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PARIS — With the opening of its renovated luxury accessories department, Paris department store Printemps plans to vault into a new league.
This story first appeared in the April 16, 2010 issue of WWD. Subscribe Today.
Chief executive officer Paolo de Cesare expects the iconic category to position the flagship on Boulevard Haussmann alongside the best department stores worldwide, rivaling Harrods in London and Bergdorf Goodman in New York.
“I’m looking at 2010 in very positive terms,” the Italian-born de Cesare told WWD. “It’s the major impact of our renovation which makes the store really absolutely unique in Europe and, frankly, in the world.”
The three-story accessories zone, conceived by Canadian design studio Yabu Pushelberg, is emerging from a two-year renovation scheduled to be finalized in June with the completion of a three-story Louis Vuitton shop-in-shop, the first of its kind.
It is part of a wide-ranging effort to move Printemps upscale, following its $1.33 billion sale in 2006 by French retail-to-luxury group PPR SA to a consortium that includes the Borletti Group, which owns Italian department store chain La Rinascente.
The new owners pledged to invest 280 million euros, or $382 million at current exchange rates, in renovating the retailer’s 17 stores in France, with around half that sum earmarked for the Paris flagship.
So far, the 145-year-old store has benefited from a 100 million euro, or $136 million, facelift that began with the unveiling of its restored Art Nouveau facade in October and entailed the closure of entire sections for much of last year.
Despite the disruption, the group registered sales of more than one billion euros, or $1.4 billion, in the fiscal year ended March 31, down 2.9 percent year-over-year, de Cesare said, declining to provide exact comparative figures for 2008.
“When we look at our performance compared to what happened elsewhere in the world, and what’s happening in Japan, I have to say that we feel very good about the resistance of our business,” he commented.
“It is better than what we initially anticipated because we were very prudent in our budget. So I think it’s a year where we successfully navigated the crisis, and very importantly, we positioned ourselves to have a very positive 2010,” de Cesare added.
Since the first renovated boutiques carrying leather goods, watches, jewelry and other accessories opened in November, brands including Prada, Chanel, Christian Dior and Cartier have registered sales growth of more than 25 percent, the executive revealed.
“I expect they will post double-digit growth in the year,” he said. “We’ve seen an immediate and very, very strong response from customers to the new space and the new offer.”
Stores on the ground and first floor are linked by a cream-colored front wall and share similar backlit logo signage. On the basement floor, which houses the entry-level offer, Printemps went a step further by requiring brands to slot into units of its own design.
The retailer’s 2009 sales performance comes against the backdrop of a 3.5 percent decline in French consumption of clothing and textiles, which followed a 3 percent drop in 2008, according to data provided by the Institut Français de la Mode.
Printemps registered a 7 percent sales rise in the key month of December and has maintained that momentum through the first quarter, de Cesare said. For 2010 as a whole, he expects sales to grow in the midsingle digits.
“This will be done with Haussmann growing high-single digits, really high-single digits, with the new openings, and the chain will be low-single digits because it’s a more stable and continuous business,” he said.
De Cesare said profitability was improving, but remained very low compared with its peers. Operating profit stood at around 3 percent of turnover, close to its level when PPR was still owner, but he aims to raise it within a few years into the range of 8 to 12 percent enjoyed by competitors of a similar stature.
“This is a very big ship with 145 years of history and I think it’s important that we move it organically, and that’s what we are doing,” he said.
The 4,300-square-foot Louis Vuitton store, its first new Paris boutique in 10 years, is expected to bring in “major” revenue. “As everyone knows, Louis Vuitton is one of the most productive corners in a department store in terms of sales density and they are going to get a very significant space, so we can expect a very significant turnover for them,” said de Cesare.
The retailer is also implementing an ambitious program of cost efficiencies, including the installment of a retail application from business software provider SAP that will allow it to better track items from warehouse to shop floor.
“It is incredible the change that SAP is bringing to our operations, because our system was really archaic. I am absolutely shocked how we managed a business of this size and this complexity with the system we had,” de Cesare said.
Printemps is upping its service level with features including trendy gourmet cafe Cojean in the basement and a revamped and enlarged Ladurée tea room on the first floor. A separate Ladurée stand selling gift items like macaroons is located near the principal ground-floor entrance.
Foreign customers will have free access to a concierge, located on the ground floor, while French residents can enjoy unlimited access to the service for a flat fee of 1,500 euros, or $2,000, a year.
A revamped personal shopping space on the fourth floor will host trunk shows, still rare in France, having kicked off with a Victoria Beckham presentation in December.
The group is banking on increased tourist flows in the French capital in 2010, with a steady flow of Asians and the return of Russian visitors following a trough in 2009. Foreign visitors accounted for 20 percent of turnover last year, but de Cesare hopes to gradually raise this proportion to 30 to 35 percent.
Outreach efforts abroad include promoting the store on influential blogs in Russia and China. As a result, spending by tourists is expected to rise 20 percent this year after an increase of 6 percent in 2009, he said.
Notwithstanding the foreign push, Printemps is not neglecting its French customers. It plans to reveal shortly the opening of its first new store since 1960 in the South of France, where it is already present in Marseille and Toulon. The 64,500-square-foot store should open in 2013 or 2014, and the retailer is scouting other locations.
“With our positioning, we could be in 20 stores,” de Cesare said. “Our objective is to take the customers that today want to discover luxury, that have the means to afford luxury but frankly are intimidated, and we want to make them it very easy for them to find and buy luxury.”