France boasts some of the oldest and largest department stores in the world: Galeries Lafayette, Le Printemps, La Samaritaine and Le Bon Marche, all began over 50 years ago. Yet department stores play a relatively small part in the retail sector - smaller than in the UK or Germany. In fact, with combined sales of €5.7Bn, department stores accounted for just 1.3% of total retail distribution and 1.7% of non-food retail in 2003.
Over the past 20 years, French retailing has been shaped by the expansion of mass-market distribution, driven by price competition. The 1970s and 1980s saw the explosion of hypermarkets and today, France has one of the highest number of hypermarkets per 100,000 inhabitants in the world. The success of the hypermarkets, and the department stores to focus on quality and customer loyalty. They were amongst the first to offer loyalty cards. Of more interest, the department stores pioneered consumer credit in France, a vital area that French banks overlooked.
French department stores are only just emerging from a period of consolidation. Le Printemps is now part of the large PPR group while Bon Marche and Samaritaine have been folded into the luxury goods group LVMH. This, coupled with new demand from tourists (notably Chinese), has helped the groups to innovate. Galeries Lafayette opened their “Home” store last year and in Feb 2005, opened a newly refurbished 5,000m² Children’s Section. Le Printemps has changed 40% of its offer over the last 3 years as well as re-modelling its stores to privilege higher demand products (women’s fashions, beauty, accessories, household goods).
While the share of retailing from French department stores has been under pressure since the 1970s, there are signs that they are making a come-back. They have re-focused their offers, renovated their buildings, re-organised their corporations and their shareholders and focused their products to reflect consumer demand. With less than 2% of total retail spend in France they can be avoided but we believe that would be a mistake. They are again emerging as a force for innovation in retailing and should not be ignored.
Focus on the Galeries Lafayettes
Over 110 years ago, two families combined their retailing skills and opened the largest store in Europe: Les Galeries Lafayette. Three generations on, the Meyer and Moulin families are finally unwinding this partnership as the Meyers have sold their stake to BNP Paribas. BNP and the Moulin family are currently launching a bid for the remaining capital. If successful, BNP will end with 37.1% of Galeries Lafayette and the remainder will stay in the hands of the Moulin family.
The interest for BNP lies in the group’s consumer credit arm, Cofinoga, the third largest in France. BNP would control 50% of Cofinoga and be able to extract more synergies with its own consumer credit arm, Cetelem. For the Moulin family, it would leave them in clear control of the retailing and property assets. The family is still involved in the day-to day management: Etienne Moulin, aged 92, still sits on the Executive Board while the two co-CEOs are both family members.
Address: IBT Partners - 17 rue du Colisée - 75008 Paris - France
Over 110 years ago, two families combined their retailing skills and opened the largest store in Europe: Les Galeries Lafayette. Three generations on, the Meyer and Moulin families are finally unwinding this partnership as the Meyers have sold their stake to BNP Paribas. BNP and the Moulin family are currently launching a bid for the remaining capital. If successful, BNP will end with 37.1% of Galeries Lafayette and the remainder will stay in the hands of the Moulin family.