Galeries Lafayette's China deployment confirms ambitious international expansion plans
today Oct 28, 2019
On Friday, Nicolas Houzé, the CEO of French department store group Galeries Lafayette, said that the group is planning to open an extra eight branches in China by 2025, in addition to the stores it operates in Beijing and Shanghai.
Galeries Lafayette is well-known to Chinese consumers, who account for one third of the customers of the group’s flagship branch in boulevard Haussmann in Paris. On Friday, the group officially inaugurated in Shanghai its second Chinese department store, after the branch opened in Beijing in 2013. The new Shanghai store extends over 25,000 m2 and is located in the L+Mall shopping centre, in the city’s Pudong district. Galeries Lafayette has opened its two Chinese branches in collaboration with local partner I.T, via the GL China joint-venture company set up in 2013.
By 2025, the group’s forecast is that China will account for between 60% and 70% of its revenue outside France, according to Houzé, speaking to French agency AFP. By then, Galeries Lafayette is hoping to generate a revenue of €1 billion in China, said the group’s international vice-president Philippe Pedone, without disclosing the current revenue. International operations currently account for 10% of the group's revenue, a share which is expected to rise to between 20% and 25% in 2025, he added. “We must double our growth rate in this market, something which is entirely possible,” said Pedone.
Houzé underlined that the opening of the Shanghai branch was wholly financed by the revenue from the Beijing store, which became profitable over the course of three years. He did not disclose the amount invested by the group in Shanghai.
Galeries Lafayette is expecting to benefit from scale economies as it invests to open new branches, compared to its outlay when it first entered China. “It took us six years to open a second store. We will strive to be quicker in opening a third one,” said Houzé, without revealing which cities the group is targeting for its next openings.
“Galeries Lafayette is a highly attractive brand. We have been approached by shopping mall owners and by municipalities looking to open Galeries Lafayette branches across China,” underlined Houzé, adding that the group's policy is to focus on “the genuine potential” of a specific location and clientèle. The launch of a mini app presenting the department store on Chinese social network WeChat is expected to give the group further clues as to the areas with the highest potential.
“We must be extremely careful because, of course, our goal is finding high-quality locations,” said Houzé, a member of the Galeries Lafayette’s founding family.
The group operates 59 department stores in France. Outside France, it has branches in Doha, Dubai, and in Berlin, Istanbul, Beirut and Jakarta. Further openings are planned in Luxembourg, next month, and in Milan in 2022. In 2018, the Galeries Lafayette group generated a revenue of €3.5 billion.
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