In collaboration with international retail expert Erik Van Heuven, RetailDetail sets out to explore the world of department stores. A series of interviews with entrepreneurs and managers will map the challenges and opportunities for the industry.
Retail as entertainment
Aren’t department stores part of our DNA? We have all visited them with our parents or grandparents when we were kids. Since many decades, both kids and adults are fascinated by the impressive shop windows with their unbelievable creative visual merchandising – and by the toys department, of course. To experience the fantastic mix of brands in those beautiful department stores in the world’s main cities, is the ultimate example of retail as entertainment. In today’s digital age, department stores aren’t relics of the past. On the contrary, they still offer millions of people an exciting and premium shopping experience.
Shoppers love department stores – and so do our readers, we reckon. What is the story behind the big names in the department store industry? What is the vision of their leaders and CEO’s? Our interview series will offer readers an in-depth profile of the global players and will illustrate the love that CEO’s and leaders have for their business, a business that faces a lot of challenges.
Customer centricity
The first department store to see the light in Europe was probably Le Bon Marché in Paris in 1852 – located in the Rue de Sèvres since 1869. Department stores stemmed from the so-called “passages“ that were also common in Benelux cities like Rotterdam (Coolvest) and Brussels (the well-known Galeries St. Hubert).
Emile Zola called department stores ‘the cathedrals of modern times’. Indeed, from the early beginnings, they were wonderful environments, offering shoppers an incomparable sensual experience. In fact, as early as the end of the nineteenth century, department stores were already a harbinger of what Pine & Gilmore described in their classic ‘The experience economy’ (1998). Today, experience is often presented as the solution for the future of physical retail.
Back then, they were wonderful shopping Valhalla’s full of novelties, inspiring the new middle class in a flabbergasting architectural environment. What we now call ‚customer centricity‘ was self-evident in luxury department stores.
Major transformations
It must be said, a lot has happened since the rise of department stores. Think of the breakthrough of supermarkets and hypermarkets, offering ‘everything under one roof’; the arrival of category killers such asMediaMarkt or Toys R Us; the trend for vertical integration, with fashion wholesale brands like Esprit and Benetton starting their own retail structures; the rise of shopping centers; and of course the e-commerce and omnichannel revolution…
So since the seventies, department stores have been undergoing major transformations. Today is no exception. In order to survive disruption, department stores sought their salvation in different solutions, ranging from ‘cheap’ (private labels) to ‘chic’ (premium luxury, with far-reaching personal shopping opportunities), often limiting themselves to the shoes, apparel, lingerie, perfume and home departments, while doing away with other categories. But Zalando and wonderful e-commerce concepts like Mytheresa.com prove tough competitors.
Touristic attraction
The solution, so it seems, is to be found in the premium luxury segment, combining an exceptional environment with an excellent one-to-one customer service. Only in ‘world class cities’ will these shopping cathedrals continue to have a future – especially because of their touristic attractiveness. Think of Harrods and Selfridges in London, KaDeWe in Berlin, Galeries Lafayette in Paris, El Corte Inglés in Madrid… But in other cities they are probably facing a ‘mission impossible’. The exception may be what Germans so beautifully call a ‘Platzhirsch’ – a historic and locally dominant department store that is part of the past and future of the majority of its inhabitants. L&T in Osnabrueck (Lengermann & Trieschmann) is an excellent example, and there are more to be found in Europe.
“Personally I love most department stores, just like a dog lover appreciates pedigree dogs as well as mongrels”, says Erik Van Heuven. “This is mainly because every department store is part of the DNA of its local community – in spite of internationalization and globalization. Every department store carries an enormous history. Whenever such a monument is closed down due to a restructuring or a bankruptcy, it causes an empty crater in the shopping environment and brings drama to many consumers who foster sweet memories of visiting the place with their children, parents or grandparents. This is also the case for me: ever since I signed my first contract to work for Grand Bazar – Innovation – Bon Marché some thirty years ago, my love for department stores has continued to grow. I would like to share this passion with our readers, through a series of interviews with European leaders in the department store industry, culminating in a book titled ‘A Love for Department Stores’. I can hardly wait!”
About Erik Van Heuven
During his career, Flemish entrepreneur and international retail expert Erik Van Heuven (56) has been a privileged witness of the enormous changes that have taken place within the department store industry in the Benelux and Germany.
He started his career at Belgian GIB Group (‘Grand Bazar – Innovation – Bon Marché’) and later on became CEO and administrator of department store company Galeria Inno and of German shoe company HR Group. During the last decade he worked mostly in Germany, at Karstadt amongst other companies. In recent years he observed how the introduction of international venture capital has transformed the business.
Think of the acquisition of Inno by Kaufhof, that was in those days part of Metro Group Germany. There was the takeover of Karstadt Kompakt by investors Dawnay Day and Hilco Capital UK. The Karstadt restart by Berggruen Holdings US. The acquisition of V&D by SUN Capital from KKR. Later on, the takeover of Karstadt by Signa Holding Austria. And the acquisition of Kaufhof by Hudson’s Bay.
Erik knows most of the key players personally and will give them the floor in our series of articles. Since the sale of HR Group to investment groups Capiton and Ziylan in 2016, he leads the European expansion of the group as a strategic consultant. Next to that, he manages different retail assignments with his company Scorpio Consultancy Europe and is an administrator at Antwerp SME Stoopen & Meeûs, producer and distributor of color pigments and mineral decorative paints.
By Stefan Van Rompaey