BONN, Germany, May 28, 2015 /PRNewswire/ --
The looming takeover battle for Germany's beleaguered Kaufhof department store
chain carries the risk of a "Walmart disaster revisited" should the
department store chain fall into foreign hands, a leading retail
expert has warned.
Professor Thomas Roeb, of the
Hochschule Bonn-Rhein-Sieg, was referring to Walmart's failed foray
into German retail. The U.S. giant bought into the German market in
1997 but failed to transfer its know-how to its newly acquired
subsidiary. The nine-year attempt to restructure the German
operations led to losses of an estimated 2.9
billion Euros and forced Walmart out of the market.
"Given the decline of the department store model, Kaufhof is a
high-risk investment for any prospective buyer," Professor Roeb
said Thursday.
"But history tells us it is particularly difficult for foreign
companies that have historically struggled to understand the German
consumer and the nuances of the German market," he added, citing,
in addition to Walmart, the failure of Britain's Marks and Spencer, which closed its
last store in Germany in 2001
after five years of trying to set up a viable business.
The battle for Kaufhof is expected to be between Austria's real estate and retail company
Signa, the owners of German department store rival Karstadt, which
has bid 2.9 billion euros
($3.2 billion), and Canada's Hudson's Bay, whose rival bid is
believed to be imminent. Signa aims to merge the two chains into a
German department store group called Deutsche Warenhaus AG.
Professor Roeb, who has worked in and for German retailing as a
professor and consultant for 20 years, said while Signa would
likely have a challenging time turning around Kaufhof, history
shows that Hudson's Bay could face an even harder test.
"Retail is difficult the world over but in Germany price aggressive specialists have
since the 1970s put the generalists under extreme pressure," he
said.
"You can't just enter a foreign market like this one and expect
to succeed and I think Kaufhof, under Hudson's Bay, risks becoming
Walmart 2.0."
For the past decade German department stores have suffered at
the hands of smaller speciality shops - especially in the area of
clothing - while fast fashion specialists like Sweden's H&M or more recently,
Ireland's Primark, have flourished
at their expense.