Shopping in Germany - a new hope?
Fashion is meant to be exciting - and make customers open their wallets. But business has been sluggish for retailers in Germany. Will an old sales concept from the US bring a fresh breeze into the struggling industry?
Stylish, but cheap
What looks like a run-of-the-mill department store has been hailed as "one of the most exciting retail concepts in Europe this year" by a trade magazine. In June, "Saks Off 5th," a US fashion outlet, opened its first German store in Düsseldorf. Designer wear from seasons past is sold "off-price," retail speak for "at a discount."
Models and celebrities...
... attended the opening near the city's Königsallee, a street known for its high-end fashion shops. Wayne Drummond (center), president of "Saks Off 5th" Europe, said the stores were "a new concept for Germany" and could help to "revive inner-city shopping streets." The company has more than 100 shops in the US and plans to open another five in Germany and the Netherlands this summer.
Tradition and change
The first German store is located in a historical building. The facade dates back to 1915, when Jewish entrepreneur Paul Carsch started selling "elegant apparel for men and boys." In 1939, he had to flee Nazi Germany. Horten, another retailer, profited from the disappropriation of Jewish businesses. The name is still emblazoned on the portals, but locals refer to the building as "Carsch House."
Department stores in crisis
In the 1990s, Horten merged with Kaufhof, a department store chain which operates a big shop just around the corner from Carsch House. When Kaufhof fell on hard times, it was picked up by Canadian retailer Hudson's Bay Company in 2015 for 2.8 billion euros ($3.2 billion). The Canadians promised huge investments and fresh ideas for Kaufhof's more than 100 stores.
Buying spree
Two years before the takeover of Kaufhof, Hudson's Bay Company had bought US retailer Saks for $2,9 billion. Saks operates the "Saks Fifth Avenue" luxury stores, but also has experience with off-price outlets. The first "Saks Off 5th" store opened for business in 1990. It is this idea that Hudson's Bay now brings to Germany.
Competitors are all eyes
It's anyone's guess if the combination of upscale store design and discount prices will be successful in Germany. Here, outlet stores are usually found in industrial areas out of town. TK Maxx is present in city centers, but its stores also look cheap. Karstadt, another embattled German retailer, wants to follow the trend and experiment with outlet stores of its own later this year.
Ouch, couch-shopping...
"New concepts such as 'Saks Off 5th' will not bring an increase in overall sales", says Joachim Stumpf, head of retail consultancy BBE in Munich. "Already cut-throat competition in German textile retail will get even tougher." That's bad news for struggling department stores, which have been losing customers for years. They just stay home and shop online.
Big plans, less money
During the next few years, Hudson's Bay plans to open 40 "Saks Off 5th" stores in Germany. A major investment, but the money is tight. The company lost 516 Canadian dollars (360 million euros) last year, mainly because of problems in its off-price segment, which includes "Saks Off 5th." But Hudson's Bay has a long track record of weathering change: It started as a fur trader back in 1670.