Luxury Places and Spaces –Flagships & the internationalisation of
luxury fashion retailing
Christopher M Moore
Glasgow Caledonian University
What luxury retailing is about…
Our concern is no longer whether our products will be accepted – what matters
is whether our entertainment will be
CEO Salvatore Ferragamo
Entertainment, Entertainment, Entertainment
Judgement of |Flagships
“Our assessment is based upon the extent to which the flagship delivers emotional satisfaction to our customers”
Hermes
Lest we forget that…
• Fashion – particularly luxury – brands – are the most prolific / longest established of the international retailers Hollander (1970)
• Gucci – Chanel – Dior – Louis Vuitton = 50+ years with stores in foreign markets
• Early internationalists – usually within two decades of their establishment – by necessity
• New generation – D&G – within 2 years of trading
Luxury Flagship Stores
• New extravagance – scale, design and cost–huge debt – such as at Prada
• New impact – media coverage, consumer response, competitor action, wider influence upon urban architecture
• Luxury machismo – expression of conglomerate power & status / management aggrandisement
Louis Vuitton, World Flagship
Like a Luxury Principality
Prada Guggenheim, New York
Research Focus
• Assemble a review of the characteristics of the luxury fashion flagship store
• Interpret the function(s) of the luxury flagship
• Case studies with 8 luxury fashion retailers
Flagships in the Literature
• Pine and Gilmore (1999) – places of brand performance – staff & customers as actors
Kozinets et al., (2002) definition:-
• Carry a single brand of product
• Company owned
• Operate with the intention of building brand image rather than solely to generate profit
Flagships in the Literature
• Carry a single brand of product – er, no
• Company owned - er, no – not always
• Operate with the intention of building brand image rather than solely to generate profit
Flagship Features
• Scale – between 8 - 12 times the size of the standard format
“We go for an historic building – always too big for our needs. So we need to develop more product to fill the flagship space”
• Cost – “development costs bear no relationship to our income levels – but we can because we are a private company”
Chanel Tokyo- £240m
“Flagships at 15m Euro
from a 105m Euro
turnover would not get
you top marks in the
business planning class”
“55% of our cap.ex. went
to one flagship last year”
Flagship Features
• Number – “fewer than you’d think – and only within the markets that matter”
• For Burberry – 4 – London, New York, Barcelona and Tokyo (owned by Licensee)
• Established markets – based upon sales income and / or market status and now…
• Emergent markets – China, Russia and S. America
Micro-Locations
• “precision placement – in 2 streets per city”
• Access to tourists, rich women, celebrities, media – in that order…
• “Inadequate spaces in the fashionable places”
New Patrons of Architecture
Claudio Silvistrin for Armani Pawson for
Calvin KleinRem Kolhass for Prada
New Patrons of Architecture
• Enhances brand reputation and status
• Provides a blueprint for the development of “roll-out” formula
• Cultural and artistic contribution to markets
Flagship Vernacular –Language of Minimalism
“The international luxury flagships are the new reference points in international architecture”
Standard v AdaptiveClaudo Silvestrin for Giorgio Armani
• International Minimalism
• Monastic experience –cream stone
• Purity of the GA brand
• “Opulent use of empty –and commercially inactive – space”
• “Space defining luxury”
• Replication across all flagship stores
Burberry –Rejecting the Global…
“We have learned that the formulaic brand footprint is no loner appropriate for a discerning, anti-standardisation consumer”
• DNA comes from Bond Street –materials, pallet and patterns
Prada –Epicentre Stores
• Aim is “to challenge the formulaic and standardised approach to international flagships”
• Each flagship experience is unique and a response to the local environment
• Cutting-edge image for Prada
• Common flagship features – celebrated architect, best location, expensive, large scale
• Near bankrupted Prada…
Prada Epicentre Tokyo
• "to reshape both the concept and function of shopping, pleasure and communication, to encourage the meshing of consumption and culture."
• Store as a large display case or more a string vest?
Prada Los Angeles
Prada Guggenheim, New York
Motivations -“That something other than profit”
• “Generate income – not so good for profit”
• Market Entry – first direct investment aimed to generate and maintain demand
“Demonstration of our long-term commitment to this fast growing market in which we will develop comprehensive distribution and retail channels” –Armani in Shanghai
Motivations -“That something other profit”
• Market re-entry – Tommy Hilfiger’s Regent Street flagship : then 2-3 company owned stores each year for the next 5 years as a re-positioned, luxury business
• Market Stimulant – attempt to re-position, develop and / or extend business within a foreign market
Case : Hugo Boss
• 4 franchise partners operate 19 stand-alone stores and 26 shop-in-shops in the UK
• May 2006 - 10,ooosg ft flagship in Sloane Square
• “London’s prominence as a fashion centre means the Sloane Sq. store has significance for the worldwide business as well as UK trading. It in one of our key flagship locations, along with Berlin, New York, Paris, Tokyo and LA”
Hans Schmitt, UK MD
Case : Hugo Boss
• “The franchisees were nervous about competition from the company-owned flagship, which will carry all of the Boss brands, but they were reassured by the marketing and brand-awareness benefits”
• “The flagship isn’t just about driving sales – It’s about supporting the market for franchisees and stockists by presenting Boss as a lifestyle. None of the franchise partners would have been able to do such a big retail project and the UK represents 14% of worldwide sales”
Hans Schmitt, UK MD
Flagship Functions- Brand Communications
• Flagship as a core branding device
• Flagship as a brand “billboard” and urban entertainment
“Flagships appear under marketing communications in our
accounts – that is their principal function. To communicate.
And to build relationships” Brian Duffy, CEO Ralph Lauren Europe
Flagship Functions
• Reinforces and enhances the brand’s provision of entertainment
• Space to develop and adapt new business propositions
• Stimulate, strengthen, and support
relationships with distribution partners, the fashion media and customers
Flagship Functions- Distribution Partner Relations
• Gain – important selection criteria for wholesale stockists / franchise partners
• Retain – experimentation and business development
• Entertain – flagships as a brand venue
Flagship Functions- Distribution Partner Relations
• Education – brand presentation, systems & service
“Luxury fashion retailing is about implementing a formula. The flagship store is the brand manual – and the partners visit the flagship to read the manual”
Flagship Functions- Media Relations
“There is a direct relationship between flagship presence and media coverage. Close a flagship and you are dead in the press. Our Bond Street opening gave us a 3000% increase in UK press coverage”
Cristiano Quieti, MD, Diesel UK
Flagship Functions- Media Relations
• Party Venue - average of 16 media events per year
• Celebrity Venue – “watching Paris Hilton shop is a national pass-time”
• Memory prompt – “a store near press land helps stop journalist’s brand amnesia”
Flagship Functions- Customer Relations
• Recruitment – esp. high spending customers who tend not to stray onto Cheap Street…
• Loyalty Venue – “any lady who spends more than £14k with us can have a free coffee or her make-up done in the Chanel flagship store”
Flagship Functions- Customer Relations
• Brand Laboratory – NPD, customer service, IT, brand presentation
“Absolutely nothing happens within this business without it having gone through the flagships first. Its market testing in the most important markets”
Trickle Down Effect…
• Appropriation of features of luxury flagships within the mass market
• Re-shaping environments and trading-up in terms of international positioning as entertainment venues
H&M New York
ZaraParis
Final Thoughts…
“Flagships are critical to our international development. For relationships and all that stuff. For developing an international property portfolio – that is not worth that much because we don’t own the building, just the design concept. Total madness really…”
Final, Final Thoughts
“Flagships are marvellous. In London –we had one customer who had negotiated with her husband that she would spend £10k with us every time England scored a goal!”
