Galeria Kaufhof is the market leader in the department store segment in Germany and Belgium. The sales line is positioned as a modern retail brand and as a competent multichannel retailer with an unmistakable profile. Its stores are characterised by high-quality, international product ranges. They comprise both well-known manufacturer brands and high-quality own brands. The department stores, which have between 7,000 and 35,000 square metres of selling space, are generally located in prime city centre locations. In Germany, Galeria Kaufhof operates 105 department stores under the names Galeria Kaufhof and Kaufhof as well as 17 sporting goods stores under the names Sportarena and Wanderzeit. In Belgium, the sales line operates 15 stores under the name Galeria Inno. The service company Dinea operates the restaurant section in around 60 department stores in Germany.
New company structure
In financial year 2013/14, our Galeria Kaufhof sales line was given a new corporate structure. The reason for this change was the dissolution of the real estate segment of METRO AG as of 1 October 2013 and the integration of operational activities into the respective sales lines. As a subsidiary of METRO AG, Galeria Holding GmbH now comprises the operational department store business and the real estate portfolio. Three subsidiaries operate under its umbrella: Galeria Kaufhof GmbH continues to run the operational department store business with all subsidiaries that are part of it. Galeria Immobilienservice GmbH serves, among other things, as the property service provider and as an interim tenant between Galeria Kaufhof GmbH and the real estate companies. Galeria Real Estate Holding GmbH is responsible for the strategic management of the real estate portfolio.
The core strategy: multichannel
The goal of Galeria Kaufhof is to become Europe’s leading multichannel department store. In particular, the company sees growth opportunities in the systematic dovetailing of its outlet and online business; that is, the integrated use of stationary and digital sales channels for customer assistance and sales. In the reporting period, Galeria Kaufhof pushed ahead with its effort to link its online channel, galeria.de, with its store network: in the summer of 2014, our sales line began to use approximately 1,100 tablets in its German stores. In more than 1,000 training sessions, all employees were taught how to use the tablets. The mobile computers give users access to the inventories of all department stores and to galeria.de. With this new service, the stores provide access to products that they do not have in stock or that are not part of their normal lines. The selected articles can be sent either to the address provided by the customer or to the local store. About 160,000 items are currently available in the online shop galeria.de. This product range will be gradually expanded. Our sales line is bolstering its competitive position by closely linking its online channel with its stationary retail network. At the same time, Galeria Kaufhof is creating added value for its customers. They can now experience the Galeria Kaufhof brand on all channels: conveniently at home, on their smartphone or as a shopping experience at the store. In financial year 2013/14, online sales generated by Galeria Kaufhof totalled about €63 million. This amounted to an increase of 64 per cent compared with 2012/13. The aim is for the sales line’s online operation to produce about 10 per cent of total sales in about three years.
Localisation process advances
During the reporting period, Galeria Kaufhof remodelled five stores – without interrupting business. The aim of this refurbishment was to give the department stores an appealing new look and to create a new atmosphere. In addition, the assortment was tailored to meet local needs. After all, the relationship among customers, the local market and local competitors varies from store to store. Customer needs always guide this work – for each business area. By carrying out this localisation process, our sales line is producing added value for its customers and can tap additional potential at its stores.
Regular analyses ensure that Galeria Kaufhof can quickly respond to changes in the local competitive environment or the local market situation at an early stage. Based on such research, our sales line decided in 2013 to close the department stores located in Düsseldorf Berliner Allee (late 2014), Augsburg (mid-2015) and Heilbronn Am Wollhaus (late 2015). These department stores offered no business or strategic potential for profitable operation in the long term. During the reporting period, work began to develop socially fair solutions for affected employees.
In Belgium, Galeria Inno will open a new store in the fashion city of Hasselt in the province of Limburg in November 2014. The department store, which has a prime location in the city centre, has more than 8,000 square metres of selling space. With this new department store, the number of Galeria Inno outlets that the company operates in all major cities across Belgium has risen to 16.
Website for Chinese customers
With a new Chinese-language website, the sales line has underscored its strong customer orientation. The company launched the website galeria.cn at the beginning of August 2014. At this site, customers in China can learn about the company, its brands and its outlets as well as about special services for international customers before they travel to Germany. Thanks to a tax-free service, customers can easily and conveniently receive a VAT refund for their purchases. Chinese visitors are customers with substantial purchasing power. In the reporting period, tax-free sales generated by Chinese customers at Galeria Kaufhof in Germany rose by 23 per cent compared with the previous year.
An event-filled anniversary year
In 2014, our Galeria Kaufhof sales division celebrated its 135th anniversary. With the opening of a small textile shop in Stralsund, the businessman Leonhard Tietz laid the foundation for the company on 14 August 1879. At the time, a department store was an innovation. Unique features included the availability of many different products under one roof, the opening of the store to any customer, set prices and cash sales.
Under the slogan of “Wir feiern unser Jubiläumsjahr” (We are celebrating our anniversary), Galeria Kaufhof surprised its customers across Germany with numerous events and special deals. Some stores, for instance, offered huge anniversary cakes and the proceeds from the sales of these treats were donated to charities. For eight traditional stores, our sales line created a touring exhibition that took viewers on an entertaining and interactive journey through the 135 years of the company’s history.