The bankruptcy of the German catalog sales giant will ruin many
As Expert notes, crisis manager Klaus Hubert Görg tried until the end to find investors for the concern's divisions. The manager hoped that the August dismissal of 3,500 of Quelle's 10,000 employees had sufficiently healed the company to attract investor interest. But by the beginning of last week, it became clear that Quelle could not be sold off.
Now the company – the leader of the German catalog sales market (turnover 2.84 billion euros, followed by Weltbild and Otto with 1.94 and 1.71 billion euros respectively) is selling off warehouse leftovers and closing down. In the coming weeks, 18 million units of goods from Quelle's warehouses are to be sold – the company's website is already unable to cope with the influx of visitors wanting to take part in the sale. After Quelle's bankruptcy, about 7,000 people will lose their jobs at once – for the first few months they will be transferred to 'transition companies' where they will receive reduced pay, and then they will have to find new jobs.
The bankruptcy of Quelle is a powerful blow to the crisis management process of the Arcandor concern (which unites the Karstadt department store chain, the Thomas Cook travel company, and the Primondo trading company, which in turn consists of Quelle, the Baby Waltz children's goods store, the HSE24 home shopping channel, and the HessNatur organic goods company). The concern, which employs nearly 90,000 people, has experienced difficulties in recent years. Starting in spring of this year, the concern's problems, which failed to adapt to the emergence of online commerce, were exacerbated by the global crisis. Attempts to obtain emergency loans from the state, ongoing since June, have failed.
Today, the only companies within the concern that have a chance of finding new investors are Baby Waltz and Thomas Cook. Difficult negotiations are also underway regarding the fate of Karstadt, which provides jobs for 30,000 employees. The other companies in Arcandor are likely to face bankruptcy.
The closure of Quelle will also painfully affect related companies. Deutsche Post alone will lose orders that brought the postal service 1 billion euros in revenue per year. The Deutsche Post subsidiary, courier service DHL, will have to lay off 400 employees and close three of its branches – in Bochum, Lehrte, and Nuremberg – which exclusively handled Quelle orders. Quelle will also close two call centers, in Berlin and Cottbus, employing 3,000 people. The Swedish concern Electrolux will also lose a significant volume of orders; it produced most of the household appliances under the Privileg brand for Quelle, which were then distributed through Quelle. The disappearance of the Privileg brand will be bad news for Quelle's customers. Under German law, the bankruptcy of a trademark owner means that warranty obligations for product repairs are no longer fulfilled. Thus, millions of customers lose the right to free repair of Privileg appliances.
Serious problems will also arise for the authorities of the city of Fürth, located near Nuremberg – there was the headquarters and main warehouse of Quelle. The unemployment rate in the city could rise from the current 8% to 12-14%, as it already was in the mid-1990s when mass layoffs occurred at the Grundig company in Fürth.
The liquidation of Quelle is the first major bankruptcy on the German market to occur after the parliamentary elections. The mass layoffs following this bankruptcy will pose a serious challenge to the yet-to-be-formed coalition of the conservative CDU/CSU and the FDP.
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