Selfridges’ owners are considering expanding to more regional cities

Selfridges’ owners are considering expanding to more regional cities

The owners of Selfridges are targeting regional towns, potentially paving the way for the retailer’s first new UK stores in two decades as they look ahead to what is likely to be a period of difficult trading.

The luxury department store group operates from its iconic Beaux Arts building on London’s Oxford Street, plus one store in Birmingham and two in Manchester. It has not opened a new store in the UK for almost 20 years.

“Our strategy is not only to live in capital cities with stores of 20, 30 or 50,000 square meters, but also to be present in second-tier cities or even small towns like St. Gallen [in Switzerland]”, said Stefano Della Valle, CEO of Central Group Europe.

The Thai-owned company, controlled by the Chirathivat family, is half of the venture that bought Selfridges from the Anglo-Canadian arm of the Weston family for £4 billion late last year. The Austrian property group Signa is the other partner.

“We have no plans as of today for new stores in the UK, but we are always alive to opportunities, as we were in Germany,” Della Valle told the Financial Times.

The venture is working on a new store in the German industrial city of Düsseldorf to complement KaDeWe in Berlin and Oberpollinger in Munich.

High-end department stores have traditionally traded from only a small number of sites in premium cities, reflecting the relatively narrow customer base for their expensive goods and the high operating costs of large luxury stores.

Harvey Nichols has four major British stores outside London, while Harrods, Liberty and Fortnum & Mason have none outside the British capital.

But the closure of many regular department stores has created gaps in some large cities.

“We believe we are the only viable solution for luxury brands in terms of distribution, so we are interested in being present not only in capital cities but also in regional cities,” said Della Valle, pointing out that the group operates nine Globus stores in Switzerland and nine Rinascente outlets in Italy.

The department store group is undeterred by Oxford Street’s well-documented problems; it is choked with traffic and foot traffic has yet to recover to pre-pandemic levels as travel restrictions and sanctions keep Chinese and Russian tourists away.

Pre-tax profit/loss (£mn) bar chart showing Selfridge's decade of profitability ended last year

Recent years have also seen a proliferation of tacky American candy stores on Oxford Street, tarnishing its image as a prime shopping destination.

“Yes, we have these problems right now, but I’m pretty sure that London will remain one of the great centers of the world as it has been for centuries,” Della Valle said.

A more immediate priority for the venture is the refurbishment of the Oxford Street food hall, which could take two to three years.

Managers are also considering options for the former hotel and the car park behind Selfridges’ huge main store building, which forms part of the estate but has been largely unused since the hotel closed in 2008.

Dieter Berninghaus, executive chairman of Signa, said the intention of any refurbishment would be to “upgrade the whole area of ​​Oxford Street to make it more vibrant, more exciting and more diverse than it is now”.

“We need a good understanding not only of the building, but of the whole environment. . . how will this area develop, what is the best concept over 10, 20 or 30 years?” he added.

Selfridges is across the road from Marks and Spencer’s Marble Arch store, which is the subject of a planning inquiry after the retailer submitted proposals to redevelop the site into a mix of office and retail use. Further east, John Lewis is also considering whether the upper floors of the London flagship should be converted to office use.

Selfridges' flagship department store on Oxford Street in London
Selfridges flagship department store on London’s Oxford Street © Mike Kemp/In Pictures via Getty Images

But Berninghaus stressed that any Selfridge’s plan was more likely to increase retail space and integrate it with hotels and restaurants than reduce it.

“In Selfridges we really have the chance to take over and integrate a very, very healthy, very innovative and very modern business . . . from my experience it’s one of the very best retailers in the world,” he said.

Della Valle added that there were only limited synergy opportunities between the subsidiaries. “Our network is a collection of stores. We cannot copy and paste what we do in the UK to Italy, or from Italy to Denmark”.

But some aspects of the Selfridges model could be exported elsewhere, particularly its commitment to sustainability, which Della Valle described as “one of the pillars of our strategy”.

He and Berninghaus acknowledged that the aftermath of the pandemic had been challenging. The absence of affluent tourists had been largely mitigated by efforts to increase the number of domestic customers, but skyrocketing energy costs have begun to put pressure on local consumers.

“But again, as a long-term investor and a resilient group, we believe we can face and pass this tough period,” Della Valle said. “For the luxury consumer, the crisis is there – but probably they are a little less sensitive.”

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