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Galeria Karstadt Kaufhof is receiving hundreds of millions of euros in state aid. With the importance of the department store group for town centres as the main argument, although not everyone is convinced.
Anchoring function
The German government wants to support Galeria Karstadt Kaufhof, which made a fresh start in October last year, in the Covid-19 crisis. It is a bridging measure in the form of a subordinated loan of up to 460 million euros. The support is subject to strict terms and conditions. The department store group still has to decide on the proposal, writes Germany’s public broadcaster WDR.
With this support measure, the German federal government wants to safeguard jobs and help the already hard-hit company through the crisis. According to the government, department stores also have an important anchoring function in city centres: they are considered indispensable ‘crowd-pullers’ and their disappearance would also jeopardise the existence of many surrounding shops.
Criticism
Retail expert Hendrik Schröder from the University of Duisburg-Essen is sceptical of the state aid: “How is it that Lufthansa, Tui and now Karstadt Kaufhof receive such loans, while other smaller and medium-sized retailers are left empty-handed or have to wait for the promised support to reach them?” He also questions the criteria on which such loans are granted. In any case, he does not accept the argument that department stores are indispensable. “The town centres are not dependent on Karstadt Kaufhof.”
Almost four months ago, Galeria Karstadt Kaufhof made a new start after its creditors had agreed to a sweeping rescue plan. In the end, the department store chain closed 40 branches. Around 4,000 employees lost their jobs.
