BERLIN — La Rinascente has big plans for its new German sister KaDeWe Group.
The Italian retailer has acquired a 50.1 percent stake in the three-door premium department store group that was spun off from the Karstadt Department Store chain last fall. The remaining 49.9 percent stake will stay in the hands of Signa, the Austrian real estate group that also owns Karstadt and is in a bidding war for Germany’s other major department store chain, Kaufhof.
Rinascente now plans to invest 120 million euros, or $134 million at current exchange rate, in the revamp of the three stores: KaDeWe in Berlin, Alsterhaus in Hamburg and Oberpollinger in Munich, according to Vittorio Radice, vice chairman of La Rinascente and Illum in Denmark, who will hold the same role at KaDeWe.
Signa said new doors in Vienna and Prague also are planned.
According to Signa , the goal of the strategic partnership with La Rinascente, which in turn is part of the Thai Central Group, one of the largest department store operators, is to become Europe’s leader in the premium department store sector. Radice told WWD the aim is to maintain the distinctive identity of each store in the process.
“These have to become the number-one destinations for tourists and locals alike, a meeting point, a souk,” he said of the expanding group. “It’s a collection of stores, each with a master plan and structure, and we actually want to emphasize the identity of each, and their local architecture.”
It is obvious Radice has been analyzing “how the customer moves, what they see, the sense of arrival, the location and the building.” He described KaDeWe as “an institution in Berlin, the expression of Germany in all its aspects, from food and technology to transportation, with brands that are very interesting, not only clothing.”
Citing the food halls at each store, Radice observed that Scandinavian products take precedence at Illum, and, similarly, German goods are to stand out in Germany.
Asked about the department store model, while clearly endorsing it, the affable executive firmly said “department stores must stop warring over prices and stock, but rather entertain customers, make them dream. I always say that when you make a purchase [at a department store], you buy a souvenir of life, not because you need it.”
Radice will work with KaDeWe’s chief executive officer André Maeder and his team, and will “take over the future management of the company,” Signa said.
The vice chairman said Central Retail Corp., which took control of the Italian department store chain in May 2011 with plans to expand globally, has provided La Rinascente with “long-term stability, no doubt.”
“You can’t sustain long-term projects with private equity funds. Their horizon in terms of time is different. How can you create a collection of stores in a short time?” he said.
Radice pointed out that revamping La Rinascente Duomo “took seven years and the structure was already there.” A new unit in Rome’s Via del Tritone will open in 2017 after years of works that were even stalled by the recovery of antiquities, mosaics and inscriptions.
He expects the renovation of the three German stores to take between seven and 10 years “for a unified final result.”
Referring to KaDeWe, the executive said “the structure is dated and not contemporary. There are 648,000 square feet to be transformed in Berlin. Its soul must be German as Illum’s is Scandinavian.”
Armando Branchini, deputy chairman of Milan-based InterCorporate consultancy, said “the strategy of developing the Rinascente/Duomo model at a European level had been defined years ago” and that the acquisition of the Illum store in Copenhagen in 2013 was only the first step.
Branchini said La Rinascente’s jewel in the crown store facing the Milan gothic cathedral has a “continental record of yearly revenues of 20,000 euros [$22,321] per square meter.”
He said the acquisition of KaDeWe offers “extraordinary opportunities in light of the growth potential” of the three stores as their productivity per square meter is still much below that of La Rinascente Duomo.
“The [end] network effect is of great consequence, the size will allow synergic advantages with suppliers and partners.”
The KaDeWe Group has an annual turnover of about 600 million euros, or $669.6 million at current exchange, and employs 1,900.
The partnership, according to industry observers, may help to strengthen Signa’s bid for the Metro Group’s Kaufhof department store chain. Still struggling to turn around the Karstadt department stores, Signa’s retail competence has often been called into question, and with La Rinascente now as a partner, the tone may change.
Signa has reportedly bid 2.9 billion euros, or $3.27 billion, for Kaufhof, with a bid by Hudson’s Bay Co. estimated in the same range. Observers say the decision on Kaufhof’s new owners could be made by the end of June. WWD first reported on April 27 that HBC was bidding for Kaufhof.