The KaDeWe myth – luxury department stores seek renewal
Published: Monday, Jan 29th 2024, 17:10
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60,000 square meters of shopping space in the middle of Berlin - the equivalent of about eight football pitches of high-quality clothes, shoes, handbags and delicatessen. The size of the "Kaufhaus des Westens" is impressive, and hardly any travel guide can do without the KaDeWe, as it has been known for more than 100 years.
For Berlin, KaDeWe is a place of longing, a symbol of luxury and a place of interest. Even insolvency cannot affect this feeling. Or can it? On Monday, the retailer of the same name, which also owns the Oberpollinger in Munich and the Alsterhaus in Hamburg, announced that it had filed for insolvency.
The aim is to make a fresh start in this way under self-administration. The good news for all customers: The three stores will not close. According to the retail company, the main aim of the insolvency proceedings is to free itself from high rents.
Retail association: KaDeWe "the big diamond"
Because the luxury business is actually doing well. Even at the height of the coronavirus pandemic, luxury brands reported good sales - those who can afford it like to treat themselves. In the 2022/2023 financial year, the KaDeWe Group reported sales of almost 728 million euros, an increase of almost 24% compared to the pre-coronavirus 2018/2019 financial year.
"KaDeWe is the jewel in the crown of German retail and will always remain so," enthused Nils Busch-Petersen from the Berlin-Brandenburg Retail Association. The insolvency proceedings now give the company the opportunity to put its connections and contracts to the test.
Rents in particular have become a burden for the department stores. Compared to the 2018/19 period, they have risen by almost 37 percent, the KaDeWe Group explained on Monday. "The sales rent burden is high at all locations, highest in Munich at around 20 percent," estimated Johannes Berentzen from retail consultancy BBE. "We estimate the Alsterhaus at around 17 percent - that would also be far too high. KaDeWe is still in the best position with a rent burden of around 13 percent of sales."
KaDeWe a purely Thai company in future?
Berentzen now expects the Central Group to attempt to secure the entire shares in the KaDeWe Group and the properties. The Thai Central Group, founded in 1947, currently holds 50.01 percent of The KaDeWe Group GmbH. The remaining shares are owned by Austrian René Benko's Signa, which has run into difficulties.
The Central Group is a conglomerate owned by the Chirathivat family, one of the richest families in Thailand. Forbes estimated their assets at 12.4 billion dollars in 2023. Based in Bangkok, the group is mainly active in the retail, hotel and restaurant sectors and operates supermarkets and department store chains, among others.
In addition to its shares in department stores in Germany, the Central Group also has stakes in La Rinascente in Italy, Selfridges in the UK and Globus in Switzerland, among others. Now boss Tos Chirathivat (59) has the opportunity to acquire all the shares in KaDeWe.
Delicatessen department with 35,000 products
This would probably make it one of the few department stores to have its own TV series dedicated to it - a good two years ago, ARD placed a lesbian love story between the clothes rails in the 1920s KaDeWe. It is just one of the chapters that made KaDeWe a flagship store.
The delicatessen department on the sixth floor is particularly popular with tourists and Berliners. Between luxury classics such as oysters, lobster, caviar and champagne, there are also unusual specialties. A delight for the senses, but not for the wallet.
The "Kaufhaus des Westens" is much older than the Cold War that its name sounds like. When it opened on March 27, 1907, Tauentzienstrasse and the department store designed by Emil Jaudt were located in an upper middle-class residential area, away from the shopping mile at Potsdamer Platz.
However, founder Adolf Jandorf suspected that the nearby Kurfürstendamm would become a shopping destination. The KaDeWe quickly became a destination for family outings. Strollers bustled in front of the building. "A boulevard for flirtatious little backfish," wrote chronicler Leo Colze in 1908 about the area on Wittenbergplatz. "The cosmopolitan air blows here".
6.50 meter high giant cake for the 100th anniversary
The KaDeWe is also a piece of German history. In 1927, Jandorf sold it to the Jewish merchant family Hermann Tietz. During the Nazi era, the owners were ousted from the management and the merchant family's name was changed to "Hertie". In 1943, an American plane crashed into the KaDeWe and the building lay in ruins.
The new beginning came in 1950, and in the Adenauer era the department store became a symbol of consumption and purchasing power. To celebrate its 100th birthday in March 2007, Berliners stormed the store and took pieces of a giant 6.50-metre-high cake.
A lot has happened at KaDeWe since the 100th anniversary. Most recently, in 2016, the department store underwent years of renovation at a cost of tens of millions of euros - the relaunch was then celebrated with plenty of bubbly. Conceptually, the department store is therefore up to date. A few months ago, it was announced that Galeries Lafayette will be leaving Berlin at the end of 2024. One less luxury competitor - that shouldn't have been bad news for KaDeWe.
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