Low-cost depot undergoing transformation, adopting strategies from Chinese budget manufacturers
Decor Retail Chain Depot Undergoes Significant Restructuring, Half of Stores Closed
Following a challenging period, decor retail chain Depot is undergoing a substantial reorganization, with approximately half of its stores in Germany closing and a dramatic change in strategy. The decade-old company, once envisioning a thousand European stores and billions in turnover, has seen a drastic shift in its operations.
CEO Christian Gries reports the transformation as part of a quest to create a healthier, more enjoyable company rather than focusing on size and revenue. As a result, 158 of the previous 328 stores in Germany have closed within a ten-month span, far exceeding initial projections. Similarly, Depot has exited Austria and Switzerland entirely.
This restructuring, initiated under self-administrated insolvency last summer, initially involved closing 43 stores by year-end 2024, followed by an additional closure of a similar number in the first quarter of 2025. The pace of closures has since accelerated, with more stores shutting in April and May. In the end, 170 lease agreements were transferred to the new company.
Gries aims to rejuvenate the Depot brand through product range changes and a stronger emphasis on shop-in-shop concepts. He announced a shift in focus from decoration to encompassing a broader range of home-related products, including specialty groceries and unique event trips. Gries has also engaged in discussions with potential partners to execute this vision.
To drive innovation and remain competitive, Depot has forged a joint venture with a Chinese supplier. This collaboration will enhance the speed at which trends are identified, products developed, and delivered using technology tools and artificial intelligence. Depot acknowledges past complacency and lack of innovation, as it took up to 12 months from the initial idea to product availability.
The retailer anticipates a shift in sales model, offering new products online in a matter of weeks while maintaining traditional slow-moving seasonal items in stores. Gries confirmed small quantities would be delivered directly to customers or stores via air freight from China. Successful products would then be produced on a larger scale for the European market.
Budget providers such as Temu, Shein, and AliExpress, who have been hurting the chain and poaching customers, have served as inspiration for Depot's new business strategy. In addition to faster innovation, the family-owned company will also leverage a new basic collection of simple, low-priced items to attract more customers.
Gries admits the decline of Depot was not exclusively due to external factors or competition but also attributed internal errors, including complex structures, a sluggish organization, and high costs. To turn things around, Depot filed for a protective shield procedure in Aschaffenburg, Germany, last July, preserving the management's role and enabling it to extraordinary terminate contracts with landlords and others.
Some observers question whether this restructuring effort will ultimately be enough to secure Depot's long-term survival. Economist Gerrit Heinemann describes the home decor theme as "thoroughly squeezed" and doubts its ability to generate sufficient revenue in today's market. Despite these concerns, Christian Gries maintains that customer surveys indicate a strong demand for the Depot brand and that potential trading partners have expressed interest in the shop-in-shop concept.
In an effort to focus on a healthier and more enjoyable company structure, Depot's CEO, Christian Gries, has initiated a significant restructuring process that involves not only a change in strategy but also the closure of approximately half of its stores in Germany. In the realm of finance and business, this restructuring is part of a larger shift, with Depot focusing on a broader range of home-related products and entering into a joint venture with a Chinese supplier for faster innovation in product development.
