MILAN — Italian entrepreneur Maurizio Borletti firmly believes in the formula of department stores and is poised to prove its validity through the revamp of Italy's La Rinascente and the expansion of the Printemps banner in France.
Borletti, La Rinascente's chairman, tapped Vittorio Radice as the retailer's chief executive officer, and in a little more than 10 months the former Selfridges ceo has already changed the accessories, beauty and innerwear floors at La Rinascente's flagship in Milan, attracting top players such as Louis Vuitton, Fendi, Salvatore Ferragamo, Gucci and Burberry.
Here, Borletti tells WWD why he thought it was worthwhile to invest in both store chains, creating one of the few department store retailers to operate in more than one country in Europe, and what the future holds for the two retailers.
WWD: Why did La Rinascente, Printemps and other department stores around the world lose momentum, and what are the right steps to put them back on track?
Maurizio Borletti: We have to go back to superior service and to stimulate our customers with our product research and innovative and luxurious goods. In the Sixties and Seventies, department stores became about selling as much merchandise as possible, to pay the rent and to balance costs of personnel. Just as an example, Printemps closed a beautiful architectural part of its [Boulevard Haussmann] store to gain more space and extend its selling floor, while shutting out the natural light. Consumers today find cheap merchandise in thousands of ways — that's not what they are asking us. They want to know what is happening in the world, they turn to us as purveyors of new, sophisticated products.
WWD: What can department stores rely on, what are their added assets?
M.B.: There are no large retailing spaces smack in the middle of our cities, that's why I believe department stores can work. Of course, there are competent retailers and specialty stores out there, from Biffi to Colette and 10 Corso Como, to name a few, but these can't offer a wide selection of goods for each brand or designer in order to fully represent the essence of the label — they simply don't have the space. The locations are usually exceptional, and the fact that we know how to run this kind of business helped us in the transactions that led to the acquisitions. A number of potential buyers favored the locations but did not know what to do next. We looked at it in a different way: Here is a business that can do better, and we can add value to the location. And with more than 10,000 employees at stake, the vendors, who were socially responsible, were confident we would not put them out of a job.(La Rinascente, which dates back to 1865, was acquired last year by Tamerice Srl, a consortium led by the Borletti family, who owned it before the Agnellis, for 888 million euros, or $1.16 billion at current exchange. This summer, the Borletti Group, together with RREEF, the fund overseeing La Rinascente's real estate portfolio, also bought the Printemps department store chain in France from Gucci Group parent PPR for 1.08 billion euros, or $1.41 billion.
Borletti said the new owners planned to invest 110 million euros, or $144.3 million, in the remodeling of La Rinascente's 15 existing stores and 280 million euros, or $367.3 million, are earmarked for investments in Printemps over the next five years.)
WWD: How do you plan to put the space you have to good use?
M.B.: We can compare marketing merchandise in a department store to building blocks, where categories are associated in different ways — fashion with cosmetics or food — which is something we are investing in, as well. We want to create a food stall on the last floor of La Rinascente's Milan flagship, à la Harvey Nichols and Harrods, for quality food, not just to feed the hungry shoppers. We also want to provide nail bars, hairdressers, spas ... we want to offer brands that you can't find anywhere else, such as [fragrance label] Jo Malone at La Rinascente's flagship in Milan.
WWD: Are you planning to expand outside of Italy, following the example of Saks Fifth Avenue in the Middle East and Asia?
M.B.: No, we don't have such plans because I don't believe in the franchise formula for this kind of venture. Printemps has franchised stores in Japan and Saudi Arabia, but I don't think this is the right strategy. We sell labels, and franchising is appropriate if you sell a specific product. Also, you run the risk of not being able to control the quality. A joint venture would be more appropriate, but this is not a priority for us.
WWD: Do you fear competition from American department stores? Do you think there is a possibility they will start exporting their model to Europe?M.B.: Not really. Americans are busy focusing on their own market, and they are keeping an eye on competing and growing businesses in Canada and Mexico. They would rather go to Asia, because Europe is a fractured, complicated market.
WWD: What about your stores expanding in Europe under one banner? While fast-fashion retailers have expanded throughout the Continent, why do you think department stores rarely operate in more than one country?
M.B.: For us, it would make sense in four or five years, and I would like to do it. There is room in Europe, but we are not ready to do so now. For the time being, [at Printemps and La Rinascente] there are different teams, two different ceo's busy with their own relaunch plans. I think certain department stores could work as a single European chain, but only by aggregation and not by creating new stores. And you can put them together only if the positioning is close.
WWD: Press reports often speculate that you are interested in taking La Rinascente public. Is an initial public offering likely to happen any time soon?
M.B.: The stock market may be taken into consideration by the shareholders when the companies' turnaround is completed successfully and if they want to enhance their investment.
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