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- While numerous retail companies suffer billions in losses and have to close branches during the pandemic, some retailers are defying the crisis.
- As the magazine “Wirtschaftswoche” reports, discounters such as Kik, Tedi or Decathlon in particular benefit from the weakness of the competition and open new locations.
- Because of the numerous branch closings of Galeria Karstadt Kaufhof and Co., numerous properties are now vacant.
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Classic retail is actually past its prime. More and more brick-and-mortar stores are closing, experts have been warning about this for years Desolation of the inner cities. Galeria Karstadt Kaufhof has to close 56 branches, the Mediamarkt-Saturn Group gives up 14 stores and Esprit is closing every second location in Germany. While one bad news chases the next in the Corona crisis, one group of retailers seems to be profiting from the other’s crisis: Cheap stores like Kik, Woolworth or Tedi are attacking and want to open hundreds of new locations, despite the pandemic. This is what the magazine “Wirtschaftswoche” reports.
The weak moment of traditional retailers as well as entire segments such as the fashion industry helps them. For many years there was a fight for the best locations in the city centers, now more and more shops are empty. When the upcoming store closings – the HDE trade association expects around 50,000 – to open up even more stores, the discounters will be ready.
As Thomas Beyerle from the real estate consultancy Catella told Wirtschaftswoche, other retail formats would take advantage of the crisis and expand, including the large grocery stores, drugstore chains and organic supermarkets, but also sports discounters and furniture stores. As the business magazine further reports, three types of retailers in particular are defying the crisis: cheap markets like Kodi, which benefit from a recession because consumers have to save; Dealers with solvent owners such as the furniture store chain Dänisches Bettenlager, who take advantage of falling rents and want to expand their business; Retail chains that have experienced a boom in demand during the corona pandemic, such as organic supermarkets.
Discounters benefit from the weakness of the competition
Especially those retailers who focus on the price point as the most important purchase criterion grow during the crisis. The household goods discounter Kodi, for example, operates around 250 branches in Germany. “In 2021 we will multiply the number of new store openings,” the company’s marketing director announced to “Wirtschaftswoche”.
And the Kodi rival Tedi also wants to inaugurate 150 new shops in the current financial year, and another 150 are planned for 2021, writes the business magazine. Even the textile discounter Kik continues to expand, although the global clothing industry is suffering extremely during the crisis. “Our goal is to open around 200 new store openings in Europe every year,” the company told Wirtschaftswoche.
More and more properties are becoming available
The example of Woolworth shows that the low-cost providers are benefiting from the crisis facing other retailers in their growth plans. The search for suitable real estate is currently much easier, as many shops are becoming available that were previously too expensive, admitted a company representative to the “Wirtschaftswoche”. “Woolworth is in fact benefiting from the plight in retail,” the magazine quotes the company as saying. The small department store chain wants to double its branch network in Germany in the coming years from around 430 to up to 800 stores, with up to 40 branches to be added in 2019 alone.
In the sports segment, too, a giant discounter is getting through the crisis well: Decathlon. With its large markets, the French sports discounter is likely to be particularly interested in large-scale properties, which have now become vacant due to several branch closings in department store chains such as Galeria Karstadt Kaufhof. “Since the national shutdown, we have received many real estate offers every day,” Decathlon told the business magazine. So far, the company operates 83 stores in Germany, four more and a logistics center will follow this year.
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