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Europe’s wealthiest man, Bernard Arnault, is spending more than $1 billion on a Paris department store, betting that rich Chinese tourists will shop at La Samaritaine, which is set to reopen next April after a 15-year renovation.
La Samaritaine is part of Arnault’s LVMH luxury empire.On Tuesday the company gave reporters a tour of the site, showing off its restored Belle Epoque glamour, including ornate frescoes, mosaics and wrought-iron staircases.
Such temples of consumption used to drive retailing, but since the Louis Vuitton owner acquired the site in 2001, the industry has been upended. As shoppers shift online, department-store chains like Macy’s in the U.S. and House of Fraser and Debenhams in the U.K. have been shutting dozens of stores. Barneys New York filed for Chapter 11 bankruptcy protection in August. Many U.S. shopping malls are half empty.
The unveiling comes as Arnault also attempts to burnish his legacy by clinching a deal to acquire American jeweller Tiffany & Co. for upwards of $14 billion in what would be his biggest acquisition yet.
Why bet against the retail odds in Paris? In short, because of China. Despite a trade war with the U.S. and anti-Beijing protests, Chinese shoppers are fueling the luxury industry’s growth, and they’re stalwarts of the many outlets for LVMH brands across the French capital. La Samaritaine is being remade to target well-heeled customers from overseas.
Selling space in what had once been the largest and most affordable of Paris’s famed grands magasins (emporiums) will be cut by half to make room for a five-star Cheval Blanc hotel, restaurants, offices and a Christian Dior-branded spa. The retail space will be filled by DFS, the LVMH-owned travel retailer known for its expertise selling Givenchy perfumes and Fendi handbags tax-free to Chinese shoppers.
DFS forecasts that the compact shopping mall with more than 600 brands will draw several million visitors per year.
“The number of foreign visitors to Paris is growing larger each year,” said Eleonore de Boysson, DFS regional president. Clients have become “increasingly demanding for the selection of products as well as the experience you offer.”
Travelers will have the option of duty-free checkout at every register, and tour buses will be able to use the Louvre museum’s parking area, helping to avoid the sidewalk chaos that’s long plagued rival department stores like the Galeries Lafayette.
LVMH acquired La Samaritaine in 2001, aiming to renovate the store while keeping it open for business. That idea was scuttled four years later because of safety risks. Original flooring made of glass tiles and partially hidden underneath layers of carpet and retrofitted electric wiring was estimated to be able to hold up only 90 seconds in the event of a fire, for example.
In a nod to the original Art Nouveau concept, glass tiles have been reintroduced in the Samaritaine’s latest incarnation—this time layered on top of concrete.
LVMH spent years fighting objections to the sweeping restoration, which merges multiple structures—built from the 1600s through the 1930s and progressively annexed to the Art Nouveau core—behind a contemporary facade designed by the Japanese architecture firm SANAA. One neighbor who opposed the project said Paris zoning authorities had refused to let her install a single skylight in her historic building, while LVMH won approval for a rippling glass wall the length of a city block.
“The Samaritaine has no architectural unity, which isn’t to say it doesn’t have personality,” LVMH Chief Financial Officer Jean-Jacques Guiony said. “It’s fitting that there should be a strong architectural gesture of the 21st century to complete this new incarnation.”
LVMH reportedly paid the equivalent of around $249 million (225 million euros) to take control of the Samaritaine in 2001, later acquiring the remaining shares for an undisclosed sum. It has since spent 750 million euros to renovate and outfit the space.
“In a highly competitive Paris market, it was essential that we set ourselves apart,” Boysson said.
©2019 Bloomberg L.P.