DFS Galleria Macao raises

Transcription

1 Reach, Reliability, Respect DFS Galleria Macao raises the retailing stakes ISSUE 36 SEPTEMBER 2008 Business commentary and analysis of key developments in the global duty free and travel retail industry for readers of The Moodie Report. All advertisements brought to you with Moodie Interactivity. The Moodie Report PLUS is published by Moodie International. Please direct any comments to Martin Moodie by Back issues can be found at inside this issue Your key to unlocking luxury...1 Editor s introduction: The invitation card from DFS Group Chairman and CEO Ed Brennan came with the simple but compelling message: Your key to unlocking luxury. And what an array of luxury was on show last Friday evening as DFS celebrated the Grand Opening of DFS Galleria Macao the most emphatically upscale environment and product offering in the retailer s history. The Galleria, housed at The Shoppes at Four Seasons on Macau s Cotai Strip, offers shoppers 110,000sq ft of boutique-dominated shopping space split into three worlds Fashion, Beauty and Watches & Jewelry. Even in Macau s booming retail environment where luxury shops are opening almost by the day, this is something special. It s not for the faint of heart...4 Targeting the PRC consumer....5 A unique focus on ready-to-wear...6 Going big on Beauty...7 Watches & Jewelry World...8 Service with a Platinum touch...10 From Four Seasons to City of Dreams...11

2 Ed Brennan: We wanted to provide customers with a luxury and world-class shopping experience DFS Galleria s breathtaking space is already the talk of the town, gushed the glossy new launch consumer magazine Cotai Style, a publication jam-packed with double-page-spread advertising for luxury and designer label brands such as Omega, Dior, Chanel, Chopard, Prada and Swarovski and DFS Galleria Macao. DFS knows it must stand out from the pack in the white-hot intensity of Macau s fast-evolving retail scene. The company aims to do that by offering a roll-call of the world s great luxury and fashion brands, together with a perhaps unrivalled collection of rare, often unique, items and a bespoke service culture. All of that, and more, was on show on Friday night as guests (including many of DFS s VVIP customers from around Asia, flown in specially for the occasion) were treated to a series of themed events, exhibitions and rare product viewings. A special Luxury Vault was created for the occasion. Behind black curtains and ringed with security men, some US$9.1 million worth of rare and exquisitely crafted items were on display for viewing by appointment only. Bringing retail to life: The entire DFS Galleria was buzzing with interactivity and displays of brand heritage They included a US$5.6 million De Beers Diamond Emerald Cut Ring, a Chanel Diamond Alligator Bag in white gold encrusted with 334 diamonds (US$261,759), and the sumptuously fine Dior Rainbow Phoenix an extraordinary necklace in yellow gold composed 2

3 A De Beers Wildflowers Necklace: a combination of pavé and bezel set diamonds, it contains 56 carats of pavé diamonds set in platinum. It is inspired by a South African flower called the Black Eyed Susan of 1,215 precious stones including diamonds, opals, sapphires and the pièce de résistance, a carat emerald priced at US$744,302. But guests didn t have to enter the Luxury Vault to encounter finery or heritage. Each of the many brands was determined to put on a show, and guests were spoiled for choice. Bally offered a retrospective exhibition of men s and women s shoes down the years; Emporio Armani hosted a photographic showcase of fashion images taken from the celebrated Emporio Armani magazine; female guests lined up for photos wearing a Chaumet tiara; and Ralph Lauren showed a historic exhibition of old photos. Elsewhere, male and female models adorned in gold led a suitably named Gold Fever promotion from MAC. Luxottica offered a signature eyewear collection, and Champagne house Moët & Chandon treated guests to icecold bubbly in its distinctive Moët Bar, featuring the quirky Golden Bubble room. Later Ed Brennan told guests at a private dinner: We re very proud to add this new Galleria to our portfolio of Gallerias. We wanted to provide customers with a luxury and world-class shopping experience that until now was not available. We think we have achieved that. During dinner guests were treated to an extraordinary fashion show in which a number of rare luxury items were worn by models walking among the tables. They included the stunningly beautiful De Beers Wildflowers Necklace (above) a glittering combination of 56 carats of pavé diamonds set in platinum; The Omega Constellation 18K gold ladies watch featuring a brown dial paired with a diamond bezel and diamond watch face; and a sensational Chopard diamond necklace with red teardrop pendant. Travel retail has seen nothing like it before. But besides luxury, that also spells investment and commitment. The project was under way long before the current economic and oil crises began and DFS hurt recently by the softening Japanese spend and the (hopefully temporary and Olympics-related slowdown in Chinese travel) has much resting on the success of what amounts to a very large bet on the retail future of China s gaming capital. 3 In preparing this special edition The Moodie Report spent a considerable amount of time with the DFS team, learning about their aspirations for the project and understanding much of its detail. The following pages feature a walkthrough of the store, and we close with news of the retailer s equally ambitious follow-up project in Macau at City of Dreams. Moodie Interactive: Click on the image above

4 Luxury Only : One of the main entrances to DFS Galleria s most upscale retail environment ever Michael Schriver looks admiringly at the Louis Vuitton Patchwork Bag one of the world s most exclusive handbags. It s one of a range of around 185 Exceptional Items at DFS Galleria Macao that differentiate this store from any travel retail outlet in the world. The bag (one of only five in existence), made from a creative montage of samples from 15 different Vuitton handbags, carries a price-point of MOP498,800 (US$62,342). It s not for the faint of heart, says Schriver, DFS Group s President, Worldwide Store Operations. Nothing about this store is for the faint of heart. As we tour the new Galleria, just days after its soft opening in late July, Schriver and his colleagues Asia Group President Tim DeLessio and Pacific Division/US Group Managing Director Jim Beighley are almost turbocharged with enthusiasm about this extraordinary 110,000ft upscale shopping emporium. Comparisons with DFS Galleria Okinawa the retailer s last great greenfield opening, formally unveiled in early 2005 are inevitable. But three years is a long time in the evolution of the world s leading luxury travel retailer, and DFS Galleria Macao represents a whole new qualitative threshold. The main difference here is that our big brands are bigger, says Schriver, but you ll also find that the product offering is much more elaborate, much more extensive, and very focused on a Macau gambling consumer. As the DFS team orientates me from a directional sign outside one of the many entrances to the store, Schriver explains: We created three zones in this store, whereas there were four in Okinawa. We started with our luxury fashion and jewellery brands in the front zone of the store, all free-standing, monobrand boutiques. We then moved into our largest beauty floor anywhere in the world, which we think 4 turned out spectacularly well, and then we did a total watch and jewellery world. There are seven access points into this elegant retail extravaganza. The front of the store is on the glitzy Cotai Strip Moodie Interactive: Click on the image above

5 Traditionally we would be very linked in with travel agents, encouraging them to bring customers to the store. Here we re partnering with high-end hosts, such as Paizer Club and Concierge, where they have guys who are gambling US$250,000 a hand. (the heartland of Macau s casino and tourism district, inspired by the Las Vegas Strip); however the primary entrance from a footfall perspective is from the adjacent Venetian casino packed every day since it opened in August 2007 with mainland Chinese high rollers. Around 60% of the customer base is drawn from the PRC mainly big cities such as Beijing, Shanghai, Guangzhou, Shenzhen and Zhuhai. Another 30% come from nearby Hong Kong, with the balance drawn from Japan, South Korea and Southeast Asia. It s a very different customer profile from the all-japanese focus of Okinawa, and that s reflected in the mix. The original Okinawa offer had a strong emphasis on luxury, but it was complemented by a mainstream, multi-brand fashion and accessories offer on the other side of the store. Here we decided not to do that, Schriver explains. We elected to go in with a 100% mono-brand approach on fashion and jewellery. Think ultra-chic shopping mall rather than traditional Galleria and you start to get the picture. But it s the services just as much as the product that make the difference here, Schriver says. They are vastly different from anything we ve done anywhere else. It really is one store, so our customers, with a single Personal Shopper, can shop in every one of the three worlds. The second primary difference you ll find is that we have room to carry even more upmarket products than Okinawa. To illustrate his point Schriver proudly shows me the first edition of the store s Black Book, a beautifully produced hardback anthology of 25 of the Exceptional Items. It will be updated regularly and distributed to VVIP customers of DFS and the neighbouring casinos and hotels. And whereas Okinawa targeted a combination of conducted bus tours, rental car customers and off-the-street travellers, says DeLessio, here it s all about walk-in traffic. And what walk-in traffic it is, including VVIP members and customers from The Venetian s Paizer Club suites the premium gaming area where suites range from 1,000sq ft to an incredible 20,000sq ft. There s also a Four Seasons entrance the luxury hotel has its own 200-room casino, which is being converted from general to premier-only gaming. Sometimes DFS will go to the customer, rather than the other way around. Notes Schriver: 5 Those customers may not want to [go out and] shop; they want the product, but they want the ability to pick up the phone and [perhaps] for us to go to them. So they can come to our Platinum Services Club Lounge or we can actually go to their rooms. It s a whole different way of targeting a customer, and then servicing that customer at an extraordinary level. In short DFS is cultivating a one-to-one relationship with Macau s mainland high-rollers. And it s doing it in style the retailer s Platinum Services Club (see page 10) has its own Manager, two Assistant Managers and 16 Personal Shoppers who do nothing but service special customers. In the past we focused on people in our stores, says Schriver, but in this store we focus on a person because it s really about the value of each individual customer buying, more than about how many people we can get into the store. You ll see why as we walk through the store, he adds with a smile. Moodie Interactive: Click on the image above

6 OCT/NOV 07 FAST, FACTUAL, FREE The Moodie Report PLUS Fashion World Bally Fendi Burberry Gucci Cartier Hermès Celine Loewe Chanel Louis Vuitton Chloé Prada Dior Ralph Lauren Dunhill Tod s Emporio Armani Salvatore Ferragamo The evidence is all around. Rare, luxury products housed in refined environments abound. The Louis Vuitton Patchwork Bag is the centrepiece of the Louis Vuitton boutique a gorgeously understated store shimmering like chain mail armour in black and white on the outside, expansive and elegant inside. As we roam the Fashion World, I comment on the tremendous space given to each brand and the great use of height within the boutiques. Everything here is much more intensive than previously, agrees Schriver. We actually ran out of space. As we merchandised the store everyone started getting larger and larger. I think Vuitton is about +60% bigger than it was when we originally started on the plan. The focus on the Chinese consumer here has meant an unprecedented emphasis on ready-to-wear. The Emporio Armani store, for example only DFS Galleria s second, with a third to open in Chinachem, Hong Kong in late 2008 is a marked departure from tradition. This is very different from what you usually see from us, Schriver points out. They are usually a very accessory-dominated company, but we tried to seed this store with more ready-to-wear, recognising The Louis Vuitton boutique gorgeously understated in black and white on the outside, expansive and elegant inside its importance to mainland Chinese. The Chloé boutique is another readyto-wear case in point, specifically merchandised for the mainland Chinese. It s a theme that proves all-pervasive throughout the Fashion World. Inside the Burberry boutique, a stunning execution of the British luxury house s new design, Schriver points out the dominance of exotics and high-end products. It s a general trend for consumers, Japanese and Chinese, to move away from the core commodity products into more fashionable, limited-edition, exclusive and seasonal items, he notes. A lot of what we learn here will probably end up moving into our other stores around the world. DeLessio points out how the Burberry boutique is split into three distinct rooms men s fashion, women s fashion, and accessories. The traditional Burberry check and popular staples such as the shirt are there, but they are just part of a much wider, upscale mix. I defy anyone to differentiate this from any of Burberry s best boutiques, anywhere in the world, Schriver says. Everything is big here, from the brand names to the price points, from the height of the ceilings to the big band music playing over the speaker system. As we walk the wide aisles the highlights come thick and fast the Dior boutique with its stunning façade; Hermès characteristically brilliant shop windows; the retailer s first-ever fur collection from Fendi. And much more. Sent digitally free of charge to the entire 10,000+ readership of The Moodie Report e-newsletter High-quality retailer-dominated hard copy readership Bonus distribution at TFWA World Exhibition, Cannes From start-up in late 2003 to clear market leader by Now the dominant sector force For advertising details contact Martin Moodie at Martin@TheMoodieReport.com The industry in focus Travel retail turns 60 BAA AND WDF: THE INSIDE STORY THE COLLEZIONI CONCEPT CHIVAS 25YO: A LAUNCH DIARY Reach, Reliability, Respect 6

7 The Dior Homme boutique is DFS s first. It s a big step forward for us and we re pretty excited about it. But with Dior s Chinese business being so strong on the male side, we thought that of all stores this was the perfect place, Schriver notes. We stroll into the Gucci boutique drawn by a dazzling resplendent window display for the brand s new Hysteria Collection and all our eyes are drawn upwards. Of all the brands that we do business with I think they do height better than anybody, says Schriver. And with this great ceiling height you get such magnificent, expansive product. And so it goes. Every boutique sells something special; each one evokes an anecdote. The Fendi boutique, for example, offers an incredible process gold-tipped fur produced by putting fur into a special chamber and then spraying the tips with gold. The fascinating thing about it is that when you touch the fur it s still soft its not painted. It s really quite amazing and quite beautiful, says Schriver. Going big on Beauty Next stop is the beauty department at 22,000sq ft the retailer s biggest beauty department in any of its stores worldwide. It features the most extensive Beauty World Anna Sui BeneFit Biotherm Bobby Brown Clarins Clinique Elizabeth Arden Estée Lauder Givenchy Guerlain Helena Rubinstein Jurlique Kiehl s La Prairie La Mer Lancôme L Occitane MAC Shiseido Sisley Shu Uemura line-up of cosmetics brands in any DFS outlet, and its largest downtown fragrances offer. Schriver, so effusive in his commentary to date, struggles to sum up the beauty offer. I don t know what to say about this except that it s probably one of the most magnificent beauty floors I ve ever seen, even if we do say so ourselves. It doesn t come across as brashness, simply as immense pride in a highly ambitious project that has delivered a rare quality of execution. I defy anyone to differentiate this from any of Burberry s best boutiques, anywhere in the world Michael Schriver There are numerous innovations besides the great sense of space. A Beauty Concierge is on hand to advise shoppers on the right products or on a makeover, and there are cabin treatment rooms for big brands popular with the Chinese, such as Lauder, Dior and Chanel. The concept behind the Beauty Concierge is that few customers shop only 7

8 customer feel like they ve just entered a different part of the store, comments Schriver. Scents of Place: DFS brings education to fragrance buying within a single brand, says Schriver. Very few people buy all their skincare and their cosmetics from, say Estée Lauder, or from any one brand. Usually they shop across brands and the concept behind the Concierge is to facilitate that. For people who are not just a La Mer customer but who would rather wear La Mer skincare, and, say, Dior make-up, the Concierge can help. Better still, for people who don t have a brand preference, or who have a particular skincare need, the Concierge can help facilitate that purchase as well. There are many additions to the regular DFS line-up in Macau. BeneFit makes its greater China debut here for the retailer, and there s a strong wellness corner featuring the first Kiehl s boutique in a DFS store (a stunning outlet that ends in a real red brick wall), Australian brand Jurlique s new concept, and L Occitane, whose inviting, colourful space is doing exceptionally well says Schriver. The fragrance area is nicely defined by a framed-off space and a fantastically detailed ceiling effect. It makes the He pays tribute to internal design architect David Gester, who also led the Okinawa project. He is exceptional extraordinary. He s one of those people who sees things that others don t. He simply understands how to engage the customer with the architecture. The magic of David is that he can create something you haven t seen before. DeLessio points out another new fragrances feature a scent bar, which allows staff to take customers through the notes of a particular fragrance by offering the real ingredients (for example, cinnamon) as a base comparison. A brave new World Our final stop is the Watches & Jewelry World, near to the Four Seasons entrance and that hotel s extraordinary casino. Watches & Jewelry World Blancpain Breitling Chaumet Chopard De Beers Glashütte IWC Jaeger LeCoultre Omega Panerai Swarovski TAG Heuer Vacheron Constantin Van Cleef & Arpels Zenith The area features ten full watches boutiques and a designer and luxury sunglasses area called Eye-to-Eye. Customers can enter the sunglasses boutique and, thanks to new technology, try out a variety of frames, colours and models to see what suits them. That illustrates how we ve taken businesses that would have previously been a general area and created them into their own stores, explains Schriver. The write stuff: DFS blends pens and panache to perfection Another example is Penache (a nice semantic twist on panache), an appropriate theme for a small but perfectly formed boutique dedicated to fine writing instruments such as Aurora, Caran D Ache, Cartier, Dupont, Montegrappa and Visconti. This little space is my personal passion, says Schriver, who conceived the idea. 8

9 DFS Galleria Macao is the retailer s most expansive statement of fine watchmaking yet These are exquisite writing instruments like you will never see anywhere else. No-one s really done this before focusing exclusively on fine writing instruments. Usually people put in other products as well. Then comes a test. Martin, you re a writer. Take a guess how much this fountain pen costs, he says, gesturing to a matching pair of Aurora Sunset Diamonds black and white pavé diamond writing instruments. It s my favourite item in the entire store. Clearly the answer is high. But how high? Schriver puts me out of my misery. One point five. One point five? Million. Million? What currency? Dollars US which is almost free in Euros, he says, suggesting that the greenback s weakness might tempt me into an exotic purchase. There are also plenty of impressive price-points in the watches offer, which is DFS Group s most expansive statement of fine watchmaking yet. It was over a year in the creation after a series of tough negotiations with some of the sector s most celebrated brands. Building the credibility and the selling skills required in order for these brands to be interested in coming in here was a challenge, admits Schriver. So this is a labour of love for us. Highlights include Panerai s first store with DFS, and a focus on rare pieces from luxury names such as Breitling and Vacherin Constantin. Such brands have got to be handled with immense care and knowledge, DeLessio points out. It is not simply a matter of selling the rarest, highestpriced items to the first high-roller who enters the store, perhaps flush with winnings from the casino. The role played by the Platinum Services Club (see panel, page 10) is crucial here, underlining the responsibility that DFS is assuming to nurture its respective brands collective and individual integrity as well as developing long-term relationships with customers. Glittering prizes: De Beers and Chaumet sparkle in luxury s limelight Our whistlestop tour is over. I will return, alone, later in the day, just to let the outstanding ambience and sheer weight of collective brand power soak in. I ask Michael Schriver to sum up the team s sense of achievement at what has been achieved here. 9

10 Service with a Platinum touch Meet Richard Wong, Watch Sales and Training Manager at DFS Galleria Macao s Platinum Services Club. If you want to know about fine watches, Richard is your man. He s charged with dealing with some of the world s finest watches and some of the world s richest customers. As he introduces us, DFS Asia Group President Tim DeLessio explains: I wanted to give you a flavour of how a customer would be treated inside our Platinum Services Lounge, whether they come from the casino, or whether they are introduced by someone who has brought them in i.e. one of our hosts. Richard s Platinum Services team are constantly on the shop floor, offering their assistance and spotting special customers. Once inside the Lounge, VVIP customers can take refreshments and preview some of the most selective items available at DFS Galleria Macao. It is equipped with restroom facilities, private fitting rooms and a kitchen. The Lounge also has a private viewing room for fine watch selling only though Richard s approach comes across more as educational than hard sell. Dapperly clad in black suit and tie, with a matching black glove, he shows me two fine pieces one from Vacherin Constantin and one from Chopard carefully explaining the mechanisms, the styles and even the market trends for such watches. Richard s role is not only to train the staff but also to be called in if someone is dealing with, say, a Vacherin Constantin watch, DeLessio explains. He has a wonderful knowledge base for the store to benefit from, and his job is to spread it. Such a role is vital. There are millions of Dollars at stake here just a few days before my visit a sales assistant from the north of China sold a US$250,000 watch to a male shopper from the same province. But image and integrity matter as much as commerce. DFS wants its customers to make the right purchase, not necessarily the priciest one. I learn more in those few minutes about those two watch pieces than I could ever hope to from a brochure. Later, when the DFS management team have returned to Hong Kong, Richard sees me snapping some photos in the store and comes up for a long chat. He s a warm engaging character as well as a haven of knowledge. In this emporium of great brands, DFS has discovered a very human asset. Picture: Martin Moodie The product merchants here really outdid themselves, he says. We pushed hard. You can t appreciate it until it all comes together. You watch as it starts to happen, one handbag and one watch at a time. When you get it all together it s really quite exceptional. It is our most comprehensive brand line-up anywhere, and it is among the most comprehensive brand line-ups in Macau today, but it won t be once some of the really big brand partners open up. We know that, and we spent a lot of time determining what our value proposition was and asking why people would want to come to DFS versus other places that might be selling many of the same products. some ways it has just begun, with the Galleria providing a sort of retail laboratory of insight into evolving Chinese spending habits and two new Macau outlets (see page 11) which are due to open in coming months. But for now at least Schriver is well pleased at both brand and customer level. For the brands, everything about this is brand-enhancing, he says. The neighbourhood is magnificent, the neighbours are magnificent everything about it is right. Okinawa changed how the industry saw us; Macao will change the way the consumer sees us. But nowhere else will you have one store that can offer you this great collection of product, across all of these different brands, with a single personal shopper who will take you through the entire store to make your selections. DFS Group s work here isn t finished. In The interior of the Chopard boutique resembles a fine drawing room 10

11 From Four Seasons to City of Dreams Barely has the paint dried on one major project in Macau than DFS is working overtime to open a second, at City of Dreams. And a third, at Cotai Central Mall, will follow soon afterwards. City of Dreams is an integrated urban entertainment resort developed by leading Nasdaq-listed entertainment company, Melco Crown Entertainment Limited. The DFS Galleria at City of Dreams will open as part of the latter s phase one during the first half of Continuing the DFS Galleria Macao theming of Luxury Only and focusing on three worlds Fashion, Beauty and Watches and Jewelry the City of Dreams store will feature a younger, larger and more contemporary fashion focus, including a host of new brands, says DFS President, Worldwide Store Operations Michael Schriver. City of Dreams will be sited just across the bustling Cotai Strip from The Venetian and The Four Seasons City of Dreams will soon add to Macau s burgeoning entertainment and retail landscape Within the new complex, the Watches and Jewelry area will aim squarely at the top end of the market, he says. The DFS Galleria at City of Dreams will include two pioneering concept stores one in beauty, the other in watches. We ll have 85,000sq ft over two levels, comments DFS Asia Group President Tim DeLessio. It will be similar to DFS Galleria Macao not such a large beauty world but a much larger fashion world and a similarly sized luxury world. Critically, the shopping space will open right onto the casino at both levels. On the lower level the retail street parallels the entire casino level. Upstairs the high-level gaming area opens into the luxury area. Retail footfall will be aided by the way the shopping environment integrates not only into the casino but also with the City of Dreams extensive entertainment venues, DeLessio says. City of Dreams says that the resort brings together a dream team of world-renowned and contrasting luxury hotel brands such as Crown, Grand Hyatt and Hard Rock providing a diverse and dynamic customer mix across a wide spectrum from the youthful upper-massmarket excitement and trend of Hard Rock to the high-end VIP opulence and refinement of Crown Towers. That diverse customer profile will be reflected in the DFS offer at City of Dreams, notes Schriver. Soon after, DFS will also open a smaller, 200sq m project in Cotai Central Mall, right across the street from DFS Galleria Macao. Two start-ups within a year of completing the retailer s biggest-ever Galleria seems a pretty tough call. Yeah, we re working pretty hard, says Schriver with a chuckle. City of Dreams will be very interesting. The architecture will be very different to here but we feel equally good about the opportunity. A rendering of the spectacular new integrated urban entertainment resort at City of Dreams 11