TUCSON, Ariz. — High-end Mexican department store chain El Palacio de Hierro is rethinking its box in hopes of thriving within each community the retailer operates.
That was a big focus of a talk given by the company’s vice president of marketing Carlos Salcido at the Terry J. Lundgren Center for Retailing’s annual conference taking place here through Friday.
The company in January is set to unveil an ambitious new store concept in the Santa Fe area of Mexico City that is entirely focused on wellness. The store will feature luxury performance ath-leisure products for men, women and children along with soccer and training areas and space dedicated to wearables. One floor will be focused specifically on gastronomy and healthy food options.
The company calls this “retail-tainment.”
“We are reinventing the department store in a way,” Salcido said. “We need to go back to this community sense of what a department store is.”
There’s also the company’s El Palacio de Hierro Perisur store, which is south of Mexico City. The company is remaking that store to be a hub for Mexican culture, architecture and culinary experiences, which Salcido said aligned well with the surrounding area.
Perisur will incorporate a denim lab, bar, contemporary art exhibits, a shoe and handbag clinic and barber shop within its four walls.
The two major projects follow the November 2015 opening of the company’s remodeled flagship Polanco store, which set a new level for how the company approaches the melding of retail and entertainment.
The holy grail of those efforts are in the events, of which there are more than 700, the company puts on throughout the year. These range from major galas and cultural events to Super Bowl and Oscars-themed parties. It also has a social media presence, counting more than 4.3 million followers, along with three publications and credit cards to drive loyalty.
“We believe that retail is an entertainment destination — an entertainment destination that needs to generate a ‘wow’ effect,” Salcido said.
The company’s flagship annual event is its Noches Palacio, which features musical acts and other entertainment along with in-store promotions for a two-day period at each of its stores. The event helps drive more than $100 million in sales each year, according to Salcido.
A Noches de Gala event for VIPs offers special benefits for credit card holders and generated about $47 million in store sales.
More recently, in the past three years, El Palacio de Hierro has also pushed into testing pop-up experiences, teaming with brands such as Prada and Louis Vuitton. Last summer, Tesla brought its pop-up experience to Latin America for the first time, partnering with the department store for an eight-week event. Cardholders were given the opportunity to test drive Teslas for the first week before it was expanded out to other shoppers.
Salcido called the Tesla pop-in a “great, great traffic driver.”
The company is thinking very much like shopping center owners, bringing in food and more service-oriented experiences, with barber shops and beauty salons examples of that.
As for whether the retailer would ever expand to the U.S., it doesn’t appear likely.
“There is room to grow still in the Mexican market and why not Latin America?” Salcido said. “You need to be inspired by what’s happening all around and to bring it [to stores] in a very local way. It’s important to be local. Department stores, we are local international companies. We should represent the best of what’s outside and bring it to the community.”
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