Giant German retail merger finally greenlit

The giant merger between German department store chains Karstadt and Kaufhof has finally been approved. Authorities cite the enormous (online) competition as a guarantee that this merger will not be too big.

“No problem for consumers or manufacturers”

Germany gets a true retail colossus now that the Bundeskartellamt (German competition authority) has approved the merger of Karstadt and Kaufhof. It does not see any real threat for an open competition, neither from the consumer’s perspective or for manufacturers and suppliers. This is partly due to the enormous online trade, says the Bundeskartellamt.

Not only the Kaufhof and Karstadt department stores unite in the new holding, but also Karstadt’s sportswear stores, outlet chain Saks Off 5th‘s European stores, the Belgian Galeria Inno stores, the recently founded Dutch branch of Hudson’s Bay and a whole series of online retailers. Across Europe, the new retail giant will have 243 outlets and employ 32,000 people.

Last chance saloon

For both behemoths, the merger was a matter of pure necessity: they have been dealing with rising competition from discounters such as Primark and large online players like Amazon and Zalando. Kaufhof in particular is in the last chance saloon: since the takeover by HBC in 2015, turnover has been dropping and the company has been leaking money.

Karstadt has already been through a heavy re-organisation, which has helped to return the company to profitability. Both chains are now hoping to improve their competitive positions through the merger and enforce better purchase conditions from their suppliers. According to industry experts, the scale increase also saves money in terms of administration, logistics and IT.