Selfridges’ new owners plan luxury hotel at flagship London store
Thai-Austrian partnership also intends to develop serviced apartments as part of revamp
The new owners of Selfridges plan to develop a luxury hotel and serviced apartments as part of a revamp of the brand’s flagship Oxford Street store, according to a senior executive at Austrian real estate group Signa, which joined Thai retailer Central Group in the £4bn bid.
Signa and Central, which already own German and Swiss luxury stores KaDeWe and Globus, will also upgrade Selfridges’ food hall after their purchase of the UK brand from the Weston family, Signa’s executive chair Dieter Berninghaus told the Financial Times.
“We plan to trade up the food hall of Selfridges,” Berninghaus said. “That is one of our core competencies we have in the group, in KaDeWe and in Globus: we operate the best fine food delicatessen business in the world.”
A portion of Selfridges’ Oxford Street property has been empty since 2008 when the old Selfridges Hotel was closed.
Developing the hotel and apartments would mean “significant value upside potential” for Selfridges’ new owners, Berninghaus said. “The purchase price merely reflects the valuation of the main Selfridges building and its retail utilisation,” he added.
One industry figure expressed confidence in the plans. Peter Williams, a former Selfridges chief executive and chair of retailer Mister Spex, said: “The food hall is frankly underexploited, and the hotel has been empty for over a decade, so definitely that is an opportunity.”
Signa and Central’s planned takeover of Selfridges’ stores in the UK, Ireland and the Netherlands will give the combined groups’ luxury department stores an expected annual turnover of more than €7bn by 2024, compared with €5bn in 2019.
The marriage of Signa’s real estate knowledge with Central’s retail knowhow had been “an unusual combination, but also very complementary”, a person who knows both groups said.
The partnership dates back to Signa’s acquisition in 2014 of KaDeWe in Berlin and other top-end stores Alsterhaus in Hamburg and Oberpollinger in Munich, whose operations it collected as part of insolvent retail group Karstadt.
After carving out the luxury stores to form a KaDeWe group, Signa’s managers, headed by founder René Benko, needed a partner in Europe that knew how to run premium retailing, and thought of France’s Galeries Lafayette and Italy’s Rinascente.
Central, owned by Bangkok’s Chirathivat family, had bought Rinascente in 2011. They installed family members into management alongside Vittorio Radice, a former Selfridges chief executive who oversaw a transformation of the business when he ran it in 1996-2003. He now serves as Central’s chief executive for Europe.
Central operates many of Thailand’s most upmarket stores and malls and was a pioneer in integrating food and drink with retail as well as recognising — and catering to — luxury retail as a global phenomenon.
According to a person familiar with Central’s thinking, the group was seeking a partner with a longer-term perspective than private equity investors. Central did not respond to an interview request.
Signa’s managers knew Radice, and via him made contact with the Chirathivats. In 2015, the Austrians sold 50.1 per cent of the KaDeWe business to Central, retaining ownership of the real estate.
On the Globus and Selfridges’ acquisitions, the management and real estate ownership is evenly split.
The partners have invested more than €600m in KaDeWe, completely renovating and remodelling the German stores. They brought in luxury brands such as Louis Vuitton, Dior and Balenciaga, and pushed heavily into online retailing. At Globus, they installed a rooftop restaurant in its flagship store and built an entirely new shop in Bern.
Ties between their shareholding families have grown. Before the pandemic, the Chirathivats and their European partners met four times a year, alternating between Asia and Europe and following business meetings with a day of social time with family members. “We are a very professional partnership, but we are also in a very tight friendship strongly based on the same values,” Berninghaus said.
The Selfridges deal comes at an unusually tough time for the retail sector, when the coronavirus pandemic and challenges from online shopping have raised questions about whether groups such as Signa can continue to borrow and invest on the expectation of rising valuations.
Separately, Benko was recently one of 12 people named in an Austrian criminal indictment over a corruption scandal involving Green party politician Christoph Chorherr, in which prosecutors claim donations to a charity were traded for political favours.
Chorherr and Benko, through a spokesperson, have denied wrongdoing and said the donations were unconnected to any business.
The Selfridges takeover, which is subject to antitrust approvals in the EU and the UK, will bring Signa and media-shy Central further into the international spotlight.