Published by Global Retail News in February 2020

The department store sector is facing increasingly rough times across Europe in parallel with e-commerce growth. In the U.K., the British high street crisis has already hit department store operators Debenhams, House of Fraser and now even John Lewis, which is warning about potential closures. Operators in Europe are now worried too, as the trend is now spreading into Continental Europe. El Corte Inglés, Spain's leading department store retailer (turnover of €7.6 million in the first half of 2019), is facing difficulties. For the last financial year 2018-2019, only 47 of its 99 department stores generated a net operating profit. As El Confidential revealed, the retailer is engaged in a transformation plan, which objective is to adjust the sales units that show recurrent losses, many of which were opened by former C.E.O. Isidoro Álvarez. The plan involves the sale, closure or renovation of up to 25 El Corte Inglés department stores and shopping centres. According to different sources, El Corte Inglés already offered the Vista Alegre shopping centre for sale (in Madrid) to the supermarket chains of Auchan, E.Leclerc and Carrefour.

Meanwhile, Central Group (the Thai giant retail conglomerate) and Austrian property developer Signa are partnering into a joint venture to buy Swiss department store chain Globus (48 units, turnover of US$789 million in 2019, a fall of 5.6%). Both companies will take a 50%-stake. Globus, operated by Swiss conglomerate Migros-Genossenschafts-Bund, is valued at US$1 billion. The main commercial activity is the property portfolio, especially its Zurich department store building located on the busy Bahnhofstrasse. To boost the new Globus growth, Central Group and Signa are betting on synergies with the other department store chains they already control in several European countries. These include the German KaDeWe Group, the Italian brand Rinascente, the Danish Illum in Copenhagen (all controlled by Central) and Galeria Kaufhof, controlled by Signa. This is the second time that Signa and Central Group have teamed up. At the end of 2019, they signed an agreement to open a KaDeWe department store in Vienna (Austria) by mid-2023. The very upscale KaDeWe banner is expected to replace a Leiner furniture store in a 58,000 sq.m GLA building located on "Mariahilfer Strasse" and owned by Signa. This multipurpose project includes a 1,000 sq.m roof top and a hotel with 150 rooms. As a result, Central Group's European retail activity will expand from US$220 million in 2011 to US$2.2 billion in 2020. This organisation is chaired by Vittorio Radice, former Executive of Habitat, Marks & Spencer non-food division and also Selfridges. In Thailand, Central Group has confirmed an impending I.P.O. for its retail branch, expecting at least US$2.6 billion. It will be the largest fund launch in Thailand since 2013.