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- 7 Jul 2011
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Department Stores Go Global: Phase Two


A rendering of the Morocco Mall in Casablanca which will be anchored by Galeries Lafayette next year

Over the past decade, pioneering retailers like Harvey Nichols and Saks Fifth Avenue kick-started a growth strategy trend that saw department stores open franchised units in leading emerging markets like Saudi Arabia, Dubai, Turkey, China and Mexico. But with the arrival of the global financial crisis and the ensuing poor performance of the multi-sector retail trade, the globetrotting seemed to fizzle out. Until now.

Several reports in the news this week highlight a renewed appetite for international expansion plans among the early adopters and serious plans for retailers like Galeries Lafayette and Harrods which were largely absent from the first phase.

Ironically, Galeries Lafayette was actually one of the first out of its home country when, in 1997, it opened on Beijing’s Wangfujing Street but, in less than a year, the French department store retreated out of China citing disappointing sales. Besides an outpost in Berlin, its only other international opening came with the 2009 launch of its branch in Dubai.

 There’s a renewed appetite for international expansion among early adopters as well as serious plans for retailers which were largely absent from the first phase. 


Entrance to Galeries Lafayette in the Dubai Mall

Now, Jing Daily reports that, after a 14 year absence, Galeries Lafayette will return to Beijing at the Seasons Place Mall in the city’s Xidan shopping district. Paul Delaoutre, CEO of department stores at Galeries Lafayette & BHV, told Jing Daily that “the Beijing store will be an essential part of our long-term development plan.”

In the past two years, the department store has been cited many times by reputable sources as having been in talks with franchisees or joint-venture partners in several French-speaking frontier markets like Lebanon and Tunisia, although these deals have since seemed to fall through.

In Casablanca, however, plans appear to be full steam ahead to anchor the Morocco Mall — which is scheduled to be completed next year. And according to CPP Luxury, Galeries Lafayette will also open in Jakarta, Indonesia by 2013 and in Doha, Qatar in 2014.


The Harrods flagship in London

Like Galeries Lafayette, Harrods too missed out on the first wave of expansion overseas and has reportedly been in a number of high-level talks with foreign franchisees in recent years. But now that it is under new Qatari ownership, some observers believe that things could accelerate.

Last Monday, a piece in Luxuo suggested that the iconic British department store is seriously targeting the Bund area of Shanghai for its first foray abroad.

“China is the most probable [option for a foreign branch], but we would have to do a lot of work first,” Harrods managing director, Michael Ward was quoted as saying.



Harvey Nichols in Ankara, Turkey (the second in the country after Istanbul)

The emergence of these late arrivals as new contenders in lucrative emerging markets has only seemed to bolster the resolve of department stores which began the trend to expand even further.

Harvey Nichols, which currently counts five branches outside the UK (Riyadh, Saudi Arabia; Dubai, UAE; Istanbul, Turkey; Ankara, Turkey; and Hong Kong) is on track to open its next in Kuwait by 2012 and a second outlet in Hong Kong later this year.

Joseph Wan, Harvey Nichols Group CEO told the Gulf News earlier this year: “We have not put anything off or on hold, we still continue to focus on emerging markets. Our strategy — and opening — in this region is for the long term.”

Similarly, Saks Fifth Avenue is penetrating deeper and exploring further afield. Its current portfolio of licenses includes stores in Riyadh and Jeddah, Saudi Arabia; Dubai, U.A.E.; Mexico City, Mexico; and Manama, Bahrain. Late last year, the American retailer opened a second store in Mexico City. Now, according to Market Watch, Kazakhstan is next on the agenda set to open in August 2012 (in the Esentai Shopping Mall).

Stephen I. Sadove, chairman and CEO of Saks Incorporated, said: "We are so excited to bring our first store to this part of the world and believe that Almaty, Kazakhstan, with its rapidly expanding affluent population, will be a great fit for Saks Fifth Avenue.”