Christophe Cuvillier, ceo of Unibail Rodamco Westfield

PARIS — A retail apocalypse? Christophe Cuvillier is having none of it. That’s to be expected of the chief executive officer of Unibail-Rodamco-Westfield — the commanding Frenchman behind last year’s transatlantic, mega mall merger, a $25 billion bet on the future of shopping centers.

Sitting down with WWD at the real estate company’s headquarters in Paris’ tony 16th arrondissement, Cuvillier explained why he’s not predicting an apocalypse, outlining his vision of concentrating on choice locations and keeping them alive with new brands and a frequent renewal of tenants. His catchwords are destination retail, proximity and convenience. But he also delved into two other cornerstones of the group strategy: mixed-use sites and consumer data — collecting it globally, bringing scale to the local mall business.

The executive hails from some of the most elite training grounds of the French corporate world: the business school Haute École de Commerce, beauty giant L’Oréal and an early techie hotspot, retailer Fnac.

Over a decade at L’Oréal took Cuvillier to London, Milan and Sidney, where he gained experience in the high-end beauty business, representing luxury brands like Lancôme, Ralph Lauren and Armani. He rose up the ranks to become luxury division head of the activities in France, a position he held until 2000, and one that could have logically led to a career in high-end goods. But his interest was piqued by news that François-Henri Pinault, a young ceo at the book and electronic goods retailer Fnac at the time — who would later lead the family group Kering — planned to invest in launching an online commerce site.

“I wanted to be part of this click-and-mortar revolution,” he said. “I thought, whoa, this is ambitious…and I want to be part of it. And so I joined.”

He recalled the moment when the retailer’s web site reached profitability, asserting it was likely the first online retailer in France to hit that milestone, at a time when Amazon was still finding its footing in the French market.

“I can tell you at that time that Amazon was far from being profitable [in France]. And why was it profitable? Because it was leading on Fnac,” he said, referring to the retail chain’s store network, one he would eventually manage himself when he became ceo in 2008.

“When the world was becoming more and more digital and people were telling me ‘What about Amazon?’…Before, I was telling them I was the retailer with the best Internet site. And then I said, ‘You know what? I’m the Internet site with the best store network.’

“And people looked at me as if I were crazy. But this was another way of seeing the world,” he said.

“Having changed from being a brand to being a retailer, and then changing from being a retailer to being a kind of marketplace for retailers and inventing the places for the retailers was pretty exciting,” he recalled, tracing his career trajectory.

Fnac was a precursor in another realm that is relevant to today’s retail landscape, in Cuvillier’s view.

“Fnac is more an experience than a retailer as such, it’s — I guess — one of the first retailers, if not the first in France, that invented experiential retail, which is, you sell products but you also train people, you have demonstrations,” he said. Starting out in photography, he explained, Fnac hired photographers to sell cameras and organize photo exhibitions — to show their customers what they could do, he said, noting similarities with Apple’s current retail strategy.

“That was before the digital world…and this is the future of retail — it was invented in the Fifties, which is very interesting.

“It’s the same story, it matches the same strategy — how you dedicate part of your physical space to something else in retail, and to bring something else than just selling products which is experience, training, meeting people, talking with peers, exchanging experiences, and so on,” he added.

Which is likely the reason, he thought, Guillaume Poitrinal, who headed the French real estate company Unibail-Rodamco, recruited him — his work at Fnac fit nicely with Unibail-Rodamco’s approach to adapting to the shifts brought on by the rise of the Internet. The European real estate giant responded to the changing landscape by making the move from a business-to-business model to a business-to-consumer model.

As part of this evolution, landlords now have to keep track of the performance of the retailers in their shopping centers, according to Cuvillier. This means gaining access to sales figures — which Unibail-Rodamco-Westfield has managed to do for the bulk of its tenants.

“When you’re a retailer, you monitor on a daily basis, your sales, and here, you’re trying to understand. Weather is a very important component…you do it on a day-to-day basis, to optimize each area of a store. When you’re a landlord, it’s the same thing,” he said.

“If you’re a retailer, and you don’t know how much each department is doing — you’re blind. If you’re a landlord and you don’t know how each of your retailers is doing, you’re blind as well. And we’re not blind. We’ve got bright eyes — wide open,” he asserted.

Overall, sales from the company’s retail tenants grew at an average pace of 3 percent last year. “This constant monitoring of the performance is — there again — part of our operating skills,” he said.

Key to the company’s strategy are shorter leases and frequent rotation of tenants to keep the assortment fresh. This entails comparing the performance of a tenant to that of its neighbors, and, when it comes to an underperforming retailer, having discussions “before it’s too late,” he said.

“If you see that someone is doing minus-X percent somewhere, where in another shopping center they’re doing plus-X percent, it means that in this particular shopping center they’re not doing what is required.

“And if they’re negative everywhere, then it’s time to have a serious discussion with these guys because it means that their concept is outdated or their collections aren’t working or that they are not growing as well as they should,” he added.

In the mall giant’s European centers, vacancy rates are low, at 2.4 percent, he explained.

“We have no space basically, so we have to create space for the new concepts and this is where the active operating management of Unibail-Rodamco-Westfield is key,” Cuvillier said.

“I think we put in more efforts than our peers…to make the space for these great new concepts, for all the kiosks and pop-up space and event spaces,” he said. Here is another benefit of the merger, he posited — on the Unibail-Rodamco side, temporary spaces accounted for 1.5 percent of revenues, which means there is room for learning from Westfield teams, who had reached a figure closer to 4 percent.

New concepts are part of the strategy.

“It’s boring retail which is dead, but it’s not exciting retail. And our job is to reinvent these places, to densify them with new activities, but also with new retail,” he said. Cuvillier cited Century City in Los Angeles, Westfield in London and the Vélizy shopping center on the outskirts of Paris, where the company recently expanded the cinema complex and significantly bulked up dining options, and also referred to a strategy of promoting mixed-use sites.  

“We have a team for international leasing based in Paris and they spent their time traveling to the U.S., to the U.K., to Asia to identify new brands to look and see new things,” he said.

By combining Westfield and Unibail-Rodamco, the group is able to introduce American brands to Europe, and vice versa.

“For an American retailer who doesn’t know Europe, Europe is a constellation of countries, of political regimes, of social laws…we offer them a custom-made introduction to Europe, because we offer them 15, 20 flagship shopping centers,” he said. A month after joining Unibail-Rodamco in 2011, the executive recalled, he sought out Michael Kors chief John Idol in New York, and brought the label to Europe. 

In addition to sharing retailers across markets, the group is building up its arsenal of data to share across teams around the world. 

On one side, the company culls anonymous data like footfall figures, and on the other, there is customer data from a loyalty program. With a database of 7 million visitors straddling both sides of the Atlantic, and new customer relationship management tools, the group can interact with consumers on a more regular basis, partnering with retailers for targeted promotions — so that “our loyalty base — database — can become their customers,” he said. 

The company uses loyalty programs as a point of access to consumers, drawing them in with perks like parking, access to higher-speed Internet or events geared to specific interests like sports.

“This is also the digital armor of our rotation strategy,” he said.  

To ensure future traffic flows, the group is also betting on mixed-use developments. 

Pointing to photos of a project on a tablet screen, the executive pointed to a patch of property being developed into housing and office buildings at Westfield Stratford, near London. 

“It’s the symbol, I would say, of our destination shopping strategy — we’re not in countries, we’re in cities with extraordinary locations,” he said, ticking off strong transportation infrastructure as a key necessity.

When Cuvillier took the helm of Unibail-Rodamco, the French-Dutch combo formed in 2007 by his predecessor Poitrinal, speculation was that, faced with options of selling the division or merging it with another pure player, he would shave off the office building part of the business. 

In the end, he decided to keep it.

“I’m today so happy to have made that decision — it was the right strategic decision since our projects are more and more becoming multiuse projects. This office expertise and hotel expertise is helping me on each and every project.” 

He called up another project on the screen — HafenCity in Hamburg, Germany, where he kicked off works with Mayor Peter Tschentscher in a May ceremony.

Hambourg development project

A view of the Hamburg development project.  Courtesy/moka

Sitting on the Elbe river, the new construction will add offices, restaurants, hotels and hundreds of apartments and stores. As for transportation, a cruise ship terminal along with metro lines that connect to historic parts of the city are expected to bring in steady traffic flows. 

The group’s local retail experts in Hamburg were helped by the office division while the hotels were negotiated by the corporate office’s development team, he said, noting the need for the various different skill sets. 

As cities expand, what were retail-only, suburban destinations have become developing city neighborhoods, with fewer brownfield developments in isolated locations. Pointing to another development site of the group, in the east of Paris — a Seventies-era mall, anchored with a department store, at the junction of two main highways — Cuvillier explained that he sees the group’s role as going beyond urban planning.

Soon the site will be linked with a metro stop — adding two new underground lines to the local train service, public transportation will bring traffic, while the group will provide the rest.

“You work here, you entertain yourself here,” he said, drawing out the new scheme over existing parking lots.

Airport travel retail is another area the company plans to expand, leaning on its experience with traffic flows, customer experience and design, along with ties with retailers. The company recently redeveloped a terminal at Los Angeles International Airport, rethinking transit areas as well as waiting spaces. 

“It’s a kind of extension of the flagship downtown or the main shopping destination that we have,” he said. 

“Of course you need to grow this, to dedicate more space, but above all, to have more interesting retail, to have a digital experience, and so on — this is precisely what we do with our malls, which is interesting to replicate in a very different world — more constrained.”

While the group’s airport business is currently concentrated in the U.S., Cuvillier said he’s open to adding cities in Europe “maybe one day.”

Asked how the company recruits talent — the malls business is not an obvious sell to young graduates — he pointed to the group’s European graduate program that is tapped into prestigious business and engineering schools in France.

“We have a very, very heavy recruitment program,” he said, noting the group vies with consulting and banking industry companies in hiring students from his alma mater, HEC. 

The job is “not just a financial job of buying or selling at the right moment of the cycle — which is a skill, which we need, but we do much more than this,” he said. 

“We need people to invent this new district, to invent this new product, to understand what is happening in retail, in offices,” he said, gesturing at the array of architecture models dotting the ground floor of the company headquarters.