Galeries Lafayette is in China, why doesn't it become popular?

2021/09/0421:54:03 news 1359

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Galeries Lafayette , it is difficult to be the "Lafayette" in China.

Source | Commercial Real Estate Headlines (ID: Dtoutiao)

Author | Mia Zhang Wenjing

Cover & head image source | Galeries Lafayette official Weibo

pilgrimage symbol called "luxury" "The Galeries Lafayette, recently sold 11 of its department stores in one go.

was founded in 1893. At its peak, there were 66 department stores under the Galeries Lafayette Group. The most famous Haussmann head office has even won the reputation of "If you haven't visited Galeries Lafayette, you have never been to Paris".

Under its prestige, Galeries Lafayette has long since broken away from the general merchandise in the secular sense, and has become a world-renowned cultural and historical symbol to feed back its commercial value.

But the dazzling historical aura dimmed before the epidemic, and Galeries Lafayette stumbled until he survived with his arm broken. After the completion of the transaction, Galeries Lafayette's self-operated department stores were reduced to 19, and the other 38 were operated by franchisees.

While Europe is shrinking, Galeries Lafayette has successively increased the Chinese market. It's just that after 24 years of trial and error, there are still many unsuccessful attempts. In the final analysis, it is because Galeries Lafayette has difficulty understanding the logic of the times in the Chinese market.

◎ Galeries Lafayette Shanghai store, photo source: Galeries Lafayette China official website

European contraction

August 25,Galeries Lafayette's official website posted a press release stating that 11 department stores will be used as franchised dealerships to be sold to other companies, includes most of the properties.

Among them, 7 department stores will be taken over by Grands Magasins, a family business specializing in high-street retail space operations.

The other three companies will be licensed to Hermione People & Brands ( Bordeaux , the retail division of real estate developer FIB Group). Hermione People & Brands has long been an important franchisee of the Galeries Lafayette department store. In 2018, it has obtained the franchise rights of 22 Galeries Lafayette department stores in France.

And one will be entrusted to Philippe Sempéré and Nicolas Chambon, who have previously obtained the franchise right of the Béziers store in Galeries Lafayette.

◎ Galeries Lafayette in Berlin, Germany, photo source: Galeries Lafayette's official website

It can be seen that the franchisees selected by Galeries Lafayette, have experience in real estate or retail business operations, and are located locally Having certain resources and strength will help franchise stores to maintain a healthy operation.

The transaction will be completed in early 2022, but the amount involved is unknown. According to sources, the annual turnover of these 11 shopping malls is about 200 million euros (about 1.53 billion yuan), which is equivalent to 1/10 of the Paris Haussmann headquarters.

After two large-scale franchising operations, Galeries Lafayette only operates 19 department stores on its own, and the other 38 are operated by franchisees .

In addition, Galeries Lafayette has been carrying out the strategic closure of . For example, five stores in France were closed in 2004, and the Moroccan shopping mall store was closed in 2016.

The transfer and closure of stores are both measures to divest inefficient assets to make the "hundred-year body" lighter, with two purposes: re-adjusted its investment focus and the structure of important flagship stores in France, and boosted its omni-channel strategy.

The omni-channel strategy was formally established in 2016. The impact of e-commerce and terrorist attacks in France led to a sharp decline in local customers and international tourists. The group strives for change, with digitalization and international expansion at the core.

/ / Digitalization is not going well

The Galeries Lafayette Group has established Ambition 2020, and the e-commerce sales share will increase from 2% at the end of 2016 to 10% .

To this end, Galeries Lafayette successively acquired luxury goods resale platform Instantluxe.com and flash sale online retailer Bazarchic in 2016. In August of the following year, it acquired a 51% stake in French e-commerce giant La Redoute.

But the momentum of powering e-commerce did not last long. In November 2018, Instantluxe.com was sold due to poor management. Although the resale market of second-hand luxury goods in Europe and America was booming at the time, Galeries Lafayette believed that Instantluxe.com was too small to compete with platforms such as Vestiaire Collective.

/ / speed up international expansion,China is very important

Digital attempts are not successful, but the pace of international expansion continues to advance in order to reduce excessive dependence on the French market.

At the end of 2017, the Galeries Lafayette Group established the "International Development Department", and expansion in China and the Middle East was once again on the agenda. Around that time, the Galeries Lafayette Dubai store, Istanbul store in Turkey, Doha store in Qatar, and L+Mall store in Shanghai landed one after another.

Expanding into emerging luxury consumption areas, the Chinese market is very important. As early as November 2017, the Galeries Lafayette Group announced that its flagship store in Haussmann and the department store in Paris City Hall had begun accepting WeChat payments. The Paris head office even opened up a special shopping area for Chinese consumers after major adjustments.

According to the group, by 2019, Chinese consumers have become the main source of income for its 59 stores in France. And Galeries Lafayette began to explore in the Chinese local market as early as 24 years ago.

Difficult to understand the logic of the Chinese era

During the 22 years from 1997 to 2019, Galeries Lafayette entered China twice, opened 3 stores and closed 1 store. Every time I shot, I didn't step on the pulse of the times.

The logic of the times is greater than the business logic. Any business is a product of the times. Galeries Lafayette has a tortuous journey in China, which can be attributed to 's difficulty in understanding the logic of the Chinese era.

/ / first entered China: the rise of popular department stores and supermarkets, but Galeries Lafayette positioned high-end

In 1997, China's first store opened in a side street of Wangfujing in Beijing, but its positioning was too advanced. High-end,This resulted in operating losses, and the short trip to China ended the following year.

Contrary to Galeries Lafayette, another mass chain department store has a different situation. According to incomplete statistics of , department stores entering China/Mainland during the same period include Hong Kong New World, Japan Isetan , Malaysia Parkson, Japan Ito Yokado and so on. In the years to come, although they have all encountered ups and downs, they have lived quite well in the more than 10 years after entering China.

Another phenomenon is that was popular in foreign supermarkets at that time. Wal-mart , Carrefour each dominates the north and south, and there are also members-only supermarkets such as Sam's Club , Metro , and Makro. After all, the per capita GDP in 1997 was only US$781, and it did not exceed US$1,000 until 2001 (data from the National Bureau of Statistics).

At that time, the Chinese were not wealthy, and mass consumption was just emerging. The high-end, advanced Galeries Lafayette department store had no choice but to leave with regret.

/ / Second entry to China: luxury consumption exploded, but positioned as a niche market

In 2010, Galeries Lafayette and Hong Kong IT Fashion Group jointly established Galeries Lafayette (China) Co., Ltd. The company, each holding 50% of the shares. The two sides cooperated and settled twice in the next 10 years.

In the fall of 2013,Galeries Lafayette is located in Xidan, Beijing, with a total area of over 47,000 square meters, spanning 6 floors. The English version of the South China Morning Post reported that the store’s construction cost a total of 42 million euros (about 320 million yuan).

When the Xidan store opened, Galeries Lafayette said that plans to open 10-15 stores in China in the next 3-5 years. As a result, Xidan Galeries Lafayette had a loss of 20 million yuan in the first year, and it was not until the first half of 2016 that it turned losses into profits, with sales of 100 million euros, a year-on-year increase of 15%. However, since then, it has not become a mainstream consumer landmark in Beijing, and it is even more difficult to speak with high-end shopping malls such as SKP , International Trade , Yintai and so on.

◎ Galeries Lafayette Beijing Xidan, photo source: Galeries Lafayette China official website

On October 25, 2019, the second flagship store of Galeries Lafayette China opened at L+Mall in Lujiazui, Pudong, Shanghai. The Financial Times reported that Galeries Lafayette plans to open 10 department stores in China by 2025, and will contribute 15% of overseas revenue to 1 billion euros.

CEO Nicolas Houzé said, "China is a huge opportunity." "For Galeries Lafayette, China is definitely a strategic market and the core of the group's international expansion strategy."

has repeatedly called out large-scale expansion plans, and Galeries Lafayette's Chinese ambitions are undoubtedly revealed. However, since then, the actual operation of the two stores did not match the reputation.

In fact, after Galeries Lafayette entered China for the second time, it is the golden decade of the explosion of luxury consumption in China. McKinsey's "China Luxury Report 2019" pointed out that in 2012, China's personal luxury goods consumption reached 334 billion yuan, accounting for 19% of the world's personal luxury goods consumption. Since then, the trend of increase is obvious, and it is expected to reach 1,227 billion yuan by 2025.It accounts for 40% of the world.

For places where luxury consumption is soaring, the LOGO effect of heavy luxury is best used. However, the official website of Galeries Lafayette China has repeatedly emphasized niche and unique.

The Beijing store’s main theme is "Provide consumers with many special and unique brands and product choices. Many products can only be seen in Galeries Lafayette." Heavy luxury brands such as Gucci and Prada are replaced by sub-echelon luxury brands, such as Saint Laurent, Bottega Veneta, Givenchy , Fendi , Delvaux, span5, Stspan6 Valentino, etc.

And its more obvious recognition label is, "There are many unrecognized but very expensive brands" , including more than 200 European niche brands that first entered China, such as Alice and Olivia, 5cm, CHOCOOLATE, izzue, A Bathing Ape, RED Valentino, Carven, Lafayette Collection, etc. There are also Chinese designer brands CHICTOPIA, Chris by Christopher Bu, Fiona Chen, KKtP, etc.

On the opening day, I knew that the user @Vivian S came away. The most impressed was "very weak brand sense, more prominent overall fashion sense", "the shoe area is particularly attractive, but the price is very deadly. The price of three to five thousand, I will consider purchasing."

Xidan business district, because of the trendy young people in Beijing,Fashionable and avant-garde, even a bit grassroots. From Xuanwumen subway station to Lingjing Hutong , the straight line distance is 1.8 kilometers, and there are 7 shopping malls and independent department stores lined up from north to south. Among them, only Xidan renewal field opened later than Galeries Lafayette.

In other words, 's commercial atmosphere and customer portraits were basically frozen long before Galeries Lafayette arrived.

Love to eat: The projects in the business district generally have a wealth of catering formats. Joy City is the most prominent, from the light luxury Lady M to petty bourgeois Naxue’s tea and Shake Shack, to the market Wenheyou stinky tofu and other trendy catering brands, which run through 10 floors.

is willing to spend money on the face: All line-level beauty brands are a must. Although the formats and floors of Grand Pacific and Hanguang are traditional department store standards, they are high-end beauty salons such as Giorgio Armani , Gucci beauty, POLA , Estee Lauder , etc.

pays attention to cost performance: Juntai, Hanguang, Xidan Shopping Mall and other projects, the brand portfolio is more prominent, such as TATA, Vero Moda and other relatively traditional popular, cost-effective brands.

Diverse personality: This can be seen from the "popular king" Joy City in Xidan business district. It can be said to be a collection of high-end, cool, stylish and comprehensive. Not only Gucci, Tiffany & Co. and other luxury products, CHANEL beauty makeup, Dior beauty makeup and other high-luxury beauty makeup,There are also fast fashion brands such as ZARA and Uniqlo .

◎ Galeries Lafayette Beijing Xidan, photo source: Galeries Lafayette China official website

Among the above four points, Galeries Lafayette has no particular advantage. On the contrary, the light luxury brands are not high-end enough, the niche designer brands are too remote, and the catering business is even more vulnerable.

In 2014, the Big Food Agency retired the rent, which caused the B1 floor to be empty for more than a year. Later, the B1 floor introduced Adidas , Nike , the Internet celebrity bookstore Zhongshuge , and the Japanese niche socks brand Taibo, but they have no obvious effect on the increase in popularity. Until now, there are only a few catering brands on the fifth floor.

After a lapse of six years, the second flagship store of Galeries Lafayette China opened into the magic city. The brand combination model , supplemented by light luxury and niche designers, is staged again, and even more extreme.

In 2019, Galeries Lafayette entered L+Mall in the Zhangyang Road business district of Lujiazui, Pudong, with a business area of 25,000 square meters, spanning from B1 to the fourth floor. Yingshang.com finds that there are not many brands with wide audience awareness, such as JIMMY CHOO, Maje, Theory, and APM Monaco.

According to the official website of Galeries Lafayette China, “The Shanghai store focuses on niche and individual brand routes. In addition to introducing a lot of independent designer brands from European niches, it also opens a fashion-forward buyer store on the 2-4 floor. Choose EDIT."

Most brands have official titles, mainly European and domestic emerging designer brands, but consumers have low awareness of these brands.It is difficult to resonate with consumers. (Corrigendum: The information in the figure below is a public report and not a financial report)

Winshang Big Data-Wins at the site selection shows that there are 17 shopping centers and department stores above 30,000 square meters in the Zhangyang Road business district of Lujiazui. In the L+Mall where Galeries Lafayette has settled, more than 46% of the population living in the surrounding 1km are well-off, more than 27% are middle-class, and there are a few rich people.

There are two high-luxury landmarks near L+Mall-IFC (opened in 2010) 1.9 kilometers away and Shanghai No. 1 Yaohan (reopened in 2016), which is 500 meters away.

Consumer power is online, but those who are willing to buy low-profile niche brands at high prices for luxury goods are destined to be niche in the niche.

Throughout the two launches of Galeries Lafayette in China, both emphasized its "high-end niche" positioning, which was intended to differentiate itself from the surrounding businesses, but is stuck in a situation where it’s difficult to sing. Popularity center, but can not share the popularity of the business district.

is not only related to its own "buyer system", but also related to the following two points:

First, the Beijing and Shanghai stores are joint ventures and joint ventures between Galeries Lafayette and IT Apparel Group, and the two parties hold half of the shares. It can be inferred that Galeries Lafayette has no absolute say in its strategic direction and operation strategy in China.

Second, the two Galeries Lafayette department stores are somewhat influenced by the "gene" of the I.T Group. The latter is obsessed with the influence of the I.T Group, which collects and cultivates niche and avant-garde brands. In the Galeries Lafayette Shanghai store, there are 12 self-owned brands such as Comme des Garcons and JULIUS under the I.T Group.

Galeries Lafayette Beijing and Shanghai stores,Will continue to make adjustments to strive for the initiative in competition. Looking back, the third store of Galeries Lafayette in China is about to land. How to avoid going the old way is more important.

◎ Galeries Lafayette Shanghai store, photo source: Galeries Lafayette China official website

heading west to Guiyang, how to avoid lessons learned?

In 2020, the European market has repeatedly lost control of the epidemic, with almost zero international tourists, and the Galeries Lafayette Group suffered a major blow.

CEO Nicolas Houzé said that since mid-2020, the group's sales have plummeted by half, with a loss of approximately 1.7 billion euros-never before in 25 years of history.

China, which is rapidly maintaining stability, has returned due to the full return of luxury goods consumption, highlighting its importance in the world's business map. Aware of this, Galeries Lafayette is actively seeking change, such as participating in the first China International Consumer Goods Fair held in Haikou. The most concerned is that decided to open its third store in China to the southwest and settle in Guiyang.

In October 2020, Galeries Lafayette announced that it has reached an agreement with Guizhou Honglicheng Commercial Group to enter the Guiyang Huaguoyuan Dolphin Plaza Shopping Center. The new Galeries Lafayette is expected to be with two floors of 11,500 square meters . Dolphin Plaza will open in 2021, and Galeries Lafayette plans to open in 2022.

◎ renderings of Dolphin Square, picture source: Guiyang Huaguoyuan

Guiyang expects Galeries Lafayette to enhance the city’s commercial level, brand richness, and mid- to high-end consumption level; boost the formation of Huaguoyuan’s Dolphin Square , Luxury and complete business system.

and Galeries Lafayette chooses Guiyang,It not only values its urban brand concept and development potential, radiates the whole province and the southwest region, and establishes a "fashion headquarters" in southwest China; it also avoids fierce battles with high-end malls in Chengdu, Chongqing and other places.

From the traditional high-end commercial development of East China and North China, to the high-end commercial development of Southwest China, the "partner" is changed from Hong Kong niche fashion apparel group to a local commercial real estate company, which shows that the Galeries Lafayette Group is determined to change .

Both sides have their own expectations. Galeries Lafayette needs to make two changes to avoid falling into the situation of "great reputation, but tepid".

/ / Reduce buyer genes and reduce the proportion of "high-end niche"

The "customer system" advocated by Galeries Lafayette emphasizes high-end, individual, cutting-edge, and distinctive. It is more suitable for mature luxury consumers like Europe.

However, the Chinese luxury consumer market is still in the strong LOGO stage as a whole. Consumers attach importance to the brand effect of , lacking rationality, and choosing products from niche buyers, which is not popular. This is especially true in the Southwest region in the development stage of luxury consumption.

Therefore, to gain a firm foothold in Guiyang, Galeries Lafayette moderately reduces the proportion of "niche" brands and increases the high-profile luxury brands, which may be a good choice.

◎ Galeries Lafayette Beijing Xidan, photo source: Galeries Lafayette China official website

/ / Add luxury "limited time experience store"

is a fashion culture of Galeries Lafayette in Paris Epitome and source,It is a must-go place for foreign tourists, the number of visitors is second only to Eiffel Tower , and it is the world's largest duty-free shop, with a tax rebate rate of 12%.

However, the two advantages of history, cultural landmark attributes and tax-free price differences have disappeared in China and are difficult to replicate. can make up for the shortcomings only by improving the level of marketing and service.

Judging from the typical gameplay of well-known domestic high-end malls, the luxury "limited time experience store" works well. Take the display experience store at the Chanel No. 5 factory in Sino-Ocean Taikoo Li Chengdu as an example. Through the reproduction of the manufacturing plant, the layout of the industrial wall and modern sceneries will narrow the distance with consumers and bring a full sense of experience.

At the time when the European market is shrinking, it will be less than a year before the third stores of Galeries Lafayette China are launched. The outside world is expecting that the 128-year-old Galeries Lafayette can truly understand China and understand Chinese consumers.

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