Late last year, the French chain of department stores Galeries Lafayette was in the midst of an exclusive discussion with its British counterpart: House of Fraser. After searching for a long time to invest its capital, this project was essential for the French brand.
The Galeries Lafayette wishes to expand
For a few years now, the Galeries Lafayette, one of the most prestigious chain of department stores in France, have been looking beyond the French frontiers to conquer a new and wider market.
With its longue lifeline, its particular style and an international reputation, the brand is surfing on a wave of success. The store located boulevard Haussman has been for some time one of the many touristic stops in France. Since its foundation in Paris in 1893, the company developed itself at an exceedingly fast pace through the acquisition of various stores.
Nowadays, the Galeries Lafayette continues its growth. Thanks to the sale of its 50% shares in the Monoprix distribution chain (that it created), the group recovered 1.2 billion euros.
Since then, the Houzé family, owner of the Galeries Lafayette, has been looking to invest outside of France. According to the Financial Times, the Galeries Lafayette had been looking to buy the British chain of department stores House of Fraser.
An intensive battle to become House of Fraser’s owner
Founded in 1849 in Glasgow, House of Fraser has known great success by opening points of sale for fashion accessories, cosmetics and household linens. Since the year 2000, the company has been partly owned by its chairman Don McCarthy and Icelandic banks. However, it has incurred important loses due to its financial situation.
Nonetheless, the group’s 1.2 billion pounds of profits made it an interesting place for the Galeries Lafayette to invest. Indeed, after opening stores in Dubai, Casablanca, Djakarta and Beijing, the acquisition of House of Fraser’s 60 points of sale across the United Kingdom and Ireland could be a great source of income for the brand. After long discussions, however, the Galeries Lafayette abandoned at the end of January and in April, House of Fraser was acquired by Sanpower, a Chinese group.
The French chain of department stores perseveres and 5 or 6 new stores will open by 2017, including in Istanbul and in Doha (Qatar).
“Expanding internationally is always a risky business for large department stores,” announced Jean-Daniel Pick from OC&C Strategy Consultants. “Not many of them have been successful or even attempted to do so. But the Galeries Lafayette have an excellent reputation, we need to take advantage of this”.
The expansion of the Galeries Lafayette network will be left to the new generation leading the group.