Luxury Places and Spaces Flagships & the internationalisation of luxury fashion retailing. Christopher M Moore Glasgow Caledonian University
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1 Luxury Places and Spaces Flagships & the internationalisation of luxury fashion retailing Christopher M Moore Glasgow Caledonian University
2 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
3 Judgement of Flagships Our assessment is based upon the extent to which the flagship delivers emotional satisfaction to our customers Hermes
4 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
5 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
6 Louis Vuitton, World Flagship
7 Like a Luxury Principality
8 Prada Guggenheim, New York
9 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
10 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
11 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
12 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
13 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
14 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
15 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
16 New Patrons of Architecture Claudio Silvistrin for Armani Rem Kolhass for Prada Pawson for Calvin Klein
17 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
18 Flagship Vernacular Language of Minimalism
19 The international luxury flagships are the new reference points in international architecture
20 Standard v Adaptive Claudo 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
21 Burberry Rejecting the Global We have learned that the formulaic brand footprint is no loner appropriate for a discerning, antistandardisation consumer DNA comes from Bond Street materials, pallet and patterns
22 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
23 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?
24 Prada Los Angeles
25 Prada Guggenheim, New York
26 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
27 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 reposition, develop and / or extend business within a foreign market
28 Case : Hugo Boss 4 franchise partners operate 19 stand-alone stores and 26 shop-in-shops in the UK May ,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
29 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
30 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
31 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
32 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
33 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
34 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
35 Flagship Functions - Media Relations PartyVenue - average of 16 media events per year CelebrityVenue watching Paris Hilton shop is a national pass-time Memoryprompt a store near press land helps stop journalist s brand amnesia
36 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
37 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
38 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
39 H&M New York
40 Zara Paris
41 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
42 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!
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