BERLIN (BLOOMBERG) – Europe’s retail crisis deepened as companies in the UK and Germany are set to cut thousands of jobs as online shopping accelerates the erosion of sales from traditional bricks-and-mortar stores.
Tesco, the biggest UK grocer, will eliminate about 15,000 positions and close meat, fish and delicatessen counters, the Mail on Sunday (Jan 27) reported, citing unidentified industry sources. Galeria Kaufhof, which has department stores in cities including Berlin and Munich, will cut about 2,600 jobs, it said on Friday – the same day that German fashion chain Gerry Weber International AG began insolvency proceedings. They join a growing list of European retailers that have collapsed amid ever tougher online competition.
The shift to internet shopping, slowing economic growth and insecurity in the UK over the country’s exit from the European Union are eating into traditional retail sales.
In the UK, there is concern over the future of retailers such as Debenhams Plc, which is in talks with lenders as it faces at least £300 million of debt coming due starting next year. The UK’s shopping districts have already been decimated by a series of collapses, including the company behind cake chain Patisserie Valerie, which is seeking a buyer. Sports Direct International Plc Chief Executive Officer Mike Ashley rescued department-store chain House of Fraser last year.
Tesco’s job cuts will probably affect the majority of its 732 larger stores, according to the Mail on Sunday. The retailer will also overhaul in-store bakeries, and replace staff canteens with vending machines, the newspaper said. Tesco declined to comment on the size of cuts outlined in the Mail on Sunday report.
In Germany, local politicians have warned that inner cities may turn into wastelands if the bricks-and-mortar onslaught continues. Galeria Kaufhof needs comprehensive restructuring to cut costs, parent company Karstadt Warenhaus said on Friday. Gerry Weber, which operates more than 1,200 stores in 60 countries, had reported its first full-year loss before interest and taxes in almost three decades in October.
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