France

The venerable and trendy Galeries Lafayette, centrally located in the heart of Paris along Boulevard Haussman and a few blocks from the Paris Opera, is a monument to France's pride -- a pioneer of the fashion industry and undeniably one of the most famous department stores in the world.

Boulevard Haussman is one of Paris' busiest retail hubs, a guaranteed stop for all visitors to Paris. "This is a where it all begins, the core of the fashion industry where designer's are born, developed and made into whom they are today" says Philippe Houze, Co-director of Galeries Lafayette SA. Truly enough, company has been the pillar and starting point of such well known designers as Sonia Rykiel, Jean Paul Gaultier, Yves St. Laurent -- all essentially Gallic designers who have gone on to make their indelible marks on the fashion world.

Philippe Houze, co-director of the high-end global retailer Galeries Lafayette

Galeries Lafayette SA manages a chain of department stores and operates other retail outlets such as Nouvelles Galeries, Monoprix, Uniprix, and BHV. They supply 245 retail outlets as well as wholesale operations throughout Europe. The company also provides restaurant, financial, and computer services. The bulk of its business lies in retail clothing and consumer goods sales, which accounted for 85 percent of 1999 revenues.

"Our strategy is not to force expansion by acquisitions in international markets, but to deliver quality customer service by all means," says Houze. Always true to the basic principles of successful retailing, Galeries Lafayette has recently taken major steps in building the department store as fashion capital.

Just before the summer a loose alliance by Galeries Lafayette and the powerful Spanish retailer El Corte Ingles was agreed upon to strengthen their specific business areas. By accepting each other's store cards, Galeries Lafayette and El Corte Ingles have moved to enhance service related initiatives in different areas such as travel, purchasing, and e-commerce. The French company has thus further improving its supply chain and its renowned personalized form of customer service.

The group has also seen indicated interest in acquiring the 18 Marks & Spencer's sites earmarked for closure in France. The stores "are of great quality, and present opportunities for the group," remarks Houze. Acquisition would mean taking over the entire portfolio of stores together with their staff and rebranding them under Galeries Lafayette, Nouvelles Galleries, BHV, and Monoprix marks. There is no doubt that funding for the deal would not present a problem for the French company.

Other significant steps have been made in raising turnover in its retail business. Reinventing the product range by investing in information technology systems to improve inventory management has been one of these. Renovation done on most of the stores and launching more brands has also been a factor in the strong recovery in this department. Last year Galeries Lafayette's retail division's operating profit rose by 32 percent.

With annual sales of Euro 5.7 billion, and net profits up 17 percent in 2000 to Euro 94.7 million, there seems to be no stopping Galeries Lafayette. Sales growth was particularly sustained in its flagship Paris store (12.5 increase in 2000), which is still more profitable then the provincial stores.

"Forty percent of our store sales here in the flagship store are generated by tourists," Houze comments, comparing Paris' performance with the 6.9 percent sales increase in its other stores in the same year.

As a matter of fact, two million Japanese visit France every year and spend double the average tourist in Paris. Japanese visitors will certainly be a factor in Houze's future plans.

"In the near future of 2 to 4 years, I would like to see our profits double", he says.

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