What: Fashion United reviews what’s ahead of Galeria Kardstadt Kaufhof now that it is being acquired by a US fund.

Why it is important: the department store chain will not survive in its current form, and drastic changes are to be expected.

Galeria Karstadt Kaufhof is set to emphasize beauty products, handbags, shoes, and underwear in its product assortment, aiming to stand out in the competitive retail market. Managing director Olivier Van den Bossche highlighted this strategic focus alongside the leveraging of the industry knowledge of new co-owner Bernd Beetz, former head of Coty. The department store chain, under the new ownership of a consortium including NRDC and BB Kapital SA, is poised for significant transformations with plans for extensive shop modernizations.

The modernization effort addresses longstanding property deterioration and updates only ten of their stores to date, with the remaining requiring significant investment estimated at over one billion euros. The financial strategy includes shifting more towards a concession model, reducing inventory and logistics overhead by allowing brands to manage their in-store presence.

This shift comes amidst broader skepticism about the relevance of traditional department stores in the era of online retail giants like Amazon. However, retail experts see potential for Galeria by focusing on curated product selections and enhancing customer service. The strategy also involves a lesser focus on the online market, as expressed by Beetz, who has a strong belief in the physical store experience and brand presentation.

The store's restructuring plan is pending creditor approval, with a court decision expected by the end of May, aiming for a transfer of ownership by the end of July.

Department store chain Galeria Karstadt Kaufhof to change its name upon backing of US investor