Future for sale / Global
In a world of disposable fashion and bad service, there are some stores that do get it right, and are seeing their profits boom. We profile five retail giants that should act as benchmarks for other floundering businesses.
At exit 7 of Euljiro Ipgu station, dull subway strip lighting gives way to a warm, golden glow. The change in ambience marks the threshold of Korea’s most famous shopping mecca: Lotte Department Store.
More than 100,000 shoppers step through the glass swing doors every day to peruse 13 floors of retail heaven before leaving with white and gold paper carrier bags. The bustling store bears little sign of the company’s humble origins 40 years ago when Shin Kyuk-ho opened Charlotte Buff, a chewing gum confectioners romantically named after Goethe’s muse.
Since then, the company has grown exponentially to become a powerhouse in modern-day Korea. Today, few aspects of Korean life are untouched by Lotte – from pharmaceuticals and supermarkets to baseball teams and hotels.
The company has over 40 per cent of Korea’s department-store market share, with 23 branches, including 13 in Seoul, and its first international outlet opened in Moscow in September. But the jewel in the crown remains Lotte Department Store.
“There are a number of reasons why people shop at Lotte but one is exceptional service,” says Sun-Dae Lee, the PR general manager. “We have always emphasised the importance of good service, in which our staff are fully trained.”
The flagship Lotte, in the heart of Seoul’s young fashion district Myeong-Dong, was the first department store to open in the country in 1979. Smiling ladies dressed in candyfloss-pink tweed suits and hats dispense store maps. These are essential for a shop that covers almost 890,000 sq m. The store employs 700 staff to deal with 700,000 shoppers a week, half of whom leave with a purchase.
In the basement, fresh fish is displayed to perfection in the buzzing food hall, alongside exquisitely packed fruits, teas and Korean rice sweets. Fashion covers five floors, while electronics, home furnishings and duty free shopping are among a string of specialist departments. A 13th-floor culture centre offers activities ranging from cookery and dance classes to lifestyle lectures. Not forgetting the sports centre, wedding consultancy, pram rental and free mobile-phone charging.
The store is linked by tunnels to the 10-floor Avenuel, a fashion store so luxurious that there are orchids, glossy magazines and TVs in its loos. Next door is the Lotte Youth Plaza, filled with young fashion, while a hotel completes the complex known as Lotte Town.
Lotte’s aims for the future are no less ambitious: stores are planned in emergent China, Vietnam and India.
01 Founded: 1979
02 Number of stores: 23 (department stores)
03 Annual turnover and profit: gross sales in 2006 were around €7.2bn and net profit was around €568m.
04 Future plans: stores for Vietnam, China and India.
05 What Monocle would like to see Lotte do next: run training schools for the staff of department stores in Paris, New York and London.
There’s a saying in the world of retail: department stores don’t travel well. But Finnish retailer Stockmann is an exception to the rule. The company, one of Finland’s premium retailers, has four stores in Russia and two in Latvia and Estonia. It’s currently carrying out a large investment programme for additional expansion, and almost a third of its revenue is derived from abroad – a figure the company aims to double by 2011.
Stockmann arrived in Moscow in 1989 and has since become something of an expert in the complicated but potentially lucrative Russian market. “We were the first western retailer to establish operations in the Soviet Union and we’ve been through all the upheavals: the breaking up of the country, the tanks on the streets, the collapse of the economy in 1998,” says Stockmann’s CEO Hannu Penttilä. “To succeed in Russia, you have to be in it for the long term; it’s no quarterly business.”
Stockmann has expanded in Russia in tandem with Ikea, renting space in the Swedish retailer’s huge shops. Both are attracted by the massive growth potential in Russia: the country has 13 cities with more than a million inhabitants, plus several more with around half a million.
Stockmann is now building a fifth department store in Moscow and its first in St Petersburg. The next city to get a Stockmann will be Yekaterinburg. “I talk to experts and Russian officials a lot, and the message is pretty clear: in the next five to 10 years, they don’t see any great changes in the economy: growth will continue, the currency will remain stable and [President Vladimir] Putin’s people will remain in power,” says Penttilä.
The company owns several other store concepts, most notably the Finnish fashion chain Seppälä, and the rights to Nike’s products in Russia. Recently it made a bid for the Swedish fashion chain Lindex, which it also wants to take east.
Eastern European countries, especially Russia, are notorious for their corruption and bureaucracy. Penttilä’s advice is to remain a good corporate citizen. “That’s central. Pay your taxes and customs, and don’t get into any grey areas. That means it’s easier to get help when you get into difficulties. Any problems we’ve had, Finnish and Russian politicians have taken seriously,” he says.
01 Founded: 1862
02 Number of stores: 13 department stores; six academic bookshops; 170 Seppälä stores; 14 Stockmann Beauty stores. Also four Zara stores; 16 Bestseller stores (brands such as Vero Moda, Jack & Jones, Only); three Nike stores and Hobby Hall, a mail-order and online retailer. The company has operations in Finland, Russia, Estonia, Latvia and Lithuania.
03 Annual turnover and profit in 2006: turnover €1.5bn; operating profit €130m; profit before taxes €129m.
04 Future plans: Stockmann is engaged in negotiations to take over several department stores in Russia. It also aims to take Seppälä to the Ukrainian market and the Swedish fashion chain Lindex to the Russian market.
05 What Monocle would like to see Stockmann do next: upping the fashion factor in its department stores by introducing new, interesting Scandinavian designers and international luxury brands.
“I think what people are responding to is the combination of modern, British, classic and organic,” says Helen Wright, MD of Bamford, who formerly worked in Ralph Lauren’s design studios. “And that is of the moment. We haven’t deliberately tried to be of the moment but, right now, people want special, more interesting, quieter things.”
And retail experiences don’t come much more interesting than at Bamford & Sons, the London store that combines an updated take on luxury cable-knits, moleskin trousers and hand-finished Neapolitan shirts (for men), and a pure white cashmere yoga collection (for women), with perfectly judged, hand-picked gadgets and accessories such as vintage Rolex Submariners, limited-edition sterling silver iPods and cordless Sony mice (for everyone).
Add to this an in-store café stocked by Daylesford Organic, which uses produce from the Bamfords’ organic estates in Gloucestershire and Staffordshire, and the revelation that these are the same Bamfords as JC Bamford Ltd – or JCB, the yellow diggers – and you begin to understand what an extraordinary story this is.
Since opening its first shop in Notting Hill in September 2004, Bamford has expanded to five dedicated stores, is stocked in 30 others, and has penned a US deal with Bergdorf Goodman. It’s also eyeing the Russian, Chinese and Indian markets, and is about to launch Bamford Body, a range of “organic/botanic” bath and beauty products certified “95 per cent organic” by the hard-to-impress Soil Association (expect to see it stocked in upmarket spas before very long).
“We have had,” Wright says, sitting in Bamford’s not immodest wood-and-white offices off Sloane Square in Chelsea, “an amazing three years.”
It has been posited that the Bamford brands (Bamford & Sons menswear, Bamford womenswear and Daylesford) create a kind of mythical, Merchant Ivory England where, as one journalist had it, “teenagers read adventure stories in hammocks, while mum and dad putter around on their sailing boat before Sunday lunch at the family’s country pile”. All of which would be so much clever marketing, were it true. Its singular combination of products is so successful precisely because it’s based not on a myth, but a reality: that of the Bamfords.
“Bamford is about a family,” says Wright. “It’s about their values, about how they live and about their passions. That is a principle of the business.” Indeed, Sir Anthony Bamford, chairman of JCB and the son of founder Joseph Cyril Bamford (a man who was, apparently, so careful with money that he insisted his wife made all their curtains) is a lover of vintage cars and planes, Lady Bamford is an environmentally active holistic enthusiast, while son George is a fully fledged gadget-head who scours the world for the limited-edition books, Tom Cat yo-yos and other boys’ toys that characterise the stores. In short, the Bamfords are selling a lifestyle – their own.
The venture grew out of Lady Bamford’s ahead-of-the-curve enthusiasm for organic food and the methods she was able to deploy at Daylesford, the family’s country retreat. “Organic begins the story,” says Wright. “Lady Bamford’s interest expanded, but remained true to things that are pure and of the earth. It became a stepping stone for menswear, then womenswear, then the rest.”
Integrity, purpose and a forward-thinking environmental message – not to say butter-soft suede jackets to die for. In the end, the only real surprise with Bamford is that the competition has been slow to copy the format.
01 Founded: 2004
02 Number of stores: five
03 Annual turnover and profit: “We do not release the annual turnover and the profit details.”
04 Future plans: Bamford Bath & Body. Expansion into Russian, Chinese and Indian markets. Further expansion in the US. 05 What Monocle would like to see Bamford do next: bring its unique taste to the home furnishings market.
What do you do when the world’s fussiest, most high-maintenance consumers decide they don’t like department stores any more and they’d rather shop in boutiques and highly edited “select shops”? If you’re the former you panic, stick to what you think you do best and die. If you’re the latter you watch your results go through the roof. However, as the market we’re referring to is Japan you improve on both. You refocus the department store to cater almost exclusively to 25-to-40-year-olds and fill it with the best “select shops” and emerging designers.
Since its launch as a household utensil and furniture shop in Nagano in 1931, Marui has become a leading player in Japan’s department store scene. Fuelled by its popularity among fashion-conscious females, today the company has a turnover of over €3.3bn and 23 Marui department stores throughout the country, including 10 in the capital. The newest and shiniest of them all is Yurakucho Marui in Tokyo. Housed in the first eight floors of a gleaming, curved 110m-high building, the store forms the core of the new complex Yurakucho ITOCiA. On its opening day on 12 October, 120,000 people rushed through the doors to explore 18,500 sq m of retail heaven, spending almost €1m in the process.
With more than 170 individual shops housed inside Marui – only 31 of which are managed by the department store – the layout is akin to wandering around a very luxurious indoor market. Or, as a spokesman says: “Customers can walk around as if window-shopping inside the store.” Fashion is the raison d’être at Marui. From Baby Jane Cacharel and earth music & ecology to Burberry Black Label and Noble Birth, a huge variety of designers are showcased on five floors of women’s fashion and accessories and two floors of menswear.
Music and green spaces, however, are also important. There is a monthly music menu for each floor, enabling shoppers to peruse fourth-floor dresses against a soundtrack of Hotel Costes X or first-floor handbags with bossa nova playing in the background. Spaces alongside escalators are filled with green plants, stylish furniture and gentle music, where tired children nod off, bored husbands play Nintendo and girlfriends gossip.
Monthly displays are also set up in “event spaces” on four floors. These include the Leaf Terrace on the eighth floor, where florists Hana-Kichi offer flower-arranging classes in a studio behind wafting white curtains. Meanwhile the basement bustles with more than 25 cafés, restaurants and food stores, ranging from the Japanese sweet store Sakura Michi to the organic outlet Natural House. But the biggest draw involves neither fashion or healthy eating: it is the phenomenally popular Krispy Kreme, Japan’s second outlet of the US doughnut chain.
01 Founded: 1931
02 Number of stores: 23 (10 in Tokyo)
03 Annual turnover and profit: In 2006 sales totalled €3.3bn and profit was €26m.
04 Future plans: opening the new Marui City Shinjuku in Spring 2009.
05 What Monocle would like to see Marui do next: work with a Japanese architect to give its souped-up interiors a matching exterior.
Eslite says everything about Taiwan. When you’re unrecognised by much of the world as a nation you strive harder to stay on top of things. It’s for this reason the Taiwanese bookseller’s flagship store in Xinyi is one of the biggest bookshops in the world – a consumer can spend an afternoon here and be briefed on pretty much everything.
What’s so special about it? For starters, it stocks more than a million books and 300,000 different titles. There are separate shops that focus on art, along with lecture theatres, exhibition spaces, cinemas, restaurants and coffee bars. For Taiwanese people wanting to know about the latest cultural trends or what is in vogue, Eslite is the place to head.
That is why the store also sells fashion. When you enter the building you walk past boutiques for Comme des Garçons, Vivienne Westwood, Agnès B, Voyage and the Taiwanese designer Isabelle Wen. The two basement floors are devoted to younger fashion, homeware, a bakery, a wine cellar and the food village.
The bookshop itself begins on the second floor, where new arrivals, bestsellers, travel, business and leisure titles are stocked. There’s also a huge magazine collection, with a comprehensive selection of foreign titles. Ascending floors feature literature, social sciences and humanities, health and cooking. There’s also an open cooking studio where celebrity chefs, wine experts and writers come to give practical demonstrations and talks.
The top floor is Eslite’s culture space, featuring a cinema/lecture room, an exhibition hall and several restaurants. On the roof they host open-air music events – there’s a separate music shop on the fourth floor. Despite the store’s name being a play on the word “elite”, there is nothing elitist about it. You are welcome to sit on the couches, steps or floors and read for hours. It’s also family-friendly. Parents can browse around the shop while leaving their children in the care of the staff on the fifth floor, where there’s a children’s bookshop, a DIY art space and a children’s museum.
01 Founded: 1989 after Wu Chin-yu, who had made a fortune selling kitchen equipment, had heart surgery that left him looking for a new direction.
02 Number of stores: 41. Two new shops were added to the portfolio in 2007.
03 Annual turnover and profit: in 2006 the company had a turnover of €214m, an 11 per cent increase on 2005.
04 Future plans: Eslite’s key ambition is to get a foothold in China, and it hopes to have its first store there by 2008.
05 What Monocle would like to see Eslite do next: go global with 24-hour branches in the world’s key capitals.