In December 2023, Nicolas Morineaux joined Galeries Lafayette China as CEO, bringing a fresh vision and dynamic leadership. In less than a year, Nicolas has significantly reshaped Galeries Lafayette's presence in China, capturing attention with impressive growth and innovative strategies.

Following our strategic partnership on enhancing WeCom clienteling and CRM strategy for Galeries Lafayette, and our collaboration on building the ITC Insights Vol. 1 whitepaper, we had the privilege of interviewing Nicolas last month.

This conversation offered valuable insights into his transformative approach and the future direction of Galeries Lafayette in the Chinese market.

A French Touch in the Heart of China: Galeries Lafayette's Journey in China

Q. Nicolas, you joined Galeries Lafayette in December last year. In just a few months, you’ve managed to significantly transform the brand’s presence in China and attract considerable attention for your rapid success. Could you walk us through those initial months? What key changes did you implement?

Galeries Lafayette China stands as the newest international department store in the market, which has given us a unique position in terms of brand recognition. Coming to Galeries Lafayette was to rejuvenate the brand from its historical model back in 2013 and transform it into what China shall offer today.

The Galeries Lafayette story in China began in 1994 when Philippe Houzé and his three sons first visited the country. The first store opened in Chengdu in 1996, followed by another in Beijing in 2000.  However, the modern era of Galeries Lafayette in China truly started in 2013 with the opening of a 50,000 square meter department store in Beijing Today, Galeries Lafayette boasts additional stores in Shenzhen (10,000 square meters) and Shanghai (25,000 square meters), along with smaller outlets across the country.

In my initial months, our focus was on understanding and redefining Galeries Lafayette's unique value proposition. We identified our key differentiator: Galeries Lafayette as the unique curator of international brands infused with a distinctly French touch.

To achieve this, we focused on four main areas:

1. Brand Trust and Engagement: We conduct extensive interviews and meetings with our brand partners to build trust and enhance visibility.
2. Client Relationships: Collaborating with ITC, we are working on creating personalized 1-to-1 relationships with our clients. This involves not only engaging VIPs but also focusing on retention, acquisition, loyalty, and trade-up strategies.
3. Brand Image: We ensure all communications, events, activities, and partnerships reflect the French heritage of our company.
4. Motivated Team: From my previous experiences, I’ve learned that ‘People make the difference.’ I’ve assembled a new leadership team of highly motivated talents, whose enthusiasm and commitment are driving Galeries Lafayette toward a new and successful path.

Partnering for Success: Why Brands Should Partner with Galeries Lafayette in China

Q: What do you tell brands about why they should join you on this path, and how do you intend to help them shine in China?

Engaging with brands at Galeries Lafayette can offer brands a unique set of advantages. Our department store model differentiates us from shopping malls by fostering direct client engagement and creating a personalized shopping experience.

We maintain a robust client base of approximately 1 million, segmented into different tiers. This diverse audience is reached through various channels, including WeCom, WeChat, and SMS.

Here are the key value propositions for our brand partners:

1. Client Attraction, Retention, and Acquisition: We offer brands the opportunity to engage with a carefully selected clientele that aligns with their DNA. Our approach ensures that brands are matched with relevant customers, avoiding overlap with competitors. Using our internal intel, Galeries Lafayette can map out client preferences across various categories such as cosmetics, fashion, gifting, home, and F&B... This allows us to link relevant brands and concepts together to create tailored brand experiences, ranging from one-to-one interactions to exclusive gift-with-purchase offers, steering clear of traditional coupon discounts typical of shopping malls.
2. Concept Branding: We embrace a playful and dynamic approach to concept branding. For brands looking to introduce new concepts or reinvent themselves, whether they are emerging Chinese designers, Korean brands, or European innovators, we provide the space and support needed to experiment. We take risks together, fostering an environment where bold ideas can thrive.
3. Adjacency and Uniqueness: Out of the 550 brands featured across our 100,000 square meters in China, around 150 are exclusive to Galeries Lafayette. We focus on creating compelling brand adjacencies and clusters to enhance visibility and communication around these unique groupings.

By collaborating with us, brands benefit from our unique platform to reach targeted clients, leverage creative freedom, and stand out in a distinctive retail environment.

Growing Client Base and Revenue Predictability with WeCom

Q: You mentioned having 1 million existing clients. Do you have a specific goal to increase this number to a certain level over the next 1 or 2 years?

Since we have implemented WeCom clienteling together, Galeries Lafayette has been able to achieve significant milestones in client acquisition and retention:

1. Data and Client Acquisition: We now acquire data for 100 new client transactions weekly through WeCom, allowing us to engage thousands of clients and place them on personalized retention journeys. This approach not only supports existing client relationships but also helps in acquiring new clients.
2. Prospect Acquisition: WeCom also enhances our ability to acquire prospects, who represent future growth, and provide us with newfound revenue predictability. Based on my experience, nurturing 100 prospects typically results in 20 potential transactions within three months maximum – a 20% increase in future transactions is achievable.

By analyzing traffic and client data, we can now forecast revenue and anticipate future client behavior more accurately to effectively drive traffic and identify and engage potential future clients.

Establishing a clear client acquisition solution was a top priority when I joined Lafayette, and it has proven to be crucial for our growth strategy.

Thriving in a Competitive Market: Why Galeries Lafayette is a Strong Bet

To your point, what’s happening in China today mirrors what occurred in Japan in the early 2000s and in the US in the mid-2010s. In the US, there was even a term called 'Retail Armageddon' to describe this trend.

We are indeed in the midst of a significant transformation in China’s retail landscape. This period of reorganization and redistribution was unprecedented since the late 1990s. It’s a crisis without a playbook, and some closures are inevitable.

Why are we seeing this now? In the early 2010s, the rapid growth of retail in China led many developers, landlords, and provinces to accelerate their retail footprints. The result in 2024 is that 54 shopping malls are set to open in Shanghai. In response, the Shanghai government has decided to halt the issuance of new licenses for shopping malls within the city, mirroring Beijing’s decision to stop granting licenses within its five rings.

What does this mean? It signifies very fierce competition for attracting brands. It comes back to brand trust, client engagement, unique concepts, and a capable team to succeed.

We see large-scale projects like Hong Kong Land’s West Bund, a 1.5-kilometer stretch covering 1.8 million square meters of multi-use space, and developments in Tianjin with their second and third phases, among others. Each will need to differentiate itself.

Ultimately, the primary focus for survival and success is client engagement.

While it's not our focus to discuss other businesses, I have great respect for department store owners and managers. The department store business involves daring and taking risks, and many have shown remarkable courage in investing in China.

So, why invest in Galeries Lafayette today?

1. Brand Transformation and Differentiation: We actively seek out and curate brands, transforming around 30% of our brand offerings to ensure freshness and relevance, which is crucial in this market. Unlike many shopping malls that often look similar, Galeries Lafayette distinguishes itself through our unique and diverse brand portfolio.
2. Collaborative Brand Partnerships: Our collaboration with brands goes beyond simple leasing, concession, or consignment agreements. We focus on space agreements and enhancing the client journey. This involves driving comprehensive 360-degree conversations with clients to bring up the brands, a distinctive feature of our department store model.
3. Government Support and Strategic Invitations: We benefit from substantial support from the local government. Galeries Lafayette’s strong brand IP has attracted the attention of various Chinese provinces, and we are currently exploring several exciting projects across the country.
4. Introduction of New Concepts: We are planning to introduce two new concepts in the second half of 2025: One will focus on gourmet foods, reflecting the successful Galeries Lafayette Gourmet experience. The other will adapt our gifting concept from the Paris Haussmann store’s 6th floor to the Chinese market. These innovations underscore our ongoing commitment to offering fresh and engaging experiences.

A New Frontier: Galeries Lafayette's Expansion into Macau

Q: Galeries Lafayette recently opened a new store in Macau as well. We know the market in Macau is a bit complicated at the moment. What is your perception of the Macau market, and why did you choose to expand there?

The Macau market is undergoing a transformation from its traditional focus on gaming, which was prevalent in the 2000s and early 2010s, to a multi-use complex that includes not only casinos and shopping but also cultural exhibitions, theaters, and concerts. This shift towards creating a diverse and enriching experience for visitors is driving new business opportunities.

I was in Macau just last week to discuss further with our franchise partner there. We have a very impressive and dedicated franchise partner, FFH, who shares our vision.

Our partner has recently delivered an exceptional experience with collaborations such as with BE@RBRICK, which you may have seen in Shanghai. He has also introduced the first franchise of Peninsula Café and brought in new niche brands in cosmetics.

So, why open in Macau?

The primary reason is to offer a new and unique experience to the market through a franchise model. This model aligns with our broader strategy at Lafayette, as we are exploring franchise opportunities throughout China.

We are also excited to participate in the China International Import Expo (CIIE) in November, where we will join the French Pavilion alongside three other prominent French groups. This participation underscores our commitment to China and our belief in both retail direct and franchise models. I am looking forward to engaging with potential partners and further expanding our presence.

A Powerful Partnership: Galeries Lafayette x IT Consultis (ITC)

Q: We had a great opportunity as ITC to support you for the last couple of months. Can you share a little bit about your experience with ITC?

When it came to selecting a partner, two critical factors influenced our decision to work with ITC: a strong belief in the company’s capabilities and trust in its founders, particularly Aurelien Rigart. This combination of trust and results-driven focus is essential for success in China.

So, what did we achieve together? In just three months, we achieved remarkable results together. We transformed Galeries Lafayette China from an SMS-centric department store with 500 brands into a modern, digitalized solution. This rapid transformation was possible thanks to ITC's speed and efficiency.

Beyond trust and results, ITC guarantees speed and effective communication. Your solid Chinese project managers and multilingual capabilities helped us move seamlessly from vision to execution and back to vision as needed. This dynamic approach was crucial for steering the business in the right direction.

Key Initiatives for H2 2024 at Galeries Lafayette

Q: What are the top three trends or initiatives Galeries Lafayette is focusing on for Q3 and Q4 this year?

Weekly Client-Brand Experience Plan: Number one is the full rollout of the weekly client-brand experience plan. Every week, we will host two events with our clients and brands, across Beijing, Shanghai, and Shenzhen, designed to engage both our clients and brand partners more deeply.

After six months of laying the groundwork, we are now ready to accelerate this engagement strategy, making it the highest priority.

Modernization of Beijing Xidan: Another significant project is the exciting transformation of Beijing Xidan to become the best in the West. While luxury and premium brands have heavily invested in the East of Shanghai, Galeries Lafayette remains a key upscale department store in the West of Beijing.

We are working closely with the city planners and lobbying for the redevelopment of Xidan Street into a hub for upscale shopping and tourism. Our goal is to enhance the location and collaborate with brands to leverage the new traffic and opportunities, solidifying our position as the best in the West.

130th Anniversary Celebrations: Finally, we will be celebrating the 130th anniversary of Galeries Lafayette. Starting in early September and continuing through the end of October, we will have significant engagements with clients, brands, and B2B partners.

Notably, the anniversary coincides with the Shanghai Fashion Week in October, promising a series of high-profile events that will showcase the brand's enduring legacy and forward-looking vision, so stay tuned for exciting updates and events!

This article is the full version of Galeries Lafayette's contribution to ITC Insights Vol.1 whitepaper, where we take a deep dive into how brands can empower digital transformation for elevated clienteling in China.