Deutsche Post: targeting the mail-order market
The agreement between the troubled German retail giant KarstadtQuelle and Deutsche Post will see the express and logistics unit DHL taking over parts of the logistics operations of the retailer beginning in April. For Deutsche Post the new acquisition represents an opportunity to expand its market share in the growing German mail order sector.
KarstadtQuelle, the German department store operator, announced the agreement with Deutsche Post [DPW.F] following the green light from the German antitrust authorities. Although financial details were not disclosed, it is believed the logistics operation generates over E1.1 billion in annual sales. As part of the deal, DHL will take over KarstadtQuelle’s central warehouse in Unna, western Germany, the industry centers in Essen-Vogelheim and Brieselang, and a number of regional logistics centers, as well as part of Karstadt’s existing logistics business, Optimus.
Likewise the bulky goods and part-load operation (for example TV sets and furniture) of the mail-order suppliers Quelle and Neckermann will be run by DHL Solutions in future.
The sale of the logistics activities forms part of KarstadtQuelle’s efforts to restructure its struggling operations. The company has embarked on a massive restructuring plan to pull itself out of the red, including the loss of 5,700 jobs from a total workforce of 100,000. KarstadtQuelle Versand, the group’s shipping and logistics business, is highly attractive for a number of reasons. The division is one of the leading players in the German mail-order market, with some 30% market share, and also occupies a leading position in Europe. KarstadtQuelle mail-order suppliers are well positioned in 22 countries and have been growing internationally in the past few years.
For DHL it was an obvious target. The B2C sector for express and courier deliveries is growing across Europe, and in Germany the market is currently valued at an estimated E2.3 billion according to Datamonitor. This makes it the largest B2C express and courier market in Europe. Although DHL, via its parent company Deutsche Post, already has the biggest share of the market, the company faces increasing competition, especially from local mail order and logistics company Hermes, part of the Otto group, which also showed interest in acquiring parts of KarstadtQuelle. By securing the deal, DHL could increase its coverage of the B2C market in Germany and penetrate the catalogue market via a specialized player in the sector.
