MILAN — Vittorio Radice is a reporter’s dream come true. His remarks are pointed, he speaks his mind freely and never resorts to pre-packaged responses. With his easy manners, he is unfazed by having to pose for a portrait — “wherever, however,” he says — and shows his curiosity by asking WWD about the state of the industry.
Not that he needs to, as the vice chairman of La Rinascente has plenty to say on his own — and lots of experience to back up his views. Radice cut his teeth as managing director of Habitat U.K., turned Selfridges around between 1996 and 2003 and, after a stint at Marks & Spencer plc, joined La Rinascente as chief executive officer in 2005, with a mandate to revitalize the then-sleepy department store.
Fast forward 12 years and Radice now leads a very different group from when he started. Under a new owner since 2011, the Thailand-based Central Retail Corp., La Rinascente has expanded to also own Copenhagen-based Illum; KaDeWe in Berlin; Alsterhaus in Hamburg, and Oberpollinger in Munich, with total sales of 1.2 billion euros, or $1.34 billion.
Ahead of the opening of a sprawling new flagship in Rome in September — 11 years in the making — La Rinascente, which is expected to close 2017 with sales of 600 million euros, or $673.2 million — is celebrating its 100th anniversary in Milan with an exhibition called “LR 100-Rinascente. Stories of Innovation” at the Royal Palace, which runs until Sept. 24.
Here, WWD talks with Radice about the importance of service, concessions, why discounting drives him crazy and the challenges — and joys — of retailing.
WWD: Reports about U.S. department stores are gloomy. What is the scenario in Europe?
Vittorio Radice: Unfortunately, the problems will persist if [American department stores] don’t return to what they were — a meeting point where the purchase should be secondary. If not, the battle is played out on the product and today e-commerce always wins.
The experience is the visit. How many people go to Milan and say I’ll go for a tour at Rinascente? It’s a given, it’s comforting to know that the store is there and it’s open. While the new products used to be the draw, now that’s not the number-one reason for a tour of the store. Today it’s about spending time there, listening to music, watching people, being surprised. That’s the key. It’s the same with restaurants — you want to go in the ones that are full, not the empty ones. You are turned off by an empty restaurant; you think there is something wrong with it.
At Rinascente, we surround ourselves with professionals who help us — artists, architects, makeup artists, musicians, the brands themselves. They dedicate their lives to perfect their work. I will never be able to compete with them. How can I tell those who make mobile phones, who spend their days developing them, what they should do? We can’t be experts on cosmetics, ready-to-wear, shoes, ceramics, glasses, espresso, spaghetti, lasagna….Let the experts be experts and help the customers directly so that they have fantastic service. My job is to be the editor.
WWD: Does this mean that the role of the buyer has changed?
V.R.: Yes, the buyer is a negotiator, maps out the adjacencies, the measures, the space and the terms of the contracts. It’s the brand, the artist determining the product. It should not be the buyer influencing it.
WWD: So buyers are also real estate managers?
V.R.: Yes. U.S. stores did not take this leap. Brands should speak directly to the customers, unfiltered by the buyers. We are only an aggregator and our main job is to generate traffic, so that the brands and the artists can express themselves and all the different components flourish. You may go to a restaurant that has fantastic spaghetti and the chef nearby has accessibility to the same ingredients, but with different quantities, how they are served, the associations that are made may not result in the same fantastic spaghetti. We are all chefs and we build our life with different associations.
WWD: Does La Rinascente work much with concessions?
V.R. Yes, of course.
WWD: Is this the right format?
V.R.: There is no secret, no right format. For a concession to exist, you need enough space to guarantee sales, the presence of four to five people, for 10 hours a day for 365 days a year, and the right assortment.
WWD: Do you think Italy and Europe are a step ahead compared with the U.S.?
V.R.: Surely, we made the jump from product store to entertainment store, I can assure you. If you still focus on selling the product, the competition is more aggressive than 10, 20 years ago.
WWD: Do you think aggressive discounting also hurt American department stores? What is your policy in this sense?
V.R.: We increasingly reduced sweeping discounts and strengthened our one-to-one relations, recognizing and supporting our most loyal customers. We say, if you love that kind of product, there’s an offer for you.
WWD: This is a memorable year for La Rinascente, with the anniversary and the opening of the Rome store, which has been in the works for 11 years.
V.R.: Yes, I am 11 years older. [laughs] I’ve seen four mayors and one commissioner in the city. That’s all thanks to the bureaucracy and the archeology in the city, but it’s also part of the charm of working in Italy and of emphasizing a historical center. We set in motion a machine that contributes to revitalize the area around the store. Via del Tritone [where the new store will open] was an area of tailors. This gives us confidence.
WWD: La Rinascente stores are always central.
V.R.: It is a center that takes shape in time around us. In 1865, when [the Bocconi brothers] opened the store [which developed into La Rinascente in Milan], there was the Duomo, with small shops around it, and then the old buildings aggregated with a new facade. Illum is made of four buildings joined together. We have incredible, fantastic locations, and always central. The stores themselves are centers of aggregation, they are important with a superior size, you can’t move or relocate them. When we open the Rome store in mid-September, we switch on the air conditioning and we know it will be on for 10 years. We know we can’t move just because you don’t like something.
The new Roman store will cover 140,400 square feet, plus 16,200 square feet for the food area, with terraces and an aqueduct that dates back to [Emperor] Diocletian, which brings water to the Trevi Fountain. We are the only department store with an antique aqueduct. We restored it and it’s visible in the basement.
WWD: Food is always very important?
V.R.: Yes, it’s part of the entertainment.
WWD: At one point you were looking at a venue in Venice? But DFS Group secured that building?
V.R.: Yes, that’s a sore subject. They won that battle. We were very committed, we wanted to have doors in Rome, Milan, Florence and Venice, as well as Turin, but when Venice fell through, Illum gave us the possibility to become pan-European, rather than a domestic group.
WWD: Central Retail Corp. is an owner with a long-term view. How do you work with the group?
V.R.: Yes, such turnarounds need breathing room. We needed to change the layouts and the culture of customers, who used to shop at Rinascente as in a self-service supermarket. It was all impersonal, customers walking in and out without talking to anyone if they so felt. Now the average price per item is higher, customers need eye contact on the floor, elegance, a different way to be addressed to and top service because it’s a fanciful purchase driven by a visit to the store.
We must work on entertaining and creating enthusiasm so that visitors will become customers. So we have a lot to do for that jump and to be closer to the customer. More than 80 percent of people on the sidewalk have no intention of buying anything, they are in a moment of freedom and leisure on a day out. They are window shoppers; they must enter and leave with a bag.
The effort as a salesperson is bigger. If you wait for the 20 percent that come to buy a pair of socks, you must be competitive on the price, you must keep those socks in stock and that group of shoppers is much smaller and has no desire to spend 1,000 euros [$1,121] for a bag, they are focused on the 24.99 [$28.02] of the socks. American retailers are vying to get that customer for one cent less, but you could do something like this in emerging countries — not in New York, the number-one city in the world for tourism. Why should we do discounts? The message is that we don’t believe in the product.
A person coming in La Rinascente wants to feel like a Milanese and relish that mood that would make them want to buy full price. When I see those discounts in New York I go crazy. Maybe it could work if you are in a small town where you’ve sold everything to everyone there and nobody needs anything anymore, but why do it in a city that draws 17 million tourists? Do something that would draw them in, send lights, be a luring siren, a magnet.
WWD: Department store windows in New York are famously eye-catching.
V.R.: I always say don’t put product in windows. I expect to see product, it’s common knowledge. No, put a siren, something that will attract attention and surprise.
WWD: Retailers have also felt the pinch of online platforms while trying to expand with their own e-stores. La Rinascente does not seem to be too interested, is that true?
V.R.: If you go online you become a generalist. You need the physical presence of artists and brands.
WWD: But there is so much talk about omnichannel…
V.R.: [Turning to his computer screen and clicking on a video presentation of La Rinascente] Let’s see if the site inspires you. This is what I see, this makes me happy, and I head to Rinascente right away. Speak to me about everything but not about the socks at 24.99 euros to bring customers in. Tell me a story, but don’t show me a pair of jeans. How many people are looking at jeans online right now? We can’t compete with that.
WWD: This is in line with your strategy of avoiding a focus on product.
V.R.: Someone is doing it better than we are. I need people in the store, not outside. Even just to buy toilet paper, I want that person in the store, that one more person on the escalator, that one more person that invites to shop. Footfall is the problem with many stores now. Again, people are influenced by whether a location is empty or not, and there is curiosity if it’s busy. We believe in the digital platform for communication but not to sell a single product.
WWD: Why did you decide to buy Illum and the other European stores?
V.R.: There are more similarities between Rome, Paris, Tokyo, London, Milan, Madrid and New York, compared with Milan and [small Sicilian town] Canicattì. For us it’s more important to buy flagships with strong names that made history rather than insular department stores in the same nation. It would have been more interesting for Macy’s to have Filene’s, Bullock’s, Foley’s in big cities, than 150 stores with the same name.
WWD: You are keeping each store separate and distinctive?
V.R.: Yes, absolutely. Each city is proud of these stores, we must keep the local uniqueness. Hamburg is different from Munich and both are different from Copenhagen.
If you think of the chef example, it’s about the quantities, different in each store. Imagine the cosmetics area, in one store the first brands you see are MAC, Urban Decay, Charlotte Tilbury and Tom Ford. In another it could be Estée Lauder, Helena Rubinstein, or Dior and Chanel. You can have blasting music and fragrances sprayed as if there’s no tomorrow or, alternatively, a more restrained atmosphere with brands such as Shiseido and Kanebo as you come in. The impression is different in each country, the dosage and the adjacencies, are different. If you are in Germany, it’s more likely to be Hugo Boss, compared with Giorgio Armani in Italy, or Ralph Lauren at Bloomingdale’s.
We put cars in Berlin’s KaDeWe, it was a must. Germany is famous for its cars — and we sold them. Intriguingly, we sold the Tesla. The passion for cars in Germany is the priority number one but the electric car is American. Now we may do Porsche, or Audi. Why not sell cars?
If you put a Ferrari at Rinascente, it would have an enormous success. How many people ever sat on a Ferrari? It’s about having the experience, sitting in a Ferrari. I remember years ago a man coming in to try an Armani jacket. He enthused about how comfortable it was — he only wanted to have the pleasure of trying it on. We can give this experience. And then who knows, by word of mouth a purchase can follow.
One experience is the view over the Duomo for a coffee at 1 euro [$1.12]. These are all key experiences. Twenty-six years in the U.K. made me learn that you can’t think of buying everything from a potato peeler to a sandwich [laughs] at Marks & Spencer. Not because you can’t, but because you want to breathe, see other things. You go in English cities, there’s Sainsbury’s, Next, Marks & Spencer, there was BHS, Karen Millen, Warehouse, Ted Baker — they are all the same. That’s why we will never open a Rinascente in Dubai. There’s Bloomingdale’s, [Galeries] Lafayette, and they are all the same in the world.
WWD: This is also what happened with designer brand stores.
V.R.: Yes and now, they are all trying to do different stores in Paris, London or Rome, do special-edition collections to diversify them.
WWD: You have previously said the owners are long-term investors because of the scale of each project. Could you give us an idea of the timing of the turnarounds?
V.R.: Yes, these are “monstrous” turnarounds. Just look at Rinascente. Illum will be completed in 2019-2020. I expected a warmer reaction, but the building is done, two out of five floors are done and business is growing, so we are happy. In Munich, we’ll be halfway at the end of 2018. Hamburg is small, it has a fantastic ground floor, and will be done by 2021 or 2022. KaDeWe, we redid the facade, but it’s epic. It will take at least five years if you want to do something that lasts forever.
WWD: What do you think of private labels?
V.R.: It’s convenient for those that have thousands of stores. Rinascente had private labels when we had 18 stores.
WWD: Are additional acquisitions in the cards?
V.R.: No, we have to digest all this. Also, we will redo the Florence and Turin Rinascente stores, starting with the latter in January.
WWD: Do you think it’s important to work with renowned architects?
V.R.: Yes, for example, we are working with Rem Koolhaas and OMA for KaDeWe. But it depends on the size of the store. The architects’ contribution is very important.
WWD: Why do you think Central Retail Corp. wanted to diversify in Europe?
V.R.: This is a group with sales of $10 billion, concentrated in Thailand until five years ago. Now it has opened a European front and one in Vietnam. Their idea was to diversify. They dominate the mass department store segment with Robinsons and Central, they have supermarkets, electronics, books, sports stores, they are well-covered in premium, and so it’s in their interest to explore new ways. They just opened Embassy [Mall] in Bangkok. They were interested in understanding and opening to accessible luxury in Europe.
WWD: How do you view the acquisition of Grandi Stazioni Retail [in train stations] by the consortium that includes former Rinascente owner Maurizio Borletti?
V.R.: On paper, this is a very interesting project, but I would be worried about the bureaucracy involved — given my experience [opening a store in Rome]. They have to work on an audience that does not transit for long, or less than in airports, they have to understand what kind of product, visual stimuli and emotions to offer. Also, there are some stations that are beautiful monuments.