In-Depth: Historic department store owners look to sell off the family silver
Department stores are in a transformational period, to put it mildly. Finding their raison d’être in 2021, and going forward, will be an interesting, and, for some, a painful process. For many, this sector is a hangover from a bygone era, so it’s interesting to learn that two of the most famous department store owning families are putting the family silver on the block.
The Anglo-Canadian Westons have put their entire Selfridges group up for sale for a reported £4bn, while the Fenwick family are reported to have been quietly trying to sound out offers for its prime, and often forgotten about, Bond Street location.
Are these moves, a case of the families getting out before things get any worse or have they identified an opportunity to pass the baton to new investors or owners to take these historical businesses onwards and upwards?
Retail analyst, Richard Hyman, comments: “The two are in very different positions. Selfridges Oxford Street has for some years been, in my opinion, the best department store in the world. Lockdown hasn’t changed that, even though closure and the lack of tourists may have hit customer traffic. This will recover.
“The Weston family clearly feel the timing is right for them, even if the economic cycle may not look so positive.
“Fenwick Bond Street is a great store that has never really been the success it should have,” continues Hyman. “In essence, Fenwick is a property company that has some retail on the side. The real estate value of Bond Street is significant, even though, as with Selfridges, the economic moment might not be optimum. The very fragmented Fenwick family may well feel they want a payday,” he says.
Fenwick couldn’t be reached by TheIndustry.fashion for comment but they have told The Sunday Times that there are no firm plans to sell the Bond Street building. Hyman thinks the Westons will hope Selfridges is bought by an investor with a long-term view, deep pockets and the capacity to continue investing as they have. He thinks the business is already extremely good and continuity will be critical whereas Fenwick, if it happens, is likely to be a property deal.
“Selfridges is a brilliant business selling other people’s brands,” says Hyman. “They do this in a very imaginative, pro-active style and the sum of the parts exceeds their individual values. Constant innovation (built on investment) maintains a buzz and vitality. They never rest on their laurels,” he says.
“Fenwick is a lovely store, but has never been the Bond Street magnet it could, and should, have been,” Hyman says. “It has suffered from insufficient vision and investment, especially in marketing. The Fenwick family has never had the commitment and ambition of the Westons.”
While the Fenwick family have been on Bond Street since 1891 (though the business was founded in 1882 in Newcastle), the Westons only bought Selfridges in 2003 to add to their burgeoning empire of luxury department stores including Canada's Holt Renfrew, De Bijenkorf in the Netherlands and Ireland’s Brown Thomas.
“Selfridges needs to retain the philosophy and leadership team,” says Hyman. “Fenwick is much more challenging and an unknown. Pouring money into it may not produce the returns required. What they do will depend on who buys it - the site could be redeveloped.”
The catalyst for Selfridges’ sale could be the death of Galen Weston, 80, in April, the head of the family and the retail tycoon who is reported to have spent more than £300m on improvements to Selfridges between 2016 and 2020, including a new staff entrance at the back linked by a tunnel to the store, and was also quietly buying up property surrounding the store's large footprint on Oxford Street.
The Westons have formally appointed bankers at Credit Suisse to oversee an auction and potentially even agree a deal by the end of the year.
Fashion industry commentator and contributor to TheIndustry.fashion, Eric Musgrave, says: “Family businesses should be expected to develop, so there ought to be no surprise about the news that the family of the late Galen Weston Senior intends to sell all its retail interests, including Selfridges, while the Fenwick family may or may not be trying to sell its store in New Bond Street, London.”
The Westons’ family history in retail goes back to George Weston, who opened a bakery in Toronto, Canada in 1837. It is his great-grandchildren, siblings Alannah and Galen Junior, who have hoist the “For Sale” sign outside the Selfridges Group.
“It is hard not to presume that his children, who will both turn 50 next year (Alannah in January, Galen Jnr in December) want to do something different with their lives rather than retailing,” says Musgrave.
Musgrave adds that it is interesting to note that in press reports, Alannah has said she wants to ensure any new owners will “prioritise sustainability” and “will honour Selfridges’ commitment to innovation and retail excellence”. Such caveats, even if they could be enforced, may put off potential buyers from the private equity community. A price tag of £4bn has been quoted in the coverage, but whatever anyone pays, they will need a large treasure chest to keep investing in Selfridges to keep it fresh and interesting.
“Much fine work was done before that by the team led by the Italian Vittorio Radice, who led the demerger of Selfridges from the Sears group in 1998. The market value of Selfridges reportedly doubled in four years, thereby attracting the attention of Galen Snr,” says Musgrave.
“Possible buyers now include sovereign wealth funds from the Middle East, and well-heeled Far Eastern retailers like Peter Woo, owner of the Lane Crawford stores in Hong Kong. Speculation that one of the major luxury conglomerates, like Kering or LVMH, might be interested has cooled, but never say never,” he says.
Musgrave thinks those who say department stores have no future might want to reflect that LVMH has just spent seven years and about £640m restoring La Samaritaine in Paris, which opened in 1870 and was closed for safety reasons in 2005. The sensory impact of this astonishing 215,00sq ft retail palace cannot be matched online.
“Any new owners of Selfridges ought to remember that department stores work best physically, not digitally,” says Musgrave.
“On a significantly much smaller level, Fenwick has yet to confirm if it is seeking a buyer for its New Bond Street store. It is not clear if the Newcastle-based business intends to exit the property or continue to operate it as a tenant,” he says.
“Although the store is attractive from the outside, it has limitations as a modern retail space inside, which may affect its saleability, but a prime property in this location does not come round too often.
“About seven years ago, one of the family, told me that the family wanted ‘to keep the business, but not to run it,” he says.
In 2017 ex-Coop boss Richard Pennycook and former Sainsbury’s digital director Robbie Feather, who joined as chairman and CEO respectively, became the first non-Fenwicks to run the business. This team departed in 2020 after carrying out some painful but long-overdue reorganisation of the disparate nine-store group.
In April 2020 the pair departed, with Feather was replaced by John Edgar, a former Selfridges and Harrods CFO. For a year Fenwick NED Steve Barber was interim chair before ex-Mothercare CEO Simon Calver took the position in April 2021.
As well as Bond Street, Fenwick runs stores in Newcastle, Bracknell, Brent Cross, Canterbury, Colchester, Kingston upon Thames (Bentalls), Tunbridge Wells and York. “It remains to be seen how it can make a significant impact online, where it has been far behind the market,” says Musgrave.
Pre-pandemic Fenwick was already struggling. In 2018, Fenwick moved to a centralised buying model for its stores and made 408 staff members redundant. Then Bond Street proposed turning around 10% of its floorspace (3,500sq ft) into offices and was given the green light by Westminster Council. At the time, Hugo Fenwick, a fifth-generation member of the family told planners: “Trade has become substantially more challenging in recent years due in large part to the structural shift of retail sales from physical stores to online platforms.” Fenwick closed a loss-making store in Leicester in 2017, while moving online for the first time that year.
While Selfridges and Fenwick are in different retail leagues, they are both in prime locations. Selling Bond Street would give the Fenwick family a large injection of cash, but it has been a business looking at managed decline. While, since buying the Selfridges store originally for £598m, the Westons have seen profitability soar over the past decade, though the pandemic has seen them cut their staff by 450 (14% of total employees) in what it described as its “toughest year”.
Howard Saunders, theretailfuturist.com, says: “I’ve long said that a trip to the West End is simply not complete without a visit to Selfridges. With its flags fluttering invitingly at the top of Oxford Street it still feels like a cruise ship ready to depart. Likewise Fenwick’s majestic (Bond Street) flagship is impossible to ignore. I visited them both recently (fully masked) and was both impressed and surprised at the levels of energy both stores exuded, despite having suffered unprecedented damage through no fault of their own,” he says.
“As legacy retail fades and newcomers arrive, these two much loved icons will demand more creative energy than ever before,” says Saunders. “In a world where we already have enough ’stuff’ and where more and more ’stuff’ appears magically on the doorstep overnight, retail destinations with brands as globally powerful as these will quickly adapt to bring us brand stories and immersive experiences like never before. Whoever’s at the helm will surely have grasped this,” he says optimistically.
As stores in Bond Street have continued to be smashed through and enlarged over recent years, Fenwick needs to think like one of these flagship “Maisons”. It has often felt like Fenwick got left behind by its neighbourhood. More a Middle England brand than a neighbour for Dolce & Gabbana and Armani. If Fenwick’s Bond Street store is sold, it is likely to be broken up or occupied by one of these type of concepts by an international luxury brand.
Selfridges on the other hand is a trophy. That’s some feat, turning £600m into £4bn in 18 years, admittedly with substantial investment – and let’s remember that price does include its global list of department stores – but there’s still plenty of money around for the right brand and locations.
LVMH “doing a Samaritaine” with it and using Selfridges as its London DFS duty free outpost is believable for when international tourism bounces back. While Thailand’s Central Retail group, which owns Rinascente in Italy and KaDeWe in Berlin is run by Vittorio Radice, who put Selfridges on the road to where it is today, and could make it the centrepiece of its group.
Selfridges probably isn’t in a rush to sell so will hold out for the best offer. If Fenwick is in distress then it may feel it has to sell Bond Street to save the rest of the group. Both are sound property deals, they will just need investors who see a future in this type of retail if they are to carry on investing.
Selfridges – a timeline
1906 – Harry Gordon Selfridge arrived from Chicago with his heart set on opening his dream store
1909 – The Oxford Street flagship store is opened after Selfridge invested £400,000 in its construction
World War 1 – mid-1930s – Selfridges prospers, but by the late 1930s the Great Depression and Harry Gordon’s gambling take their toll on the fortunes of the business
1941 – Harry Gordon Selfridge steps down from his role as chairman, having been forced out by the board for racking up debts owed to the store
1940s – Smaller provincial Selfridges stores are sold to the John Lewis Partnership
1947 – Harry Gordon Selfridge dies
1951 – The Oxford Street store is acquired by the Liverpool-based Lewis’s chain
1965 – The Sears Group takes over Selfridges and Lewis’s
1998 – Selfridges opens in Manchester’s Trafford Centre; demerged from the Sears Group
2002 – A second Manchester store is opened in Exchange Square
2003 – Selfridges opens its futuristic looking store at Bullring, Birmingham
2003 – The Weston Family, led by Galen Weston, pay £598m to buy Selfridges
2013 – The Selfridges story is dramatised in a prime-time TV show, Mr Selfridge, based on an adaptation of Lindy Woodhead's biography Shopping, Seduction & Mr Selfridge
2020 – For the first time in its history Selfridges is forced to close its doors as lockdowns are enforced by the Government due to the COVID-19 pandemic
2021 – Galen Weston dies and his children begin a sale process for the group
Fenwick – a timeline
1882 – John James Fenwick opens his first store in Newcastle, having bought and renovated a doctor’s house for £181 and 4 shillings, at 5 Northumberland Street in Newcastle upon Tyne.
1885 – Fenwick expands into 37 and 28 Northumberland Street
1890 – JJ’s son Fred joins the business and is despatched to Paris to gain inspiration from the city’s famous stores such as Le Bon Marche
1891 – Fenwick opens on London’s Bond Street
1941 – A WWII bomb explodes outside the store but no one is hurt and it continues to trade
1976 – Fenwick opens in London’s Brent Cross shopping centre
1984 – Fenwick opens in York
1986 – Fenwick opens in Canterbury
1992 – Fenwick opens in Tunbridge Wells
2001 – Fenwick buys the Bentalls chain of department stores later selling some of the stores to JE Beale and retaining branches in Kingston upon Thames and Bracknell
2007 – Fenwick buys Williams & Griffin in Colchester, changing its name to Fenwick in 2016
2017 – Fenwick opens a new store in Bracknell’s The Lexicon replacing its old town centre store; the first non-Fenwick family members take over the running of the business, ex-Coop boss Richard Pennycook and former Sainsbury’s digital director Robbie Feather
2020 – Pennycook and Feather leave; former Selfridges and Harrods CFO John Edgar takes over
2021 – The Fenwick family are said to have quietly sounded out potential buyers for the Bond Street store but say no sale is planned