by the end of the year. 17 have already been closed, says the retail company’s managing director, Christian Gries. The branch network will shrink to 285 stores. It is likely that more will be closed. Negotiations with some landlords are still ongoing. “We will consistently close stores from which we do not make money,” said Gries.
Most of the affected employees will be transferred to other branches. Around 50 of the 3,350 employees will lose their jobs with the planned closure of the 27 branches. At the company headquarters in Niedernberg, Lower Franconia, the number of employees has been reduced from around 650 to 500 since the beginning of the year, it is said.
Depot is a subsidiary of Gries Deco Company (GDC). Due to impending insolvency, the company filed for self-administration insolvency in July.
According to the company, the goal is to be able to return to regular operations by mid-2025 at the latest. According to Gries, Depot struggled with difficulties during and after the Corona period. “The warehouses were full, but the goods could not flow out because the shops were closed.” Because supply chains didn’t work, Christmas goods didn’t arrive until January.
Consumers are spending less money on furniture and decoration
According to Gries, the general conditions have changed for retailers. Raw material prices, additional costs, container rates and rents have risen sharply. The freight costs would have increased tenfold within six months. It is hardly possible to operate the current business model profitably. However, Gries also admits management errors. “We realized too late that many customers were changing their purchasing behavior due to high inflation.”
The furnishings retail sector is particularly suffering from the poor consumer mood. Many households are reluctant to purchase durable consumer goods, says Sabine Frühwald, consumer expert at market researcher Consumer Panel Services GfK. The number of buyer households fell by one million compared to 2019. The sales of furniture retailers in the first half of 2024 were almost 14 percent lower than before Corona.
These well-known companies have filed for bankruptcy
esprit
The fashion group Esprit is finally closing its branches in Germany. This is the sad result of the insolvency proceedings, as the DPA news agency reports. In May, the company filed for bankruptcy for its European operations. At that time it was said that there were discussions with an investor, but that the branches would only remain open “until further notice”. Almost three months later it is clear: all remaining 56 branches will finally close by the end of the year. This cost around 1,300 employees their jobs. Things didn’t look good for the branches right from the start, after all, it was the second insolvency procedure in Germany in just four years. In 2020, the group had already closed 50 branches – and laid off a third of the workforce. However, Esprit fashion will continue to exist, according to the plan of the new owner, the British financial investor Alteri. Esprit is active in around 40 countries worldwide and has its headquarters in Ratingen and Hong Kong.
© Schoening / Imago Images
Depot and other retailers also lost market share to rapidly expanding non-food discounters such as Action. Further competition has emerged online – through portals such as the Chinese marketplace Temu. This online competition has strong competitive advantages, complains Gries. “We comply with the standards and have our own departments for quality assurance and supply chain law. When we sell a table, we have to prove in which region the tree was felled.”
There are also fewer depot branches in Austria
What does Gries want to do differently in the future? “We have to get better, stand out with a surprising product and price mix and offer more experiential shopping again.” They would like to continue the “Rooms” concept, in which small depot shops are integrated into larger areas of other retailers: almost 150 of them in Rewe, Toom and Edeka stores will remain. Others, such as Kaufland, were closed.
According to its own information, the company generated sales of around 390 million euros last year. Gries did not provide current figures for profit or loss. Depot also does business in German-speaking countries. In Austria, the branch network was reduced from 49 to 29 this year, also as a result of bankruptcy. In Switzerland there are 34.
The trading company Migros acquired a majority stake in GDC in 2012. After that, the decoration chain expanded significantly. At times there were more than 500 branches. In 2019, Gries bought the company back completely. He has been managing director again this year.
DPA
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Source: Stern
