Bernard Arnault, chairman of LVMH, wants to dazzle the world once again with his latest venture, the relaunch of Parisian department store La Samaritaine, in operation since 23 June.
In a world still struggling to emerge from the pandemic, where brick and mortar stores are in crisis and where many people believe that the days of the department store business model are numbered, Monsieur Arnault is not afraid to swim against the trends. That’s why the French group has invested no less than 750 million euros in the restoration and refurbishment of La Samaritaine, located in the First Arrondissement of Paris, facing the Pont Neuf.
The mission, heroic and risky, seems however, the right fit for LVMH, specialised as they are in breathing new life into the dustiest and most outdated maisons. If anyone can resuscitate this historic business, it is undoubtedly them.
La Samaritaine was born as a small neighbourhood shop founded in 1869 by Ernest Cognacq and his wife Marie-Louise Jaÿ. The couple applied the business principles of the then innovative Le Bon Marché establishment: fixed prices, exchange and return guarantees, a wide range of products, etc. Thanks to their business vision, La Samaritaine grew throughout the rest of the 19th century and the spectacular building designed by architects Jourdain and Sauvage in 1900 confirmed it as the most elegant department store in Paris, as well as one of the jewels of French Art Nouveau and Art Deco. The business began to decline in the 1990s and between 2001 and 2010, LVMH acquired it in its entirety. After almost twenty years of restorations, negotiations with the French authorities and, to top it all, a pandemic that has cut off the flow of tourists, the project is now a reality and La Samaritaine shines brighter than ever.
According to Laure Guibault’s article for Vogue Business, The LVMH game plan for La Samaritaine, LVMH-owned travel retailer DFS is in charge of operating the new 20,000 square metre space, with an emphasis on the shopping experience. “It was important to make a shop that differentiates us, given the competitive environment in Paris, so we conceived a place for living and strolling,” Eléonore de Boysson, president of DFS for Europe and the Middle East, told the magazine.
Along the same lines, Benjamin Vuchot, president and CEO of DFS, said: “In a world where commerce is undergoing tremendous change, we have to find new solutions. Hence food and beverage, spa, hair salon and so on. We strive to move away from the purely transactional aspect”.
The article goes on to say that, indeed, the fusion of fashion and food is central to the shop experience. There are twelve restaurant concepts, such as Street Caviar, which combines street food and caviar, conceived by Maison Prunier, and Dînette, by Dalloyau, which offers snacks in a doll’s house format on the womenswear floor. There is also L’Exclusive, offering pastries on the beauty floor. The restaurants are strategically located throughout the shop. “It’s what consumers want today, a promenade. I think food courts are outdated,” says De Boysson. Faced with the inevitable comparisons to Harrod’s, La Samaritaine sells French lifestyle in its purest essence, and in doing so aims to attract tourists and Parisians alike.
As we said at the beginning, the department store business model is not doing well lately, and this was so even before COVID-19 made its appearance. Consider the bankruptcies of Barneys New York in 2019 and Neiman Marcus in 2020 (although the latter has dodged liquidation and continues in operation). In an interesting episode of her podcast Fashion Law Network, entitled Fall From Retail Royalty: Neiman Marcus, the attorney and specialist in Fashion Law Kasia Zebrowska-Trauben mentioned the impact of e-commerce and even demographic and sociological factors, such as the decline of the middle class as a socio-economic group, to explain this trend. In Spain, the leading exponent of this commercial model is, naturally, El Corte Inglés. Coincidence or not, at the last General Shareholders’ Meeting, a new strategic plan for the company was announced, which focuses on developing business channels other than retail. In this sense, Víctor del Pozo, member of the Shareholders Board, declared that El Corte Inglés will become an “ecosystem of services and businesses, where new activities (as a mobile operator, energy provider, security services, etc.) will play an important role”. Likewise, as reported by Modaes in its article “El Corte Inglés seeks new outlets for its ‘brick’: renting to third parties, ‘dark stores’ and outlets”, in the last year it has carried out several operations to make its real estate assets profitable, such as the sale or rental of some of its spaces, which seems to indicate that the company needs cash.
We’ll see what the future holds for the brand new Samaritaine; Benjamin Vuchot acknowledged to Vogue Business that business will be slow at first. “We know we have a difficult 18 months ahead of us. We expect a return to a decent level of travellers by mid-2022. When the tourists return, La Samaritaine anticipates around 5 million visitors a year.” To conclude, and in relation to the general crisis experienced by department stores, is worth mentioning the so-called “great bifurcation of retail”. This is a theory that Kasia Zebrowska-Trauben also referred to in her podcast and, according to which, in the current scenario, the establishments that are to prevail are of two types: either those dedicated to the highest ranges of luxury, or, on the contrary, those that offer the lowest prices. Businesses in the middle range (such as most department stores) will often struggle to survive. La Samaritaine, for its part, with its strong focus on the most exclusive luxury, seems to have a bright future ahead of it.