Business

Building on family ownership – can new family owners revive a legendary department store?

Billionaire families, and their wealthy friends, are set to drive Selfridges, the UK-based department store chain, upmarket with the help of real estate deals and omnichannel shopping, where sales are spread across a network of retail platforms, physical stores and – potentially – the metaverse.

The Weston family of Canada, the vendor, is keeping Selfridges’ Canadian arm and selling the rest for £4 billion ($5.4 billion). It bought Selfridges for £600 million in 2003.

The new owners are Central Group of Thailand, owned by the Chirathivat family, and Signa Holding of Austria owned by the family trust of Austrian billionaire René Benko, co-owner of New York’s art deco Chrysler Building. The joint venture between the two already owns a string of department stores across Italy, Switzerland, Germany and Denmark.

Central Group was founded by Tiang Chirathivat, whose Chinese surname is Zheng.  He arrived in Thailand from China’s Hainan province in 1927. He sired 26 children by three wives and boasts 220 descendants, 50 of whom are active in Central whose operating divisions comprise department stores, food outlets, online retail, hotels and restaurants. 

His son Samrit played a leading role in developing the family business out of a 1956 department store in Bangkok. Tos Chirathivat, his youngest son, took over the business in 2013.

Central Group enjoyed early mover advantage by offering the Thai population their first access to retail outlets modelled on the West. It has penetrated the luxury market.

According to the Harvard Business Review, attempts to generate business through an omnichannel approach tends to pay off, with 73% of customers using multiple channels. This puts a high value on brands capable of carrying the omnichannel message. 

Selfridges, founded by US entrepreneur Harry Selfridge in 1908, can offer a luxury tag. Its current chair Alannah Weston has added sustainability to the mix.

Analysts say global retailers with upmarket brands are well-positioned to develop omnichannel businesses by offering access to quality brands and a personal touch. And Central has many options to choose from. 

Emerging VC manager Race Capital backs a venture called Social Chat which offers machine learning to online retailers so they can generate a social relationship with clients. It is backed by developers of e-commerce businesses like Twitch, Lyft, AfterPay and Wish.

The metaverse, which can offer avatars the illusion of visiting a 3D virtual store, is starting to offer new opportunities Adidas, Nike and Zara are already opening stores on metaverse platforms.

H&M, founded by the Persson family, has opened a site at Ceek City, a virtual location founded by Mary Spio, born in Ghana, who used to launch satellites at Nasa and served as former head of Boeing’s satellite division.

Physical premises need to match the ease of purchase offered by other channels. Central has updated its logistics: “built on the intention that if customers could commit one hour of their time to visit our department stores, we should be able to deliver within one hour as well.”

Amazon wants to scan credit cards at physical stores, rather than getting them presented at checkouts.

A Portuguese venture called Sensei, backed by German retailer Metro, wants to use overhead cameras and AI to tot up the price of goods put in a basket and charge clients as they leave the store.

Veesion of France sets out to detect individuals behaving suspiciously at stores, to prevent shoplifting. One of its 2018 seed backers in 2018 is Aglaé Ventures, a venture business run by Bernard Arnault of LVMH.

Analysts say people will increasingly earn their living in an automated world by offering shopping advice.

John Federman, chief executive of JRNI, which provides relation management software, says: “Customers want to buy into more than a quick transaction. They want an experience that is personalized and unique to them.”

In this world, physical retailers will use technology to match concierge staff with customers; prepare items or services they may want; arrange appointments; book car parking spaces, arrange drone deliveries and manage Covid-19 risks.

Personal shopping relationships can be further developed face-to-face at stores, online or through the metaverse.

You need to take services upmarket to make personal services profitable. Central and Signa have increasingly put luxury goods on their European platform. Signa has plans to develop a luxury hotel and apartments at Selfridges of Oxford Street and take its food mall up market.

Signa was founded in 2000 René Benko, an entrepreneur from the Austrian Tyrol, who sought to acquire real estate in city centre locations. He went on to acquire Karstadt sporting goods and department store outlets, with the help of acquisitions from billionaire Nicolas Berggruen.

In 2015, Central Group became joint owner of Signa’s renowned KaDeWe department store in Berlin, after agreeing to inject the Rinascente department store chain of Italy, owned by the Agnelli family for many years, plus the Copenhagen store Illum, acquired from BlackRock.

In February 2020 Signa and Central bought Swiss department store chain Globus for $1 billion from Swiss retail co-operative Migros-Genossenschafts-Bund. Dieter Berninghaus once ran Migros and now leads Signa’s executive team.

Central’s European business is run by Vittorio Radici, former CEO at Selfridges, who introduced the opportunity to Signa.

Signa brings real estate expertise to the joint-venture. It has become one of the largest landlords in Vienna and Innsbruck.  Elsewhere, Signa has bought into local media groups and uses an advisory board comprising prominent politicians, entrepreneurs and bankers. One of the best known is former Austrian Chancellor Alfred Gusenbauer.

Benko controls Signa through a family trust, although he delegates management to Berninghaus’ executive team.

Signa has used debt and access to the billionaire community to pull off a series of audacious deals. It is happy to pay top prices to acquire quality assets.

Its minority shareholders are Ernst Tanner, manager of the Lindt chocolate group, and Torsten Toeller, who runs pet speciality group Fressnapf.

Other families owning stakes in Signa businesses have included Niki Lauder’s family office, the Peugeot family of France and Aby Rosen’s RFR Holding, co-owner of the Signia’s New York Chrysler building.

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