UK Edition
Christophe Cuvillier: Retail is not dying. Only boring retail is dying.
Christophe Cuvillier has the confidence of a man who knows he is on the home straight.
Last week, shareholders of Unibail Rodamco, the company of which he is chief executive, signed off on a $24.7bn (£18.3bn) deal to buy rival shopping centre owner Westfield. This week, Westfield’s shareholders will rubber-stamp a deal that has been three years in the making.
Unibail Rodamco is the largest property company in Europe, but few in the UK have heard of it. Its shopping centres – some of the world’s largest and most successful – are mostly in France, with others in Spain, Poland and elsewhere in Europe.
Life is about to change for the Paris-based business. In December, it stunned the market with its audacious takeover of Australia’s Westfield, best known in Britain for its two major London malls but, perhaps more importantly for Unibail, also with a huge presence in the United States.
Cuvillier, a dynamic Frenchman who after years abroad returned to live in Paris in 2011 to work for Unibail, is about to hugely expand his remit. At present, Unibail Rodamco’s property across Europe is worth around €43.1bn (£37.3bn); by the time the deal with Westfield is done it will be €62bn.
The deal was first discussed in 2015, he reveals. The Lowy family, who founded Westfield and own a majority stake, were looking for a way to move on and Unibail proved a worthy suitor. “We thought it would be great to combine the portfolios, and the moment is right now for Westfield,” Cuvillier says.
Parallels were drawn between this deal and the failed tie-up between London-listed companies Hammerson and Intu, but Cuvillier is quick to point out differences. “Our deal was prepared very thoroughly over three years, and was a friendly deal,” he says.
To some, buying more retail property stock at a time when brands are collapsing at every turn might seem like a doomed manoeuvre. The UK retail market is demonstrably slowing: consumers are spending less, and where they are spending they’re often choosing to do it online. That’s hitting retailers, with many shuttering stores and scaling back their presence on the high street. The US market is not faring much better.
But Cuvillier believes that the best shopping centres will prevail. “If you visit New York, San Diego, retail is not dying,” he says. “Boring retail is dying.”
“We believe in physical retail and shopping destinations, in flagship stores,” he says defiantly. “We think retail is growing in three main directions – on the internet, in convenience, and in the big destination experiences, and that’s what we’ve chosen to develop.”
Both Unibail and Westfield have sold a number of malls in recent years, keeping only the prime real estate. Although Unibail owns fewer malls than in 2012, the average value of its centres has risen from €300m to €557m. “Our job is to concentrate on the best shopping centres in the best areas,” Cuvillier says.
Is he worried about the creeping online threat? “It is very difficult for internet retailers to make money,” he says confidently. “If you sell multi-brand products, things that other people sell, you’re not going to make anything because you will always have someone who will sell it cheaper.”
Cuvillier is a retailer at heart. He began at L’Oreal, first in marketing, but over his 14 years he managed Lâncome’s UK division, part of the business in Australia and the French luxury arm. He then worked for luxury goods giant Kering, holding posts including chief executive officer of French electronics retailer Fnac. He moved to Unibail after chief executive Guillaume Poitrinal decided to hire a chief operating officer from outside the traditional property background, and succeeded Poitrinal in 2013.
The crowds at Les Quatre Temps in Paris, Europe’s highest-grossing shopping centre, seem to bear out Cuvillier’s theory that shopping as a recreational activity is alive and well.
The centre is buzzing on a weekday and the staff point out extra facilities designed to keep people coming back: space for events, which is expanding due to demand, a concierge who gives parents free nappies, plenty of places to sit. Only the best brands get in and demand for space is high. Adidas is about to move into a newly built store in time for the World Cup next month.
Cuvillier accepts that in a competitive market Unibail must always be on its toes, looking out for the latest brands and staying one step ahead of rivals. It has made a point in recent years of being the company to bring brands to new markets. Rumour has it that Steve Jobs himself signed off on Apple’s move into its first French store, in Unibail’s mall connected to The Louvre, after being so impressed with the space that he dropped plans to move to the Champs-Élysées.
Cuvillier refuses to predict what the shopping centre of the future will look like, but says: “Who would have thought 10 years ago, even five years ago, that car makers would be taking space in shopping centres? Ten years ago I’d have told you that luxury brands in shopping centres in London wouldn’t work because of Bond Street. The question is not about knowing what’s going to happen in 10 years or 20 years, but being ready to change.”
The newly expanded Unibail Rodamco Westfield (“the name’s still to be decided,” Cuvillier says) has plans to build even more. The combined group has a pipeline of developments worth €13bn – its closest rival Klépiere has just €3bn worth of building plans. But these are subject to regular scrutiny to check that they are still right for the market. “We review our development projects at least three times a year. We’re building things that need to last for 20 or 25 years.”
Cuvillier is not deaf to the challenges ahead: he has to get his head around two major new markets, and will add 50pc to his workload overnight. The retail landscape in 2018 is, if anything, tougher than ever.
He says: “We are in a very long-term industry – we don’t play cycles, we go from one cycle to another. People are worried about Britain, but we’re not investing in Britain, we’re investing in the two top-performing malls in the UK. We’re not buying a normal US property company, we’re buying the best portfolio in selected US markets.”
The average shopping centre may well struggle to survive, he admits. But he says, with a French shrug: “Don’t be average.”