 |
 |
 |
 |
 |
 |
 |
 |
Shopping Centers Today -> May 2002
 PRINT THIS STORY: |
  CHANGE TEXT SIZE: |
|
ITALY’S GRUPPO COIN EXPANDS ACROSS EUROPE
By Debra Hazel
 |
| An 86-year-old Venetian department store company turns itself into a pan-European conglomerate. |
It’s not just a small family company any more. In order to survive and grow, Gruppo Coin has remade an 86-year-old Venetian department store company into a European retail conglomerate.
“We’ve been able to [shift] from a family company to an international company,” said its chairman, Vittorio Coin.
Founded in Venice in 1916 by Coin’s grandfather, Gruppo Coin has undergone massive change in the past four years.
But that change was the result of 30 years of gradual expansion of the company’s department store concept, to both new regions and new formats, and also of a knack for buying and converting retailers no one else seems to want.
“Until 1962 our company was regional, spread out in the Venetian region,” Coin told delegates at last year’s ICSC European Conference in Turin. That year the firm opened a store in Milan, followed by units in Bologna, Rome and other Italian cities, making it a national retailer. Then, in a move to enter the discount field, Gruppo Coin launched the Oviesse chain in 1972. Other formats followed, including Act, Bimbus (children’s wear) and Kids Planet.
But in 1997 the chain’s board decided on a radical rethinking of the family-held company. Growth had become critical to Gruppo Coin’s ability to compete with foreign-based competition.
“For the first time a director was appointed [who was] not from the family,” Coin said. “We set up a new management team.”
Among the problems facing the new team was a trend that was evident in North America: the weakness of the department store business, which was trying to provide one-stop shopping for its customers; this was now becoming evident in Italy.
“The market was more and more polarized,” Coin said. “The lower and higher price ranges were increasing, and the middle, where we were, was decreasing.”
To adapt, the offerings of the company’s signature stores became more upscale, while Oviesse focused on improving efficiency. Then the chance to expand and to spread costs over a greater number of stores came along.
“At this point an opportunity came up to purchase La Standa. The opportunity had been on the market for a while, but no one seemed interested in it,” Coin said.
In October 1999 the company acquired discount and variety stores from La Standa, which also operated food stores. La Standa continues to operate its grocery stores and is owned by Gruppo Fininvest, a holding company run by the family of media mogul and Italian Premier Silvio Berlusconi.
In buying the La Standa properties, the group gained 167 stores totaling more than 300,000 square meters (3.2 million square feet), effectively doubling Gruppo Coin’s size. The stores were old and in need of substantial investment, but provided significant potential for growth.
“La Standa became an opportunity [that was] not to be missed,” Coin said. “This would also give us an advantage over foreign competitors looking to enter Italy.” The L8.4 billion deal ($4.7 million, at the then prevailing rate) closed in 1998, before the advent of the euro. The company has since converted at least 70 stores to the Oviesse format, eight to Gruppo Coin units and five to other formats, and has sold 21. The rest still operate under the La Standa name.
The deal also compelled the company to list itself on the stock exchange the following year. The family, however, still holds majority ownership and remains strongly identified with the chain.
“The transformation process would require L300 million, more than we could handle out of our own resources,” Coin said. “The outside world is changing, particularly on the retail side.”
The equity funding has allowed the group to extend itself further; expansion outside Italy has begun through the acquisition last year of German variety store Kaufhalle.
“We’ve taken up the idea of being an international company, and development is an essential feature for the health of a retail company,” Coin said.
Germany was the logical expansion site, he noted, because of the polarization of that retail market; even more than in Italy, successful chains in Germany tend to be either high-end or discount.
“Also, Germany is a country sensitive to Italian style and [is] a mature retail market that can attract and mature a new retail concept,” he said.
Kaufhalle, like La Standa, was a struggling chain with good locations.
“Indeed, the two companies had much in common,” Coin said. “Kaufhalle had low price points and was perceived as a variety store,” a format that no longer works in Germany. “But the chain has 98 sites of great relevance.”
In fact, Kaufhalle was so deep in debt that the group did not pay for the chain, but instead received a compensation payment from seller Divaco. The company has begun converting the Kaufhalle units to the Oviesse concept, with 20 to 25 stores to be completed this year.
“Germany also is in both west and [east] Europe, and the latter, particularly, would be of interest” for the discounter, Coin added.
Gruppo Coin has also begun franchising and creating joint ventures to increase its reach. A fifty-fifty venture with consumer electronics, books and records retailer Fnac will enable the French chain to enter Italy; Fnac will acquire six La Standa units by the end of the year, and three more by 2003. Gruppo Coin has also signed a franchising agreement with Magazine zum Globus, a Swiss company that will eventually bring as many as 40 Oviesse stores to Switzerland, according to published reports.
The result of the deals is that the chain owns or franchises some 480 stores, with L2.36 billion in sales last year, up 1.1 percent over 1999.
 | Current Issue January 2009 |