The grand German department store, “Ka-de-Wa,” in West Berlin is facing tough times. On the surface, everything seems to be business as usual. Luxury fashion houses and high-end goods are still on display on the ground floor, and shoppers from all over the world come to spend their money. But a closer look reveals that things are not what they seem.
Empty shelves and bare walls are visible on the fashion floors, where some vendors have removed their merchandise. Fancy films block access to most products in the design and home department on the fifth floor, and credit cards are the only accepted form of payment in chocolate shops on the sixth floor. Despite this, it is an open secret that “Kaufhaus des Westens” is in a state of financial turmoil.
Cigna, an Austrian real estate company that has owned the store for over a decade, filed for bankruptcy last year due to a combination of business reasons such as rapid expansion, expensive financing, and mismanagement against the backdrop of a slumping commercial real estate market. This news comes at a time when Germany’s economy is struggling as well. According to recent data published this month, Germany’s economy contracted by 0.5% in 2023. The country is also grappling with rising debt levels and budget deficits.
The extreme right (and radical left) parties are gaining strength in Germany’s polls as they have not been since its establishment in 1949. These parties include the far-right “Alternative to Germany” party and the “Sarah Wagenknecht Alliance,” which split from the “Di Linka” party earlier this year. Together, they won 25% of the vote in recent polls, reflecting public unrest caused by economic hardships.
The department store’s struggles are just one example of how Germany is struggling to survive after two years of pandemic disruption and online trade taking off across Europe while non-German economies have already recovered fully or partially recovered from it . However, according to its manager of business activities, there is hope for “ca-de-va” if normal rent can be maintained.