Printable version here

Introduction

The IADS had the occasion to travel to Brussels and took the opportunity to visit Inno, the iconic Belgian department store celebrating its 125th year of activity this year and a founding company of the IADS. A new CEO was appointed in 2019 with a new plan, and this visit was the opportunity to take stock.

What can we learn from the Inno revamp? Where do they stand? To what extent the Belgian retail scene has evolved after the Covid-19 pandemic and where is the company heading?

Historical background: the many ownership changes added to the market difficulties

“A l’Innovation” (the original name of the company) was founded in 1897 by Julien Bernheim and the Meyer family rue Neuve, in Brussels. In 1928, the company was a founding member of the IADS, where it remained until 2011.

Just like many other department store companies, A l’Innovation was all about novelties and first times for the Belgian market, and developed a network of stores across the whole country, until becoming the largest retailing company in Belgium 40 years after being founded. After WWII, the market consolidated and A l’Innovation merged with its competitor Bon Marché to become Inno-BM in 1969, and then with GB Entreprises to become GB-Inno-BM in 1974 (also increasing the store portfolio).

However, difficulties increased with the evolution of new retail formats (mass distribution, specialty stores) leading to the purchase of Inno (a new name minted in the 90s) by German department store Kaufhof (another long-term member of the IADS, from 1930 to 2015), then the property of Metro AG, in 2001. When Metro sold Kaufhof to the Hudson’s Bay Company in 2015 for €2.42bn, Inno was part of the deal. History repeated itself in 2018 when Signa Holdings purchased Kaufhof (which had been renamed Galeria Kaufhof) to the Hudson’s Bay Company for an estimated €3bn, and merged it with the other German department store it already owned since 2014, Karstadt, into a new entity called Galeria Karstadt Kaufhof (the new name was released in 2019). On the same occasion, Inno was rebranded as Galeria Inno on the Belgian market.

This long and complicated story of ownership is not entirely unrelated to the difficulties of the company up to 2019: it has never been a priority for its successive owners, due to its isolated (and smaller) market, and its size when compared to its Canadian or German counterparts.

Bringing in the changes

A new CEO, Armin Devender (a Kaufhof veteran with 23 years of experience in the company, followed by a 3 years stint at the Hudson’s Bay Company), was appointed in October 2019 with the clear mandate of revamping the company’s appeal and increasing sales. Even though the Covid-19 pandemic obviously did not ease things for him, a strategic transformation plan was implemented and executed, with visible results.

The plan included 21 projects, among which:

-    The most visible part was the rebranding of the stores into Inno in April 2021. Devender was aware that Belgian customers did not recognize Galeria Inno as the original brand and he was eager to recreate a sense of proximity between the general public and the iconic store (the current tagline of the company is “Inno for you”),

-    Stores also had a makeover, both in terms of spaces (larger and easier circulation areas, opening of new lounge spaces, lighting, the opening of the windows on the outside…) and offer, with an increased range of brands sold (including younger or more upmarket ones) and new partnerships, especially in the F&B area with the opening of BON restaurants on the ground floors of the stores,

-    Somewhat more impressive, behind the stage the plan also included a technical upgrade. During the pandemic, Devender and his new management team have managed to implement a new ERP with SAP in only 7 months, which allowed them to relaunch a proper e-commerce website which also includes a marketplace, allowing them to test new product categories not sold in stores such as design pieces, furniture units or lights and either delivered via dropshipping or picked up in stores.

According to Devender, the results were quick, with an increase in the conversion rate noticed as early as in November 2021, and when the IADS met with him in May 2022, he mentioned that total sales were now almost back to pre-pandemic levels.

Strangely enough, however, the rejuvenation plan was first launched in secondary locations (Schoten end of 2020, Liège, Louvain and Waasland in 2021-22) and not in the capital city flagships. This has raised some critics about a strategy which requires capital and time to refurbish a 16-wide network of stores, in a very uncertain context, and questions about its realism and time needed to achieve it. For instance, the company had to put on furlough 50% of its overall staff, including HQ, in early 2022 due to liquidity issues.

The IADS visited the two stores in Brussels city center, in the posh location of Place Louise and the original one of Rue Neuve. The feeling, look and touch differ considerably from one location to another and even allows to have a “before / after” kind of understanding of the work done so far.

Place Louise store

This store is the place to go to have a taste of what the department store concept looked like prior to the arrival of the new CEO, as the revamp has not started yet. This retail unit is surprisingly out of synch with the immediate neighbors (the usual luxury brand suspects, Hermès, Louis Vuitton, Tiffany’s…) and looks at best dull, at worst unattractive.

Organized on 4 floors, the zoning is classical with a few surprises:

-    The basement is dedicated to lingerie, and visitors land immediately in the section from the escalator facing the entrance. This is somehow surprising as there is no boudoir nor intimacy feeling here, but this clearly reflects a practice from the past (many department stores in the Northern part of Europe used to display lingerie either on the ground floor almost immediately at the entrance or in the basement). One can wonder about the efficiency of such a set-up in modern times.

-    The ground floor is rather classical: cosmetics, accessories with multi-brand generic central displays, and walls with brand concepts, showing an assortment of local and international brands. The wholesale model seems predominant with no shop in shop with separate cash desks in view, but a large bank in the middle of the floor, flanked by a guard, where customers can line up and pay for their purchases under his close watch. The fact that customers are given their purchases in new concept packaging is destabilizing and shows that the store is about to be upgraded, which would explain why the barber space is closed and under construction.

-    On the first floor, the feeling is airier thanks to the large windows overlooking Avenue Louise, and customers can find access prices and contemporary RTW and shoe fashion. Construction is being carried out in the middle of the floor, with a sign “this is the right moment for a relooking” and workers are busy with the upgrades.

-    On the second floor, mature fashion is presented. A mannequin was lying on the floor unattended at noon, facing the escalator exit, which raises questions about the attention given to service and image.

-    The last floor is dedicated to Men’s and Kid’s Fashion. The height of the ceiling and structure of the walls makes it almost impossible for salespersons to see who is in the kid’s section, which is a problem and leaves customers being left alone there. The customer service space is under construction and without any type of hoarding or explanatory sign.

During the visit, sales assistants were either not in sight, or discussing between themselves. None of them were saluting customers, even at a moment when affluence was low, and they seemed pretty much left to themselves, as some of them were having surprising behavior (hiding behind a corner or spending time folding garments at a moment when customers were gathering in front of them with questions).

Overall, the visit was disappointing and far away from the promise implied by the new plan. The CEO latter confirmed that this store should be upgraded in S2 2022 / S1 2023.

Rue Neuve store

This location is a stark contrast to the posh Place Louise area: like many other areas in Europe, this area used to be a must-go during the 20th century, and gradually lower-range retail and restaurants started to get locations there and make the most of the traffic. As a consequence, the Rue Neuve location is rather mainstream with a concentration of fast foods and high street fashion boutiques.

However, the store, due to its historical status, has started to undergo a makeover launched in November last year. The new logo is proudly displayed on huge banners floating on the façade. However, they are made less visible from the street as Media Markt, the partner leasing the last floor of the store, has also displayed their logo on the building.

On the total 5 floors, 4 are occupied by Inno itself, from the basement to the third floor (the last one being entirely occupied by Media Markt):

-    The basement is dedicated to home products, design and decor. Even though it had been revamped in 2019, hence not with the current concept being deployed, the feeling is the antithesis of the Place Louise store, with perfect lighting, a feeling of space and the use of bright colors. In comparison, the cash desks are inviting and look like places where one can receive advice and help, rather than just paying bills. The way the floor is organized allows us to comprehensively measure and sense the dimensions of the store, and this is impressive.

-    The ground floor allows customers to enter directly through the main entrance into a cosmetic space which has been built with international standards: brands are properly displayed in their own shop in shops with their own concepts, with competent, welcoming and smiling staff, and this is clear that here, the floor is being looked after both by the retailer and by brands. The cosmetic area is then connected to the lingerie space (with a cozier feeling than in Place Louise) and bags and accessories. The brand selection is also a bit more upmarket than in Place Louise, with names such as Furla, Coach, or Calvin Klein, coming as a top up to the Guess or Liu-Jos of this world.

-    The first floor is dedicated to women’s fashion, organized in nice spaces with corners build with specific brand concepts. The whole floor is clear, and gives a sense of space with set ups and displays which are supporting the glance while not cutting it.

-    The second floor is dedicated to men’s fashion, with a similar sense. It was noted there that all sales staff were wearing their own looks, not uniforms, giving a sense of youth and credibility.

-    The last floor shows a bit of everything, from shoes, sportswear, gift, travel accessories and a restaurant that is a reminiscence from the 80s (not in a cool way). Here, the rebranding is still on going, with signage mixing both the old and the new concept. Again, the space gives a feeling of light and is quite welcoming.

Although both stores were visited on the same day, within 20 minutes of each other, traffic intensity and quality were incomparable, and seemed out of synch with the environment itself: the younger, cooler and apparently richer customers were not in the posh area location but in the more popular one, which suggests that the rebranding strategy is beginning to bear its fruits.

Online presence

It is interesting to see that even though the rebranding of the company now dates back more than a year, not every detail has been yet fixed: for instance, Google still displays “Galeria Inno” on its maps for the Rue Neuve location, which Place Louise is simply called “INNO Louise”. This is the kind of detail that can be confusing for tourists and people unfamiliar with the names, for instance.

When visiting the neat and very efficient website (where marketplace products are presented in an indistinct manner until the product page), the accent is clearly put on the loyalty program recruitment, using the anniversary celebration as a pretext to display the new perks according to the 4 levels of membership (‘Unique’, ‘Amazing’, ‘Exceptional’ or ‘Premium’: perks are quite classical and range from free parking, alterations or make up sessions, to access to special and VIP events, and including point-based vouchers, birthday date discount and extended return policy).

Even though the overall display is very simple (and somewhat unappealing for the younger generation), it is probably the best way to make sure existing customers start to use the online channel, and one might wonder if the current website is not simply a transitional one for a more sophisticated version once the customer based has evolved.

Check out the collection of pictures here!

Conclusion

It is paradoxically too early to know if the plan launched by Armin Devender in 2020 is bringing success, from visiting the flagship stores only. While the idea of testing new concepts and projects in the second-tier stores can make sense in order to limit risks, the current look and feel in the capital city stores suggests that this approach was too shy and timid given the timing. Now that tourists are coming back and local customers are looking for new experiences, the situation in Brussels is not on par with everyone’s expectations which is a shame given the fact that the corporate revamp has now been launched close to two years ago.

Also, even though the revamp in the Rue Neuve store is not finished yet, the progress made so far suggests that there is still a long way to go for Inno to get to international standards: while the offer is more attractive, there is no hint that the stores are becoming more experiential and able to generate new streams of revenue in the same manner than what we see in France, England, Spain or Germany. As a consequence, critics in the local press stating that the overall plan is too slow and not radical enough (especially in terms of restructuring and rightsizing the network) can be understood: there is no evidence that Inno is currently building the solid foundations it will need to succeed in the future.

Additional reading

Also see the press release (rebranding and new rue Neuve Store)

Credits: IADS (Selvane Mohandas du Ménil)