Back to the future: the Fondaco dei Tedeschi building on the Grand Canal in Venice was a home for commerce for 800 years – and will become one again with the DFS opening
Antonio Belloni: “LVMH has been waiting for the right opportunity and partners for DFS’ European entry”

ITALY. DFS Group has announced a landmark entry into Europe after securing a lease on the famous and historic Fondaco dei Tedeschi building on the Grand Canal in Venice, in partnership with Edizione, a private company controlled by the Benetton family.

The hugely ambitious project, which will combine retail, cultural and entertainment events, is expected to open in Summer 2016. The move – a potentially transformative one for the luxury goods travel retailer – was announced to invited international media, including The Moodie Report, at a press briefing on Monday, and to Italian media on Tuesday.

DFS said it plans to create “a new destination for culture and commerce on the famous Grand Canal” of Venice. Restoration of the 13th century Fondaco dei Tedeschi building, which will feature 7,906sq m of retail space, will be carried out by owner Edizione (in alliance with the City of Venice) between now and January 2016, when it will be handed over under a lease agreement to DFS.

The retailer will then introduce its own marketing, merchandising and cultural concepts before opening the premises sometime that Summer. The retail concept is being designed by UK architect Jamie Fobert, who has a strong track record in blending retail into historical buildings, said DFS.

The store will house brands from fragrances & cosmetics, watches & jewellery, fashion & accessories and Italian food, gifts and wine, and “will go beyond the concept of a conventional department store,” said DFS. “It will act as an extra venue for the city, promoting public events and liaising with the city’s cultural institutions,” the company noted.

LVMH Group Managing Director Antonio Belloni said: “DFS is one of the most global units in all of LVMH and has exceptional know-how, cultural sensitivity and an unwavering desire to explore new territories. LVMH has been waiting for the right opportunity and partners for DFS’ European entry and hence we are thrilled to collaborate with Edizione, and the city and people of Venice in offering a perfect combination of history, cultural traditions, craftsmanship, retail and hospitality in this outstanding location.”

Gilberto Benetton: a venue for Venetians and visitors alike

Edizione Group Chairman Gilberto Benetton welcomed DFS’s entry into Italy and said: “Our aim is to foster new life into historic Venice by creating a venue for Venetians and visitors alike to revel in Italian architecture, craftsmanship, performing arts, and services, all alongside a beautifully curated product offering. We are confident that LVMH’s DFS will be a trusted steward and the right, high quality partner to occupy and nurture this building rich of history.”

DFS Group Chairman and CEO Philippe Schaus added: “We feel honoured and humbled by the opportunity and responsibility of becoming the guardians of this iconic landmark. In opening our first European location in Italy, our vision for Fondaco dei Tedeschi is to re-create, in the modern world of travel, the enjoyable experience this historic building plays in connecting culture and commerce in Venice. ”

“We will showcase the best of what Venice and indeed, Italy has to offer the world – a unique culture and the city’s long tradition of exceptional craftsmanship. Our cultural programme will include entertainment as well as a curated selection of products, brands and services that together will provide a memorable and sought-after experience,” he said.

DFS revealed that the retail and cultural offer will be housed over four floors in the Fondaco, which is the second largest historic building in Venice after the Doges Palace by St. Mark’s Square.

A luxury and destination offer
There will be a number of entrances to the building, principally from the Grand Canal side, leading into a ground floor housing Italian gifts and other local products, plus a café. The first floor will house Italian and international fashion & accessories, the second floor men’s fashion & accessories plus watches & jewellery, while on the third floor there will be a high-end shoe salon (the first of its type in the city) and a broad fragrances & cosmetics offer.

The Fondaco is stunningly located at the centre of the Venice tourist trail

The fourth floor will house a public space that will feature regular events, with a terrace view on top also featuring themed events.

Full details of the retail space breakdown by brand and concept will be decided later. Discussions with a number of brands – initially Italian fashion houses – began in the past two months, and these will be followed by negotiations with brands in the other categories over the months ahead. “This is just the beginning of the journey,” said Schaus.

View of the future: DFS Executive Vice President Europe and Middle East Eléonore de Boysson with Chairman & CEO Philippe Schaus on the Rialto Bridge overlooking the new DFS site, which opens in 2016
The building is currently under construction; it will house four floors of luxury and destination retail alongside events space when complete
The building’s interior has been preserved and retains touches of its centuries-old character
Philippe Schaus: “This is a wonderful opportunity to develop a new type of European department store”

Of the offer, DFS Executive Vice President Europe and Middle East Eléonore de Boysson said: “There will be a mix of brand boutiques and multi- brand environments, with a blend of top international and niche local brands. In watches & jewellery there will be a mix of the best brands; in perfumes & cosmetics we will feature all the leading brands but with some Italian highlights; fashion will be predominantly Italian and the food offer will be entirely local, definitely Italian and mostly Venetian.

“Our strategy of localisation will be seen strongly here. There is an emphasis on art and culture, as in other locations across the DFS network.

“We want to be a part of what is happening locally, which is why we are creating space for public use and including a strong calendar of cultural events. It will be a meeting place, a place where people connect and a major hub for activity in the city.”

Ms de Boysson further noted that DFS wanted not only to commit to the responsible stewardship and preservation of a historic location, but it also wanted to give back to the community in Venice through supporting traditions and the arts and by creating jobs, skills and training. She said the company plans to become immersed in local cultural life through connections with key organisations such as government, university, performing arts institutions, hotels and non-profit organisations.

As well as themed events and food & beverage, there will also be a lounge dedicated to DFS loyal and frequent shoppers. The company is also developing relationships with top-end hotels to attract potentially high-spending visitors to the store.

Remarkably, this complex will be the first of its type in the city. DFS noted that there is currently no destination for travel shopping within the city that houses the key luxury categories in one place, underlining the opportunity that exists here.

Schaus said: “There is a real need for a high-end department store concept that combines high-end shoes, high-end beauty, premium watches & jewellery, and we are doing this in an environment that is not only about retail but about events and theatre and education too. There is also a deficit of premium destination goods in Venice – much of the offer you see is at the lower end – and we aim to address that need by introducing local artisans and offering bespoke design pieces from the region.

Eléonore de Boysson: Localisation is a key part of the strategy in the Venice venture, as it is elsewhere for DFS Group

“This is an opportunity to showcase the know-how of the local craftsmen, and tourists will discover that they can find authentic Venetian souvenirs.”

He noted that the retail offer was duty paid, and operated on the same basis as other Italian department stores, without the airport pick-up option as practised by downtown duty free operators in Asia. “We will rely on the service, experience and product offer,” said Schaus.

Leaning heavily on heritage
The branding of the store is close to being finalised, Schaus added, and will lean heavily on the historic Fondaco dei Tedeschi name. [The building was first constructed in 1228 as a place of exchange for German merchants, and used for centuries to trade spices, silk and other goods between the Orient and Northern Europe. It was twice destroyed by fire and rebuilt in the 16th century, before being transformed into a customs house under Napoleon, and was a post office in the early years of the 20th century.]

“The hero of this story is not DFS, the hero is the building,” Schaus said. “We don’t plan to change the name after 800 years. This will be the oldest brand building in the world. Find me another retail site in the world that is 800 years old. It’s quite amazing.”

He added: “Just as Venice was the epicentre of travel and trade for the world, and an iconic destination for travel, so this building has been at the centre of travel and commerce in Venice. Now the Fondaco dei Tedeschi will become once again a retail and cultural centre, operated by DFS.

In an illuminating address about the building, Ca’ Foscari University Professor of Arts History Giuseppe Barbieri outlined the rich history of the Fondaco, and noted its place within the rich heritage of the city. “It is an icon of the social and cultural history of Venice, and it will now return to its original function: commerce,” said Professor Barbieri.

Schaus added: “This is a new venture for DFS and we expect to learn a lot along the way. It is new in the sense that this is a new region, and we are entering a historical building with many centuries of history. That brings some constraints but it also offers guidance to what we can do.

“That’s why we are working with Jamie Fobert, who has experience in design with historical buildings. We don’t want to de-naturise the building, we want to use the building and immerse our new concept in the existing building. The historic cells that were once occupied by traders will still exist and some of these will remain and will house brands.

“You accept when you come to a location such as this in Venice that you are not in a department store in Asia or the Americas. It’s not a modern shopping mall, but we will use the charm of the building to our advantage.”

Prof. Giuseppe Barbieri: the building is “an icon of the social and cultural history of Venice”

The ‘world traveller’
Schaus told The Moodie Report that the target audience was “the world traveller”, and would not have a singular focus on Asian or specifically Chinese travellers.

“Venice is a melting pot of visiting nationalities, from Europeans to Americans to Asians and Middle East visitors. This is dedicated to travellers of the world, and all of them are interesting for us. We have the entire planet here.

“It is a first for us to go to a place with such an eclectic mix of passengers. When we are in Abu Dhabi it is very different to Hong Kong, just as that is very different to Los Angeles, and each has a broad base of its own, but nowhere is the customer mix as eclectic as it is here.

“Even given that, I would say it is likely that the [purchasing] mix will be dominated by emerging market customers – just as is the case for any luxury retail offer in Europe today.

“But there are also many many Italian visitors that come here, so that offers further opportunity, In terms of brand building for DFS, this is enormous.”

How DFS outlined its vision in a presentation to media in Venice on Monday, plus the timeline and stages of the project to 2016 (below)

Service culture
Schaus also told us that the retailer would seek to extend its highly regarded service ethos from Asia Pacific to the new location. “If there is one element in our Asian culture that we want to import to Venice, it’s our customer service.”

He added: “One of the things we have to do here is to ‘Europeanise’ some of our teams. We want to recruit in Italy and are doing that in the universities right now, taking them to our existing locations so they can learn [through the in-house DFS University] and then transmit that knowledge in the workplace back in Europe. That’s a challenge but it’s also an exciting proposition.

The Europe strategy
Schaus also spoke of the broader strategy to enter Europe, with further developments likely in time.

“Although we have a European shareholder [in LVMH], we have no European operations today but that will change with this important project. We have been looking at other locations in Europe but for now our focus is on Venice, and it will be for the next two years until it opens.”

He said that Venice was not the only option that DFS could have selected in Europe but it was the most attractive.

“We could have chosen a location such as London or Paris for our first venture, as these also attract many world travellers. For many visitors to Europe, there is a ‘magic axis’ covering France, Switzerland and Italy. We looked at each of these and Italy in particular presented a number of options.

“The four big destinations are Milan, Rome, Florence and Venice. Milan already has a strong offer across the categories that we will feature so we could not pretend to offer something new there. Rome was very interesting as it does not have the luxury offer that Milan has, and did present an opportunity, but it is very hard to find the right space. Florence is popular but it is less visited than the other locations, while Venice offered large numbers in terms of visitors and was the least well retailed of the four, yet the most iconic.

“But it was not only about the city, it was about the location too. If the right location didn’t present itself, we would not be here, and the Fondaco dei Tedeschi certainly is the right location. As our shareholder Robert Miller said, this is a once in a lifetime opportunity.”

Philippe Schaus: “In retail you always have to reinvent yourself or you will fall back”

Schaus concluded: “We are proud and awed by this challenge. This is a wonderful opportunity to develop a new type of European department store. It will borrow elements from the best department stores in the world, it will borrow from this fantastic and iconic city and it will borrow from DFS’s skills and expertise.

“In retail you always have to reinvent yourself or you will fall back. This is our chance to do that. Venice sets a new benchmark for us. It has some constraints in the building but it also has vast potential. We have close to 8,000sq m of space to work with, which sounds like a lot but in terms of what we want to do, is not enough. Now it’s down to making the right choices, of brands, of events, of how to treat the public spaces.

“There is no model to copy from because it has never been done before. If we do it right, it will be a new benchmark for the world of retailing in Europe, and a template for retailing in historic city centres for the future.”

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*We’ll bring you further details, reaction and comment soon on this hugely important project for DFS and for travel retail. The project will be among the key features in The Moodie Report Cannes Print Edition for October, out at Cannes.