Luxury boutiques. a palatial experience. RETAILER SHOWCASE DFS Galleria Okinawa March/April The Moodie Report

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1 RETAILER SHOWCASE DFS Galleria Okinawa March/April 2005 Luxury boutiques a palatial experience Can there be a more upscale, better-presented boutique area anywhere in the travel retail world than the next world to confront the shopper? The luxury boutique area is DFS Galleria Okinawa s defining offer, where 13 of the world s leading luxury names each enjoy dedicated boutique space customised to their own exacting requirements. After exiting fragrances and transiting through a short portal, shoppers discover the stunning refinement of a long curved room with boutiques set off to either side. An open piano bar with table seating fills the centre area allowing customers to sip a glass of Champagne in between shopping. As one exits the fragrances room, the impression is of walking out into a whole new luxury store. That s the point, agrees Schriver. You come through a portal and you feel like you ve exited or entered a new store. We want people to feel like they ve walked into another world. the architecture of the room draws heavily on local inspiration. We tried to get a real feeling of Okinawa but make it modern. RTKL did a spectacular job, says Schriver. The Champagne bar sets off the brand boutiques nicely, as well as being consistent with the image of the houses. Importantly, the natural curvature of the room allows all the brands to be seen at any time. It really catches your eye, Schriver enthuses. You can stand in one place and see every brand that s in here. With a perfect rectangle you wouldn t see them all. The collective impact is profound. We all knew and believed it was going to be great but we didn t realise it was going to be like this, Schriver enthuses. Brands on offer are Tiffany, Montblanc, Cartier, Christian Dior, Louis Vuitton, Prada, Bvlgari, Chopard, Burberry, JP Tod s, Celine, Fendi and Ferragamo. Nobody has walked into here and not been totally mesmerised, says Schriver. Here we want you to feel you have entered a very palatial place. The ceilings are 32ft high. The Italian marble is complemented by Okinawan materials including wood trim, limestone and sandstone, and VIPs, including popular Japanese all-girl band Max, prepare to cut the ribbon at the opening of Louis Vuitton, at the heart of the Galleria s boutique world 22 The Moodie Report

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3 RETAILER SHOWCASE DFS Galleria Okinawa March/April 2005 Each boutique environment is dictated by the demands of the brand itself, the range of its offer and by likely customer volumes (the jewellery boutiques are typically smaller than the fashion-led ones, for example). All have their talking points: Cartier, for example, features the first of the luxury house s new designs; Chopard, a relatively new brand for DFS, features a big new format. The range on offer consistently offers depth and diversity. Notes Schriver: The Cartier assortment here would be consistent with any Cartier assortment you ll find anywhere in the world, with high jewellery, gold and diamond watches and jewellery watches. This is a whole new format for us so you really have to have qualified sales associates here who will work with the customers, sit them down and sell the products but it s been very successful. Although the boutiques represent the crème de la crème of the luxury business (only Chanel, Hermès and Gucci are conspicuous absentees), the area is in no way intimidating to the casual shopper. Yes, it is comfortable, agrees Schriver. That was part of the reason why we designed a nice seating area here [the Champagne bar]. It s not very [traditional] travel retail. Interestingly the luxury end of the business at DFS Galleria Okinawa is even stronger than in the retailer s international business both in offer and sales. We re really trying to represent the brands the way they would represent themselves, says Schriver. It s exactly how they want to communicate they give us the design for it, this is their store. In each case a full range is on offer, a Bob Miller and Ed Brennan celebrate a very Grand Opening Just before the official speeches took place at the Grand Opening of DFS Galleria Okinawa, there was a brief but poignant moment that captured the past, present and future of the world s leading travel retailer. To the side of the stage, deep in thought, stood DFS Chairman Ed Brennan and company co-founder Robert (Bob) Miller, now in his 70s but still an active minority shareholder (and as recently as 2003 a record-breaking transatlantic monohull yachtsman). Both were in ebullient mood, knowing full well that the opening of the Okinawa Galleria represented a return to top form for DFS and symbolised its emergence from the welldocumented trading difficulties of the past few years. This is a store that underlines the retailer s unrivalled credentials with the Japanese travelling shopper, its commitment to quality and its relationship with luxury brands. The store s very existence reaches out to the company s roots. Here the retailer has worked with local legislators to create an opportunity out of nowhere and secure an unchallengeable long-term position, just as it did long ago in locations such as Guam. Today is a very special day for me, Miller told guests. I came to Okinawa for the first time 44 years ago. This place has much significance in the development of DFS in Asia. I have since been to Okinawa many times, and each time I grow to like this place more and more. Thanks to all of you for your support during those 44 years. And through our steady hard work, DFS has grown to be the first of its kind. I am very proud of this record and of our people. Today in Okinawa we have the Grand Opening of this Galleria. This is a testament of our commitment to Okinawa and our belief in its potential for development in the future. Ed Brennan stated a few moments earlier: The vision was to transform Okinawa s already successful tourism business into a truly luxury retail business. Those of us involved believed that Okinawa could generate more tourism growth if it developed luxury shopping. We humbly suggest that this Galleria will be the much-needed magnet to attract more visitors to Okinawa. Brennan pledged DFS Group s commitment to becoming part of the Okinawa community. He praised the role of local and central government, particularly the Governor of Okinawa, as well as Customs. We have 14 Gallerias, he said. But I can honestly say today that this store is the finest in our portfolio. 24 The Moodie Report

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5 RETAILER SHOWCASE DFS Galleria Okinawa March/April 2005 distinguishing feature of the whole Galleria. That s the important part for us, notes Schriver. As the brands get better and better, we have to get better and better all the time. So we are working very hard at being as good at running the brands as they are themselves. The boutiques reflect changes in the way that DFS now buys. A good example is Celine. Under our old structure we would have someone buying handbags, notes Schriver. If we wanted jewellery we would have another person doing it, someone else buying scarves and someone else buying ready-to-wear. Now, however, for any brand you see in the store in any given space there s only one product merchant who selects the range. We ve got a much better look, and the brands are much happier because one person is in market with them. This has been very effective. The same applies for JP Tod s, originally an Italian shoe brand but now increasingly active in handbags and accessories. The diversity is reflected in the Okinawa store [the brand is well established at DFS Guam, and will enjoy an expanded presence in the new-look Tumon Bay Galleria]. So how different is this store to the other Gallerias? I guess the closest we have to this is Guam [Tumon Bay] but that is six years old, so you can t compare it. This is an entirely different level of retail, says Schriver. It s also different conceptually. When we created Guam and our other Gallerias we had a three-pyramid approach. We had a general area of products (such as leathergoods and cosmetics); we had a boutique world; and then we had what we called entertainment, which was destination and souvenirs. Today DFS sees destination as a much smaller part of its overall store footprint, and in time as a smaller part of total business. The concept remains important but its role has been qualified. We viewed it as a way to get people into the store. Today we don t really think it s a driver: it benefits from traffic, but doesn t really bring it, Schriver notes. As a result the company is right sizing the destination offer across its stores, particularly at the new-look Tumon Bay where the freed-up space will be used for more branded items. Raising the bar once more in Tumon Bay DFS Galleria Guam, opened six years ago in Tumon Bay, is one of the retailer s finest achievements. But a big refurbishment of the store, already under way, will see it taken to new heights. The sheer excellence of the new DFS Galleria Okinawa has put healthy internal pressure on the company to raise its game further at Tumon Bay, says Merchandising President Michael Schriver. We re under renovation and construction now; it will be complete by March next year, he notes. It takes a little longer to renovate an existing store while you re doing business than it does to build a new store from the ground up [construction on the Okinawa store started in December 2003 and the store opened just one year later]. Learning some lessons from Okinawa, DFS executives are busily fine-tuning and planning Tumon Bay. You always ask what you can do better next time, Schriver says. For example, the retailer will underline further its upscale focus in luxury watches epitomised by the addition of Blancpain in Okinawa with three or four other ultra-premium brands. And the fashion and leather section will be moved up one more notch in Guam. Destination and entertainment will be less of a focus, with the Okinawa brand formula echoed and in some cases taken to new levels. Over lunch, Chairman Ed Brennan and his senior management make it clear that while they re delighted with Okinawa, there will be no resting on the corporate laurels. The Hainan China opening [22 March] and Guam both beckon. Once again the world s leading travel retailer is determined to take its offer to a whole new level. It s a significant cultural shift from the late 1990s when words such as entertainment and destination dominated the retailer s vocabulary. Schriver sums up the current attitude neatly: We think the brands are the entertainment. The Japanese come for the brands they ll buy a number of gifts for omiyage from our destination area for when they get home, but that is an area in which everyone can compete. Here however [in the boutique area] we can differentiate ourselves not by any one brand but by the collection and in how well we represent the brands. That s really the differentiator. 26 The Moodie Report

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