Galeries Lafayette closes Berlin branch, German and French department stores face transformation
2024-08-20
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Walking into the French Galeries Lafayette on Friedrichstrasse in Berlin, the shelves were once filled with glittering luxury goods, but now everything is over. On July 31, the Galeries Lafayette in Berlin announced its closure after its last business day.
Image source: Internet
The Galeries Lafayette in Berlin covers an area of 8,000 square meters and attracts customers from all over the world every day. Busch Petersen, a Berlin retail industry representative with more than 30 years of work experience, recalled that when the store opened in February 1996, the temperature was close to zero and it was raining and snowing, but thousands of people still flocked to the store.
On its tenth anniversary in 2006, Galeries Lafayette Berlin achieved sales of 20 million euros, a figure that doubled again in 2014. However, this positive trend then declined: from 2014 onwards, sales began to decline, and in 2020 sales fell below 20 million euros, even worse than in 2006.
Galeries Lafayette is not the only luxury department store that is "going bankrupt". In January this year, after years of losses, KaDeWe, a department store with a history of over 100 years, filed for bankruptcy. KaDeWe has a sales area of about 60,000 square meters and is one of the largest department stores in Europe. The bankruptcy of this department store is a true reflection of the fact that the concept of department stores is outdated.
But this is not the case for luxury goods themselves. "Luxury goods are extremely resistant to crises," said Yasin Maloglu of management consulting firm Marktlink. A report released by data platform Statista shows that even in 2022 and 2023, which were plagued by crises and inflation, German luxury sales increased by 9% and 23% respectively, of which about 80% of sales came from physical stores.
But department stores only get a small part of it. According to a 2020 survey by Statista, only 7% of respondents said they had bought luxury goods in department stores in the past three years. In Maloglu's view, this is mainly due to the uniqueness of the luxury industry: wealthier customers prefer to shop in luxury stores. The dependence of large luxury brands on luxury department stores is decreasing year by year.
In France, many department stores are also in trouble. Due to financial problems, 26 Galeries Lafayette franchised department stores in medium-sized cities in France are also facing the crisis of closing. In March, the Galeries Lafayette Group approved a rescue plan to forgive 70% of the huge debts of these franchisees. At the same time, the real estate company of Galeries Lafayette is upgrading and renovating department stores in major cities such as Marseille and Paris, with the goal of turning aging department stores into real leisure destinations.
However, thanks to the shopping enthusiasm of foreign tourists, the elegant Le Bon Marché department store on the left bank of the Seine and the Galeries Lafayette headquarters on Boulevard Haussmann are still doing good business.
Special Contributor Li Yijin
