l’s acquisition move is not unusual,” Selvane Mohandas du Ménil, International Association of Department Stores managing director, told Inside Retail.  “Last year, Magasin du Nord acquired the rest of the real estate where they were operating but not owning, which relieved rent pressure and allowed them to redirect investments in store modernisation. On the other hand, El Corte Inglés, which recently announced that it had growing top and bottom lines, decided to close off stores that it did not own to reduce rent pressure and avoid being dependent on third parties.” Implications for Central Group Entering the continent in 2011 with the acquisition of Rinascente, the Chirathivat family-owned conglomerate operates 40 luxury department stores across seven European countries. Central Group made the headlines again in 2022 after snapping up Selfridges Group, making it the largest luxury department store operator in Europe.  KaDeWe joined Central Group’s portfolio of European department stores including Globus, Illum, De Bijenkorf, Brown Thomas and Arnotts.  White & Case Llp, the global law firm that advised The KaDeWe Group on the business operations sale, said the department store landlords must agree on rental contracts with Thai Central Group on commercially reasonable terms to complete the transaction. While Signa’s business was all about maximising the value of the real estate, for Central Group, it is a matter of rental control. “The fact that [Central Group] acquired the real estate is logical,” said Ménil. “If you do not control your walls, you remain at risk of not being able to withstand massive rent increases. Barney’s is a great pre-pandemic example, and more recently, this is why both Manor and Jelmoli closed or are about to close in Zurich.” “It also suggests that they massively invest in iconic department stores whenever this is possible, and opportunities in Europe are not that many: Spain is a closed market and France is complicated as there are no obvious potential candidates.” “Finally, reducing the pressure on rent by acquiring the real estate is crucial in a model where the retailer buys (Central’s case): they purchase and sell products, and do not rent space to brands. For this reason, maximising the margin goes by controlling the walls,” he added.  “Keep in mind that Central is a luxury, family-owned operator, so they are sensitive to this notion of long-term vision and survival in the same way that LVMH and Kering are very careful when purchasing their flagship stores’ real estate.” How does KeDeWe benefit from the Central Group? “Central consolidates its luxury retailer’s global position, which gives an obvious leverage power with luxury brands,” Ménil said.  He added that Central’s customer loyalty program in Thailand could potentially extend to European department stores, directing Thai and Asian customers to their European stores while also modernising the systems in current European subsidiaries and introducing new services. What’s next? “Nothing suggests that they are not here to stay, on the contrary: when it comes to La Rinascente, De Bijenkorf or Globus, investments go beyond what is needed to simply maintain the stores afloat, as the group invests in the retailers’ branding recognition, tech, and ability to remain attractive to brand,” Ménil said.  Central Group said it will expand KaDeWe Group’s presence in Europe with the opening of the first luxury department store in Vienna dubbed ‘Lamarr’ and ‘Carsch Haus’ in Dusseldorf, Germany. The two new projects are scheduled to launch next year.  The group was also reported to have its sights set on more real estate assets from Signa to further strengthen its European presence.  According to GlobalData, the Europe luxury retail market size was US$109.8 billion in 2022 and is expected to grow at a CAGR of more than 5 per cent between 2022 and 2027. More European luxury retailers are investing in pop-up or concept store formats and opening new stores in famous retail areas to increase their market presence. Consultancy firm Cushman & Wakefield (C&W) said Europe saw 107 new openings on 20 key luxury streets in 12 countries last year, with average growth in prime rents in luxury locations twice as high as in other top retail streets reaffirming the region’s attractiveness as a “well-established luxury retail location”.