“The future of our department stores will be ‘phygital’” (Philippe Houzé, Galeries Lafayette)

“In the rapidly changing world of retail, we have been considered dinosaurs. But we adapted constantly, like chameleons, and we now have to become agile like dolphins,” says Philippe Houzé, who is the current chairman of the Galeries Lafayette Group. He sees great potential in a close relationship between the physical and the digital world.

The main reference

Its name is renowned in the sector of department stores. During its 125 years of existence, Galeries Lafayette has survived – and often taken over – almost all of its French colleagues, and today it is spreading its wings to greater distances once again. However, the ‘parent store’ on Boulevard Haussmann in Paris, with its impressive glass dome, undeniably remains the main reference. Incontournable, as they say in French.

We spoke with Philippe Houzé, who was head of the family department store group for two decades until he handed the reins over to his son Nicolas in 2013. He still remembers his first visits of department stores as a child, with his mother: “She preferred going to Printemps because we had a direct metro line from our home to the Havre-Caumartin stop, near that shop. My first retail experience dates back to the summer of 1969, when, as a young trainee on the Boulevard Hausmann pavement during the ‘3J’, the ‘trois jours de folie’, I sold more than a thousand shoehorns at five francs to passers-by who came to the shop by thousands during those crazy days. I was immediately smitten with the trade. The commercial profession is ultimately a fairly simple business: if you love people and you love the product, you can work miracles.”

His favorites: Selfridges and Nordstrom

In short, Philippe Houzé caught the retail fever and remains passionate about the exciting, international world of distribution to this day. “My favourite shop is definitely Selfridges in London, a shop that is truly alive in the international capital. It really is the place to be, for both Brits and foreign tourists who go there. The retailer has successfully reinvented itself, thanks in part to the tremendous work of Vittorio Radice, whom I know well and whom I hold in high esteem.”

“The department store chain I admire most is the American Nordstrom. It has been one of the best companies in the world for years: the company has always been highly committed to service, which I believe is one of the core elements for the future of department stores. They really consider service to be their first raison d’être. You should know that the founder, the Swede John Nordstrom, actually came to America as a gold digger, but soon realized that he could earn more by selling shovels and pickaxes to the other miners. He then participated in a shoe store, which is a very delicate sector: shoes are a complex product, and every foot is different. You have to find the right size, a comfortable shape, the right model, the right colour… This is a challenge for any salesperson, who sits on his knees for the customer, who walks back and forth between the stock and the customer to find the right product. It is one of the most challenging sectors of trade. Only later, in the 1950s, did they expand their product range and make it a full department store. To this day, the shoe department at Nordstrom is still on the ground floor. It remains an essential department for the retailer.”

Expansion strengthens the brand

The international expansion that Galeries Lafayette has initiated over the past decade is remarkable. The group has opened stores in Dubai, Beijing, Istanbul, Jakarta, Doha, Shanghai… and aims to open ten more stores in China. Where does this relatively recent urge for expansion come from?

“It’s not entirely new. Even under Georges Meyer, in the eighties and nineties, we opened stores in New York, Singapore, Bangkok, Moscow… These were mainly franchise stores that were not all run equally well. We closed them again one by one, and only after the year 2000, when we were really ready, did we go abroad again. Today, the focus mainly lies on China – in cooperation with a local partner – and on the Middle East. Nicolas and his team have industrialized that process. We usually open smaller stores there, often of less than 10,000 square metres, and we keep a close eye on investments. In fact, it means that we set up where we are asked to and where we are largely financed for our installation.”

Why is it important for Galeries Lafayette to go international? Because it strengthens the brand’s presence, says Houzé. “We have been interested in an international clientele from the start, and we have also had mail-order sales. We are hoisting the French flag in all these different countries, where we export the idea of French ‘art de vivre’. And when people come to Paris – because tourism is steadily growing – they visit the original Galeries Lafayette branch, the department store that embodies that French savoir vivre . And they’re not disappointed, because the wow factor they experience in that store, with its beautiful dome, is unique. I’m a marketing man, I believe in developing brands. A store sells goods, a brand sells values. This is important: customers will recognize themselves in these values, or they won’t.”

An exercise in style

Galeries Lafayette is also working on expanding closer to home: new department stores have recently opened in the shopping centres Beaugrenelle in Paris and Royal Hamilius in Luxembourg. Not to mention the opening of the innovative flagship store on the Champs-Elysées. All of these are unique shops that are very different in terms of concept and what they offer, adapring to their local environment.

“Beaugrenelle really is a special case. The shopping centre itself has already been designed as a department store, with an atrium, five floors, and spaces that are rented out to brands. The developer offered us the premises where Marks & Spencer was previously located. But how do you create a small department store of about 6,500 square metres next to a much larger one? We have opted for a ‘tailor-made’ range, with brands that complement the range on offer in the shopping centre. I think it’s a successful exercise in style. Our new flagship store on the Champs-Elysées cannot be compared to this. It is also a fairly small shop, of 6,500 square metres, with three levels. We focus on millennials here. We definitely wanted to rejuvenate our audience. We’ve gone as far as possible, bringing in lesser-known names, emerging brands that built their audiences through influencers on social media such as Instagram. Everyone agrees it’s a marvellous store.”

Bricks and clicks

The world is changing and the public is changing, so retail must also change. Philippe Houzé is convinced of this more than ever. “When I became the CEO of Monoprix in 1982, my message was already: “le changement est devenu notre seule constante”. Since then, I haven’t stopped changing things in all areas. Twenty-five years ago, I was the first to bring organic products, eco-friendly products, Fairtrade products with Max Havelaar… I have always been the first to do things in everything, with cash register scanners, for example. I also tried the same thing with e-commerce, already in 1995, but that was difficult. Our companies have a ‘bricks’ culture. But e-commerce is all about ‘clicks’: about speed, agility, technology… Our teams had a hard time with that; they didn’t understand the importance of e-commerce. That is only changing now. My son Nicolas is taking the bull by the horns and has launched a new program with external teams to become a true e-commerce player in the coming years.”

“I am convinced that the future of our stores will be ‘phygital’: we have to focus on an intelligent combination of the physical and the digital. In France, online sales already have a market share of 15% in fashion. In ten years’ time, it will probably be 25%, but I think it will cap there. On the one hand, with fashion, you want to look, touch, feel, try things on… On the other hand, I dream to be able to make the full range of Boulevard Hausmann’s products, of more than one and a half million references, available to the whole world in an online shop, presented in a way that enhances the products, with the help of innovative technologies, such as 3D glasses with augmented reality to really bring our range to life. We’re working on that.”

Reinventing selling

Food & beverage is close to Philippe Houzé’s heart. At Monoprix, he saw Marks & Spencer as an inspiring example, a forerunner in food to go, among other things. But at Galeries Lafayette, food doesn’t have the place it deserves yet, he says. “We don’t have enough to offer our customers yet, even though they stay in our shop for quite some time. I launched Lafayette Gourmet in 1991. I was inspired by KaDeWe in Berlin, but I had to set it up in Paris in a much smaller space, of about 3,000 square metres. Still, that first Lafayette Gourmet store in Paris was an instant hit. Now I think we need more restaurants, and different ones. We opened two new ones on the Champs-Elysées in 2019: Citron and Oursin. Both are very successful, and the same goes for our veggie restaurant Créatures on the terrace at the Boulevard Haussmann.”

“I believe in a future for the department store,” he emphasizes, “but certain conditions must be met. We need to reinvent relationships with our customers. We do not sell goods (‘des biens’) but relationships (‘des liens’). The more ‘high tech’ we have, the more ‘high touch’ we need to be. That’s why on Boulevard Haussmann, for example, we’re going to restore the old ‘escalier d’honneur’, the central staircase, to its former glory. Why? We want to make sure that our stores generate a true wow factor, that they will stir powerful emotions. Architecture plays a part in this: our department store in Berlin is almost a modern art museum, and the new shop on the Champs-Elysées looks unbelievable… Events also play a part in that experience. You don’t catch flies with vinegar. Our Christmas windows are still able to arouse many emotions. They are still a great success with children, grandchildren, parents and grandparents.”

And it’s still a people business. “We equip our employees with the technological tools to sell products that are not physically present in the stores. Employees are becoming even more important. In the early days of the department stores, we had real salespeople, but gradually they were reduced to the people who merely accompanied customers to checkouts… Today, we have to reinvent sales. Our salespeople have to become real ‘personal shoppers’ who will find the right type of product for each customer in our wide range. We may need fewer employees, but we will need them to be much better educated and have strong personal qualities.”

Darwinian evolution

Nevertheless, Philippe Houzé believes in the future and expresses his great passion for the department store: “It’s my past, my present, and it’s my family’s future. My two sons, a son-in-law and a cousin have taken over. They are the fifth generation, and they are passionate about our profession. Look, I’ve always known that our profession is mortal. You have to fight to survive. We have endured many storms and, over the years, we have taken over almost all of our fellow department stores in France, with the exception of Printemps and Le Bon Marché. And there are certainly more storms to come. This is one of the most complex sectors in retail. With Monoprix, it was all about textiles and food, but with Galeries Lafayette you have food, fashion, technology, perfumery, interior decoration, and so much more… So many different universes. As a result, we compete with every form of trade: hypermarkets, shopping centres, specialized chains, fast fashion, the Internet…”

It is Darwinian evolution, says Houzé, the survival of the fittest: “At Monoprix, at Galeries Lafayatte and recently also as a shareholder at Carrefour, people always wished me good luck with what they called the ‘dinosaurs of distribution’… But then why are we still here, and even in reasonably good shape? We were chameleons, we adapted constantly, and we adopted the best practices from every sector of the trade that threatened us. We are now enduring the tsunami that is the Internet, and we must become dolphins, fast and agile. Darwin taught us that it is not necessarily the smartest or the strongest who survive, but those who adapt most quickly to change. Retail is a world in constant motion, but that’s okay: some daily adrenaline is good for your health…”

A family history

“More than fifty years ago, I joined the Galeries Lafayette group on 5 November 1969 as a trainee assistant director at Monoprix, which was a subsidiary of the group back then. The founder, Max Heilbronn, was one of the two sons-in-law of Theophile Bader, co-founder of Galeries Lafayette. Two years later, when I became director, I married one of Etienne Moulin’s daughters. Etienne Moulin was in charge at the time. He helped me switch to Galeries Lafayette. So in 1971, as a son-in-law, I joined the family of the department store’s shareholders and directors. My mother-in-law Ginette Moulin and I privatized the group in 2005. The Moulin family now owns 100% of the group. For some years now, I have been handing operational management over to my son Nicolas, who represents the fifth generation.”

by Erik Van Heuven and Stefan Van Rompaey

– photo: RetailDetail – 

Galeries Lafayette, Philippe Houzé, The Future of Department Stores, A Love for Department Stores, Monoprix, Printemps, Selfridges, Nordstrom