Zalando's radical transformation into a technological super-platform: The economic deconstruction of the Erfurt location – Image: Xpert.Digital
From flagship project to obsolete model: What the Zalando upheaval means for East Germany as a business location
Between efficiency mania and social drama: When algorithms decide on the lives of 2700 people
The announcement of the closure of the Zalando logistics center in Erfurt by the end of September 2026 represents an economic turning point that extends far beyond the regional borders of Thuringia and must be seen as a symptomatic case study of the radical transformation of the European e-commerce sector. With the planned layoff of approximately 2,700 employees, the DAX-listed company is bringing to a close a chapter that began in 2012 with high hopes for a lasting industrial renaissance in East Germany. However, the company's official explanation—that the closure is a necessary consequence of the realignment of its Europe-wide logistics network following the acquisition of competitor About You—falls short upon closer examination. Rather, it is a complex decision in which technological obsolescence, changing global supply chain strategies, an escalating labor dispute, and the relentless pressure from capital markets to maximize operating margins converge. While Zalando promotes its strategy as an evolution towards a leading pan-European ecosystem for fashion and lifestyle, the closure of Erfurt reveals the downside of this platform economy: the devaluation of physical infrastructure that no longer meets the requirements of fully automated, AI-driven logistics.
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The strategic realignment following the merger with About You
The decisive strategic impetus for restructuring the logistics network was the successful merger of Zalando and About You, completed in 2025. This transaction, in which Zalando acquired over 91 percent of About You's shares for an estimated purchase price of around €1.1 billion, fundamentally altered the competitive landscape in European online fashion retail. The merger created a powerhouse with over 60 million active customers in 29 markets, aiming for a gross merchandise volume (GMV) of over €17 billion. However, the integration of a former major competitor inevitably brings redundancies, particularly in logistics. Following the acquisition, the combined group has a multitude of locations, some of which overlap geographically or exhibit different levels of technological maturity.
The management team, led by Co-CEO Robert Gentz, is now pursuing a dual-brand strategy, in which both brands retain their identities but utilize a unified infrastructure. The goal is to realize annual synergy effects at the EBIT level of approximately €100 million by 2029. A significant portion of these synergies is expected to be achieved through the consolidation of the logistics network, which, following the completion of the restructuring, will comprise 14 central logistics centers in seven countries. Erfurt, once the flagship of the expansion, was deemed slated for closure during this optimization process, as the network is now being more strongly focused on locations that enable more efficient multi-channel fulfillment and are closer to the high-growth markets of Southern and Eastern Europe.
Financial key points of the realignment 2025/2026
| Value / Objective | Data |
|---|---|
| Purchase price About You (approx.) | 1.1 billion euros |
| Acquired stake in About You | 91,45 % |
| Targeted annual synergies (EBIT) | 100 million euros |
| Target EBIT margin 2028 (Group) | 6% to 8% |
| Projected GMV 2025 (Combined) | 17.2 – 17.6 billion euros |
| Remaining logistics centers after conversion | 14 in 7 countries |
Analysis of logistical inefficiencies at the pioneering site in Erfurt
The logistics center in Erfurt was a sensation when it opened in 2012: at 130,000 square meters, it was considered the largest wardrobe in Europe. It was the first location that Zalando developed entirely in-house, aiming to reduce its dependence on external service providers. But this very pioneering role has now become the site's downfall. The center's architecture and internal layout were designed at a time when online retail relied primarily on manual sorting and human picking. While Zalando has experimented with specific technologies in Erfurt in recent years—for example, by testing 16 TORU robots for shoebox order picking—the site's basic structure has fallen far short of the capabilities of modern new buildings.
In direct comparison with the Gießen site, which went into operation in 2023, or the highly automated centers in Lahr and Mönchengladbach, Erfurt lags behind technologically. According to company management, the technology in Erfurt is simply no longer state-of-the-art. In modern e-commerce logistics, factors such as throughput speed and sorting error rate determine the profitability of an order. Modern facilities utilize the latest generation of pocket sorter systems and AI-driven predictive models integrated into the physical layout. A comprehensive modernization of Erfurt to the level of a smart warehouse would have required investments in the high tens of millions of euros, which Zalando deemed economically unfeasible given its existing capacity at other, more efficient locations.
Technological change and the role of automation
Zalando is increasingly transforming from a fashion retailer into a technology company with integrated logistics. This transformation is reflected in its massive investment in robotics and artificial intelligence. At locations like Lahr/Schwarzwald, the fleet of TORU robots, which handle unergonomic and monotonous gripping tasks, is being systematically expanded to 57 units. In addition, autonomous mobile robots (AMRs) from idealworks are being used to transport empty cartons and move through the warehouses at speeds of up to eight kilometers per hour. These systems are directly connected to the central operating system ZalOs, which controls the entire flow of goods in real time.
The collaboration with specialized companies like Nomagic to expand robotic warehouse capacity underscores the goal of largely replacing human labor in standardized processes. For a location like Erfurt, which employs 2,700 people, this development represents an existential threat. The economic logic is relentless: While an automated process incurs high initial costs, it significantly reduces variable costs per package in the long run and is also insensitive to sick leave or strikes. In an industry where delivery speed and returns processing are the only remaining differentiating factors, human labor is increasingly becoming the limiting factor for scalability.
Automation technologies in the Zalando network
| Function and area of application | Description |
|---|---|
| TORU robot (Magazino) | Autonomous picking of shoe boxes in order picking towers |
| AMR transport robot (Idealworks) | Internal transport of cardboard boxes and packages |
| AI grabber arms (Nomagic) | Gripping and placement solutions for small parts and bags |
| Intelligent inventory orchestration | Algorithms for predicting regional demand |
| AI-driven discovery feed | Personalized customer communication to reduce incorrect purchases |
| Virtual changing room | Virtual size consultation to reduce return rates |
The B2B platform strategy as a future business model
A key reason for restructuring the logistics network is the strategic prioritization of the business-to-business (B2B) segment. Under the brand name ZEOS (Zalando E-commerce Operating System), the company offers its logistics and technological infrastructure as a service to other brands and retailers. In this model, Zalando no longer acts as a traditional reseller, but rather as an enabler for the entire European fashion retail sector. The integration of SCAYLE, the B2B division of About You, and the middleware Tradebyte creates a holistic system that allows brands access to over 17 European marketplaces through a single interface.
This operating system requires logistics that function as a highly efficient inventory pool. Partners like Marks & Spencer or Pepe Jeans send their goods to the ZEOS network, where Zalando handles warehousing, inventory management, and shipping – regardless of whether the order is placed through the Zalando shop, the brand's own website, or a third-party marketplace. This platform logic demands locations designed for maximum flexibility and technological integration. Erfurt, which was primarily focused on Zalando's traditional wholesale business, could not adequately meet these complex requirements for multichannel fulfillment. The withdrawal from Erfurt is therefore also a commitment to the transformation from a retailer to an infrastructure giant.
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After the Zalando shock: The bitter truth behind the job losses of 2,700 people
Industrial action and collective bargaining disputes as a location factor
It would be naive to explain the closure in Erfurt solely through technological or strategic factors without considering the years of tension between management and the Verdi union. Since its opening in 2012, the Erfurt location has been a focal point in the struggle for collective bargaining agreements in the online retail sector. Employees have persistently demanded the recognition of the industry-wide collective agreements for the retail and mail-order sectors in Saxony, Saxony-Anhalt, and Thuringia. According to Verdi, wages at Zalando in Erfurt are around 15 percent below this negotiated level. Furthermore, employee representatives criticize unergonomic working conditions and a culture of maximum flexibility at the expense of employees.
In 2025 alone, there were several warning strikes, including during the high-revenue Christmas season and around Black Friday. Zalando has consistently blocked the commencement of collective bargaining, instead pointing to market-based conditions and voluntary benefits such as the stock option program or employee discounts. From an economic perspective, chronic strikes represent a significant operational risk, jeopardizing planning certainty and undermining delivery commitments to customers and B2B partners. In a fiercely competitive environment where efficiency trumps profit margins, a location with a highly mobilized and dissatisfied workforce becomes a strategic liability. The decision to close the Erfurt plant can therefore also be interpreted as a clear signal to the unions that the company is prepared to take radical measures to avoid collective bargaining agreements.
Comparison of wage and working conditions (demand vs. status)
| Verdi's demand (collective agreement) | Zalando Status (Erfurt) |
|---|---|
| Basic wage difference (approx.): +15% | Fair market value (according to Zalando) |
| Weekly working hours: Shorter (standard rate) | Standard industry practice (shipping) |
| Company pension scheme: Coverage under collective bargaining agreements | Group program |
| Surcharges (night/holiday): Higher according to tariff | Statutory / Voluntary |
| Participation / Respect: Collective bargaining agreement | Employee participation |
Economic consequences for Thuringia as a business location
The closure of the Erfurt logistics center is a devastating blow for Thuringia, with far-reaching economic consequences. With 2,700 employees, Zalando was one of the largest private employers in the state capital. The loss of these jobs will significantly weaken regional purchasing power. Calculations of Zalando's economic footprint from 2024 showed that the company contributed over €1.4 billion directly to German GDP in Erfurt alone, with hundreds more jobs indirectly dependent on suppliers and induced effects. This engine of growth has now disappeared.
The situation on the Thuringian labor market is ambivalent. While unemployment fell slightly to 6.2 percent in November 2025 due to seasonal factors, the number of reported job vacancies is significantly lower than the previous year. The so-called skills imbalance is particularly critical: while companies are desperately seeking skilled workers, many people employed in logistics are classified as unskilled laborers and often lack the qualifications required in other growing sectors such as battery production (CATL) or the high-tech sector. Although Amazon is expanding in Erfurt-Stotternheim and is continuously seeking warehouse and transport workers, whether a seamless transition for all 2,700 Zalando employees is possible remains questionable given the sheer number of layoffs.
Labor market statistics for Thuringia (as of 2025)
| Key figure | Value |
|---|---|
| Unemployment rate in Thuringia (Nov 2025) | 6,2 % |
| Unemployment rate in the city of Erfurt (July 2025) | 6,6 % |
| Number of unemployed people in Erfurt (July 2025) | 7,720 people |
| Job vacancies reported in Thuringia (Nov 2025) | 15.100 |
| Percentage of long-term unemployed in Thuringia | 36,3 % |
| Affected Zalando employees | 2.700 |
Legal framework and social security for employees
Following the announcement of the closure, employees and the works council are now entering a phase of tough negotiations regarding a reconciliation of interests and a social plan. German Works Constitution Act mandates that in such cases, the employer must attempt to mitigate the economic disadvantages for the affected employees. A key component of this process will be the calculation of severance payments. This is typically done using a formula that multiplies the gross monthly salary by the years of service and a factor reflecting the employee's need for social protection.
Since the Erfurt plant has been operating since 2012, many employees have accumulated over ten years of service. Assuming a gross monthly salary of €2,800 and a standard factor of 0.5, a long-term employee would receive a severance payment of approximately €16,000 to €20,000. However, this factor can increase to as high as 1.2 depending on age, disability, or maintenance obligations, which is particularly relevant for older employees who may face greater difficulties reintegrating into the job market. Zalando has already announced that it will hold discussions to offer affected employees future prospects, which could include establishing a transfer company where employees would receive training and job search support for up to twelve months.
The legal complexity is increased by the General Equal Treatment Act (AGG) and the case law of the Federal Labor Court. Social selection criteria such as age and company loyalty must be weighted transparently and in a legally sound manner to avoid lawsuits. For Zalando, these negotiations are not only about social responsibility, but also about maintaining industrial peace until 2026. If the workforce leaves en masse prematurely or if motivation collapses completely due to the threat of job loss, this will jeopardize the functionality of the entire European network during the transition phase.
The financial outlook and the pressure from the capital markets
Zalando's financial results for 2025 show a clear recovery after the challenging years, but also continued volatility. In the third quarter of 2025, gross merchandise volume (GMV) rose by an impressive 21.6 percent to €4.2 billion, while revenue grew by 26.5 percent to €3 billion. However, this jump is primarily attributable to the consolidation of About You. Adjusted for this effect (pro forma), growth is in the single digits, between 4 and 7 percent. Adjusted EBIT reached €96.3 million in the third quarter, corresponding to a margin of 3.2 percent – a solid figure, but significantly below the long-term target range of 6 to 8 percent.
Investors are demanding a consistent increase in profitability to justify the company's valuation. Zalando's share price fluctuated between €20 and €40 in 2025, reflecting uncertainty about its long-term competitiveness against global giants like Amazon or specialized Asian players like Shein. In this context, the closure of the Erfurt plant is seen as a necessary step to reduce fixed costs and free up capital for investments in AI-driven inspiration and personalization in the B2C sector. The message to the capital market is clear: the company prioritizes operational excellence and technological superiority over maintaining historically established locations.
Key figures on group performance 2025
| Value | Q1 | Q2 | Q3 (including About You) |
|---|---|---|---|
| GMV (in billion EUR) | 3,5 (+6,5 %) | 4,1 (+5,0 %) | 4,2 (+21,6 %) |
| Revenue (in billion EUR) | 2,4 (+7,9 %) | 2,8 (+7,3 %) | 3,0 (+26,5 %) |
| EBIT (in million EUR) | 46,7 | 186,0 | 96,3 |
| Reported EBIT margin | 1,9 % | 6,5 % | 3,2 % |
| Active customers (in millions) | 52,4 | 52,9 | 61,4 |
The industrial development of e-commerce
Zalando's withdrawal from Erfurt by autumn 2026 marks the end of an era and the beginning of a new, industrially driven phase of digital commerce in Europe. From a purely business perspective, the decision is logical: the merger with About You requires a concentration of resources at technologically superior locations to achieve the ambitious synergy and profitability targets. Erfurt, which made history as the first self-developed site, has fallen victim to its own age and rapid technological advancements. The logistics centers of the future are no longer mere warehouses, but highly automated hubs in a complex B2B and B2C ecosystem where algorithms and robots dictate the pace.
For the 2,700 employees and the Thuringia region, the painful realization remains that even large industrial developments no longer offer a guarantee of permanence in the age of the platform economy. The Zalando case demonstrates that in modern capitalism, loyalty to a location must take a back seat to network efficiency and technological innovation. The next two years will show whether Zalando can deliver on its promise to manage the transition in a socially responsible manner, and whether the region is able to compensate for the loss of such a significant employer through new, higher-value businesses. One thing is certain, however: the map of European fashion logistics will be different after 2026, and Erfurt will appear on it only as a closed chapter in Zalando's impressive, yet challenging, success story.
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