German Retail Giants Toppled
Monday, August 31st, 2009“Eick is being rewarded for a task that he did not fulfill!” is the complaint from labor-council chairman Ernst Sindel featured prominently in a new article in Die Zeit by David C. Lerch over the bankruptcy of German retail-giant Arcandor. Welcome to the Anglo-American business culture, Herr Sindel! Isn’t that something that Germans have always been striving to emulate? Well, now you’ve arrived, complete with around 38,000 company employees about to lose their jobs and unsure about where their next paychecks will come from, while Arcandor’s CEO (one Karl-Gerhard Eick) also loses his job but receives a €15 million “golden handshake” to help ease his transition. At least that money will not come directly out of Arcandor’s empty coffers, but rather from those of the private bank Sal. Oppenheim, the bankrupt concern’s majority shareholder.
Money for nothin’ and your chicks for free: that peculiarity has now also reached Deutschland, although at least – thank Goodness – there it does not (yet) involve financial institutions or taxpayer monies. But Arcandor’s plight typifies the way the German economy has been hit hard by the Great Recession, since that business-speak, focus-grouped moniker dates back only to March, 2007, and encompasses two more-serious names, venerable pillars of (West) Germany’s post-war retail world, namely the ubiquitous department-store chain Karstadt and the mail-order house Quelle. Karstadt, in particular, is like Sears in America: every city and town has had one for decades on end, so that you could never even imagine life without it (although, for that matter, Sears has itself been suffering financially for rather a long time now). In another way it is like Macy’s: just like that department-store chain’s world-famous flagship store in New York City’s Herald Square, Karstadt itself boasts of the renowned KaDeWe (Kaufhaus des Westens) in the center of former West Berlin, a gigantic and opulent department store in its own right and the very symbol of Germany’s 1950s-60s era Wirtschaftswunder.
The exact occasion for Lerch’s article is not the sudden discovery of Eick’s generous “golden parachute,” but rather the fact that the three-month “freezing” period, mandated by German law, after Arcandor filed for bankruptcy on June 9 is shortly to come to an end. This means that it will soon be time to liquidate Arcandor, erase that particular business-speak, focus-grouped name from the official business-register, and find buyers for the firm’s component-pieces (or for pieces of those component-pieces, if necessary). Surely someone will be willing to purchase jewel-in-the-crown KaDeWe! It also seems that another big German retailer, Metro, is willing to take up most of Karstadt’s stores to fuse with its own Kaufhof chain. But the mail-order concern Quelle might have a harder time finding a buyer. No interested parties have stepped forward as of yet, and you’d be excused for suspecting that such a business-model might be somewhat outdated, unless it can re-make itself more along the lines of Amazon (which itself certainly already has a robust presence in Germany).
