Hamburg (dpa) – Galeria Karstadt, Kaufhof, Esprit, Hallhuber or Bonita: the list of fashion retailers that stalled this year and had to go through insolvency proceedings is long.
The corona pandemic hit the industry, which was already hit by the triumph of online retail, like a tsunami. And there’s probably no quick improvement in sight. Credit insurer Euler Hermes expects more bankruptcies in the coming months.
Above all, the low-turnover “bitter cucumber season” from January to March will be a litmus test for some companies, said the head of the German credit insurer, Ron van het Hof, the German news agency. “Only those who can now at least put a little mattress on the Christmas business will be able to stay afloat until the spring business.”
But that is exactly what will be nearly impossible for many retailers in the pedestrianized areas of city centers this year. Because Corona and the partial closure imposed for November ensure that city centers are empty of the all-important Christmas business of all things. The number of visitors to shopping streets had already dropped significantly in the last weeks of October, according to the Hystreet company, which specializes in measuring customer traffic in city centers.
And the closing of pubs, restaurants, cinemas, theaters and gyms in early November reduced the number of visitors even more. In the early days of the stricter crown rules, stores reported drops in sales of up to 80 percent, reported the president of the Textile Trade Association (BTE), Steffen Jost. Additional bad luck for the industry: The normally high-volume discount day Black Friday on November 27 is likely to enter the partial lockdown phase.
The crisis hits an already weakened industry. In the first nine months of this year, Euler Hermes has already recorded eight large insolvencies in the fashion sector. Compared to the previous year, this was an increase of about 166 percent, the credit insurer emphasized, and that at a time when the default rate in Germany was falling.
The industry has been struggling for years with profound structural change: the rise of discount textile stores like Primark and the triumph of online retail. Many classic textile companies were already in trouble before the pandemic, as the credit insurer emphasized.
This year was then a dark year for the industry. Euler Hermes estimates that textile retailers will lose sales due to the pandemic at around 12 billion euros, almost a fifth of annual sales. The Corona crisis acted as a catalyst and ruthlessly exposed the strengths and weaknesses of individual companies.
Online retail was the main winner from the crisis. And its prospects are also good in 2021, according to Euler Hermes. An online mainstay is currently particularly important for retailers. “Those who had prepared and invested well for structural change prior to the pandemic could benefit from the online boom in the days of Covid,” the industry expert emphasized. Anyone who has missed this trend will have a future hanging by a thread. “So there will still be bankruptcies,” Van het Hof is sure.
Meanwhile, traders are looking for a way to make the most of the difficult situation. The fact that responses to the challenges of the pandemic are vastly different likely only shows how unprecedented the challenges are. Tom Tailor’s boss, Gernot Lenz, for example, gave a clear rejection of the big discount campaigns in the specialized magazine “Textilwirtschaft”: “There will definitely be no massive cuts,” he announced.
Germany’s last major department store chain, Galeria Karstadt Kaufhof, is taking a completely different path. According to his own statements, after the start of the partial blockade, he began “the largest discount campaign in its history.”