Galeries Lafayette to turn 22 stores into franchises

A project to franchise 22 Galeries Lafayette stores employing over 900 workers, affecting around half of the company's holdings in France, has been announced to employee representatives during a works council meeting, according to unions. 

The stores, which will continue to operate under the Galeries Lafayette name, are part of the MGL group, which owns 53 stores in France, along with a flagship on Paris' boulevard Haussmann. According to union sources, three potential buyers are on the cards. When contacted by FashionNetwork, Galeries Lafayette had no further comments to make on the situation. 

The stores in question are located in mid-sized towns and have, for the most part, experienced a slow down in clothing sales. The stores affected by the plans are those in Agen, Amiens, Angoulême, Beauvais, Bayonne, Belfort, Besançon, Caen, Cannes, Chalon-sur-Saône, Chambéry, Dax, La Roche-Sur-Yon, La Rochelle, Libourne, Lorient, Montauban, Niort, Rouen, Saintes, Tarbes and Toulon.

In an attempt to revitalize these stores, the group is hoping to hand over the reins to local businesses, more able to pilot revitalization efforts while bearing the particular regional context in mind. Galeries Lafayette appears to be considering two options: franchising the stores while maintaining ownership of the buildings, and handing over the premises or leases on the condition that buyers enter into a franchise agreement. Five Galeries Lafayette stores are already run by franchisees: this is the case in Béziers, for example, where management of the department store was handed over to a local fashion supplier in 2015. 

This "very short term" project, which could be finalized before mid-2018, had already been discussed before, according to a union source contacted by AFP, but only 16 stores were affected at that time and the names of the towns in question were not divulged.

Since 2014, Galeries Lafayette has been working on a reinvention program concerning their French holdings. The brand has opened up to outlets, closed three unprofitable stores in 2015 – in Thiais (Belle Epine), Béziers and Lille –, and inaugurated a store with a new direction at the Carré Sénart mall last October. The group has also been focusing investment on its boulevard Haussmann flagship, which generates an annual turnover of around 1.3 billion euros (almost as much as the rest of the brand's French network put together), and will begin renovations in 2018, scheduled to be completed in 2020. 

Galeries Lafayette is also concentrating on international development in locations such as Dubai, Casablanca, Beijing, Jakarta, Istanbul and Beirut, applying the same franchising model. The brand recently announced that it was planning to open a second store in Istanbul and another in Kuwait City through franchising in 2019, while another store is slated to open in Doha in 2018. "We're robbing Peter to pay Paul", commented a union source, comparing the brand's projects in France and abroad. 

The Galeries Lafayette group, which also includes BHV Marais and a number of other brands such as Guérin Joaillerie and Louis Pion, achieved turnover of 3.8 billion euros in 2016. 

(Marion Deslandes and AFP)