Shop Talk

Retailers, consumers and prices

It’s deja vu at Arcandor, but this time the lifeline slipped

June 9, 2009

arcandor-ceoIt’s deja vu at Arcandor. Five years ago, the company was still called KarstadtQuelle and it was on the brink of insolvency. It took a dramatic last-minute rescue to save the company. Today, it finally filed for insolvency.

In 2004, the company said part of the problem was that there were not enough customers at its department stores, or at least those that were there were not spending enough. And consumers were not ordering enough goods from its hefty mail-order catalogs, Quelle and Neckermann.

This year, there are still “huge problem areas” Chief Executive Karl-Gerhard Eick said to shareholders last month. The company has changed its name, sold dozens of stores, dumped real estate, revamped its stores and tried to win more online customers for mail-order.

But here we are again. Fresh live TV spots with company representatives telling us how dire the situation is.  Same image, different year.  Not enough spending at its 120 stores, which sit squarely in the main shopping districts of German city centers.  So far, the company has been trying to lure more consumers by trading up and offering more premium brands and getting customers to spend more than they’d planned to when they walked into the store.  It has spent 3.1 billion euros on restructuring, with little to show for it.

Now that Metro is pushing to take over Arcandor’s stores, the company’s agony could finally come to an end.

(Reuters photo of Arcandor CEO Karl-Gerhard Eick)

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