The recent announcement that Carrefour is seeking to acquire the malls that surround more than 100 of its hypermarkets, is a reversal of the previous management’s intention to sell off many of the group’s European property assets to fund overseas expansion.
The recent announcement that Carrefour is seeking to acquire the malls that surround more than 100 of its hypermarkets from Klépierre, their current owner, is a reversal of the previous management’s intention to sell off many of the group’s European property assets to fund overseas expansion.
Georges Plassat, Carrefour’s chief executive, signalled this fundamental shift in thinking at this year’s World Retail Congress in October, when he proclaimed the important role played by contiguous shopping galleries in enhancing the attractiveness of the anchor store.
If retailers want to control their destiny, why not own the destination? Key tenants turned landlords thus run the anchor store while also becoming masters of the harbour.
On a return trip to South America this month, I was struck by the extent of mall ownership by retail groups: Chilean-based Falabella owns more than 18 million sq ft of gross leasable area in three of the four markets in which it operates.
The leading player in Colombia, Éxito - a multi-format food retailer and part of the Groupe Casino empire - has a dynamic real estate division running its own Viva malls and galleries. And Grupo Pão de Açúcar, the Brazilian market leader and now a fully fledged subsidiary of Groupe Casino as well, is opening mini-malls in proximity locations under the Conviva banner.
Two other recent announcements, this time by speciality retailers in the UK, demonstrate how destinies can be more or less under control. In 1978, Julian Richer opened his first Richer Sounds store. Three years later, Roy Bishko launched his Tie Rack chain which, at its peak, traded from 450 outlets - 10 times more than Richer Sounds’ current portfolio.
The demise of Tie Rack is primarily a result of the rental burden of its small but prime locations, compounded by the decline in consumer demand for its core product.
Richer, conversely, personally owns the freehold of 46 of his 52 outlets and can pay what rent he likes. They are also small, and in more secondary locations, but are true examples of destination stores.
Richer Sounds’ economic operating model, combined with phenomenal customer service, continues to defy big competition, not least from the internet - arguably a more natural home for such high-tech, high-price products.
Richer’s recent decision to bequeath his company to its employees has rightly been applauded far and wide. John Spedan Lewis would certainly have approved his decision, having completed JLP’s move to employee ownership in 1950.
Over a century earlier, in 1844, the principles set out by the Rochdale Society of Equitable Pioneers, the founding fathers of the co-operative movement, similarly enshrined democratic control of their organisation.
The behaviour of Paul Flowers (ironically titled Reverend) - disgraced chairman of the Co-op Bank - must be causing the Rochdale Pioneers to turn in their graves. But with latter-day altruists like Richer embracing their founding principles, they can surely lie in peace.
- Michael Poynor founder and managing director, retail expertise