Billionaire bets on retail
At a time when other shops are going out of business and consumers are turning to Amazon.com Inc, Europe’s wealthiest man Bernard Arnault is spending more than Us$1bil on a Paris department store – La Samaritaine which is set to reopen next April after a 15-year renovation.
PARIS: Europe’s wealthiest man is spending more than Us$1bil on a Paris department store at a time when other shops are going out of business and consumers are turning to Amazon.com Inc.
La Samaritaine, part of billionaire Bernard Arnault’s LVMH luxury empire, is set to reopen next April after a 15-year renovation. On Tuesday the company gave reporters a tour of the site, showing off its restored Belle Epoque glamour, including ornate frescoes, mosaics and wrought-iron staircases.
Such temples of consumption used to drive retailing, but since the Louis Vuitton owner acquired the site in 2001, the industry has been upended. As shoppers shift online, department-store chains like Macy’s Inc in the United States and House of Fraser and Debenhams in the United Kingdom have been shutting dozens of stores. Barneys New York Inc filed for Chapter 11 bankruptcy protection in August. Many US shopping malls are half empty.
The unveiling comes as Arnault also attempts to burnish his legacy by clinching a deal to acquire American jeweller Tiffany & Co for upwards of Us$14bil in what would be his biggest acquisition yet.
Why bet against the retail odds in Paris? In short, because of China. Despite a trade war with the US and anti-beijing protests, Chinese shoppers are fuelling the luxury industry’s growth, and they’re stalwarts of the many outlets for LVMH brands across the French capital. La Samaritaine is being remade to target well-heeled customers from overseas.
Selling space in what had once been the largest and most affordable of Paris’s famed grands magasins will be cut by half to make room for a five-star Cheval Blanc hotel, restaurants, offices and a Christian Dior-branded spa. The retail space will be filled by Dfs-the Lvmh-owned travel retailer known for its expertise selling Givenchy perfumes and Fendi handbags tax-free to Chinese shoppers.
DFS forecasts that the compact shopping mall with more than 600 brands will draw several million visitors per year.
“The number of foreign visitors to Paris is growing larger each year,” said Eleonore de Boysson, DFS regional president. Clients have become “increasingly demanding for the selection of products as well as the experience you offer.”
Travelers will have the option of duty-free checkout at every register, and tour buses will be able to use the Louvre museum’s parking area, helping to avoid the sidewalk chaos that’s long plagued rival department stores like the Galeries Lafayette.
LVMH hopes exclusive fashion lines, niche beauty brands and restaurants ranging from high-end gastronomy to takeout caterers will help bring local clients back to the store.
LVMH acquired La Samaritaine in 2001, aiming to renovate the store while keeping it open for business. That idea was scuttled four years later because of safety risks. Original flooring made of glass tiles and partially hidden underneath layers of carpet and retrofitted electric wiring was estimated to be able to hold up only 90 seconds in the event of a fire, for example.
In a nod to the original Art Nouveau concept, glass tiles have been reintroduced in the Samaritaine’s latest incarnation-this time layered on top of concrete.
LVMH spent years fighting objections to the sweeping restoration, which merges multiple structures-built from the 1600s through the 1930s and progressively annexed to the Art Nouveau core-behind a contemporary facade designed by the Japanese architecture firm SANAA. One neighbour who opposed the project said Paris zoning authorities had refused to let her install a single skylight in her historic building, while LVMH won approval for a rippling glass wall the length of a city block.
“The Samaritaine has no architectural unity, which isn’t to say it doesn’t have personality,” LVMH chief financial officer Jeanjacques Guiony said. “It’s fitting that there should be a strong architectural gesture of the 21st century to complete this new incarnation.”
LVMH reportedly paid the equivalent of
€225mil around (Us$249mil) to take control of the Samaritaine in 2001, later acquiring the remaining shares for an undisclosed sum. It
€750mil has since spent to renovate and outfit the space.
“In a highly competitive Paris market, it was essential that we set ourselves apart,” Boysson said.