MWith Peek & Cloppenburg, a traditional name has once again entered into self-administered insolvency proceedings in order to restructure itself. The fashion house from Düsseldorf joins an illustrious circle: Adler Modemärkte, Escada, Esprit, Orsay, Sinn are the names of previous cases from the clothing industry that have gotten into trouble in recent years. Salamander and most recently Görtz from the shoe trade are added, and then there is the long-term patient Galeria, the ailing department store chain, which is currently going through its second protective shield procedure in a short time.
The external circumstances and how they affect the business have the retailers in common: After the hardships of the Corona crisis, when their shops had to remain closed by order of the authorities, high inflation and the uncertainty caused by the war in Ukraine are currently having a full impact. Many potential customers keep their money together or otherwise spend it on things that they missed more than shopping, vacations, for example.
How attractive is the city still?
The lack of attractiveness of the city centers is also repeatedly mentioned as a threat to retail, a mutually reinforcing effect: shops remain empty or move out, which in turn weakens the attractiveness. In addition, in the fight against climate change, cities and municipalities are increasingly banning cars from the city center without being able to offer any reasonable public transport services. The result: Quite a few dealers complain about the car-phobia of the cities, many customers do not live in the metropolitan area and shy away from expensive trips into the city if the package is delivered to the front door.
However, it is also true that it is never just the external influences that have brought dealers into trouble. At best, these increase the misery of a brand that is already under pressure. After all, there are enough retailers who can hold their own with all the difficulties of inner cities because they know their target group well, address them and lure them there. The Cologne-based jewelry retailer Icrush, for example, was small and locally oriented until the pandemic, but then consistently expanded its online business and addressed customers every evening with live streams on Instagram. Marketing with influencers is now part of the standard kit of almost all retailers.
Of course, this works better with some brands than with others, which also has to do with reputation – traditional companies sometimes have a harder time despite their reputation. Icrush now has stores in main shopping streets in Cologne, Munich and Frankfurt, but continues to use social media as a sales channel.
Those who shop stationary also want advice
Other stores are doing well because they offer a shopping experience that has advantages over online shops, be it through special advice or a certain exclusivity – which, by the way, doesn’t necessarily have to be luxury. Of course, the discount and luxury segments benefit more in times of crisis, because some have to pay particular attention to money, while others are less affected by the worries. The price classes in the middle segment then come under more pressure.
But the same applies here: That alone does not completely destroy a business, there are also home-made difficulties. Department store chains such as La Rinascente in Italy, which is owned by a Thai investor but has built up a local department store experience at the respective locations with different, separate brand appearances in the store, show how it can be done better, which Galeria can only dream of. Also in terms of customer loyalty. Breuninger from Stuttgart is a similar case. The fashion house has so far managed very comfortably through the crisis, which is also due to the fact that it is also consistently present in online retail and has built up market shares there when the shops were closed.
The imbalance of the big names like P&C in Düsseldorf and Galeria is also due to management errors. Bosses changed constantly, online strategies were not consistent. However, indolence, which stems from the self-image of “we are well known”, also contributed to the crisis. Their size and importance for suppliers, landlords and cities now give P&C and Galeria a certain bargaining chip in the debt relief. But that’s not a business model for the future.