Chanel, 52 Avenue Montaigne, Paris
Rapid store and network expansion amongst luxury companies has become much more the norm over the past decade, as brands seek to benefit from the growing populations and burgeoning wealth levels in relatively new markets such as China and Russia. In the 10 years to 2011, global retail space more than trebled, from 40m square meters to 130m square meters (AT Kearney).
However there are signs of a slowdown and potential move away from this aggressive expansion. In terms of store numbers, figures from Ledbury’s Wealth Profiles show that the growth of outlets opened by the top luxury brands in the world fell from 15% in 2010, to 6% last year. In the UAE and China, growth rates slowed from a whopping 79% and 60%, to 20% and 22% respectively (see Chart). In a recent interview Lanvin ventured that being small had been a key part to the brand’s success and that this is the format it will continue to adopt (Financial Times).
Growth rates by number of outlets opened, by top luxury brands in 4 countries
Further reflecting a shift in focus to quality rather than quantity, various luxury brands have expanded their lines to appeal to existing clientele, as distinct from reaching out to new customers. When Aston Martin launched its hybrid city car the Cygnet in 2010, it limited sales to current Aston Martin owners. Within fashion, brands are now looking to sell more to their existing market, as evidenced by, for example, the growth in children’s wear.
Gucci opened its first standalone boutique for children in New York last November. And in December, fellow luxury brand Versace opened its first children’s store in Milan, under the Young Versace brand (Luxuo). Burberry has launched a childrenswear boutique in Qatar, whilst Louis Vuitton installed a ‘Family Room’ to entertain children in its Dubai flagship at the Mall of the Emirates.
“ Various luxury brands have expanded their lines to appeal to existing clientele, as distinct from reaching out to new customers ”
In further evidence to the above, brands like Chanel, Dior and Louis Vuitton have invested heavily in re-invigorating retail offerings in developed cities like Paris, New York and Rome, in a bid to both best serve existing VIP clientele and dazzle travellers from emerging markets.
Chanel recently launched its third Avenue Montaigne location, dedicated to ready-to-wear and accessories. Its long-standing space at No. 42 is now devoted to watches and fine jewellery. The 600sqm Peter Marino designed boutique heralds a new era of luxury for Chanel, where artworks by Olga de Amaral, Ingrid Donat, Peter Dayton and Johan Creten are offset by weighty curtains of silk, embroidered with dense patches of pearls or tiles of metallic leather.
Louis Vuitton’s Etoile Maison, Rome
Louis Vuitton’s Rome Maison is similarly opulent, featuring laid onyx and travertine, cube tables in copper bronze and pewter patchwork slate. Launched on the site of one of Rome’s most iconic movie theatres, the Etoile, the boutique features the brand’s first cinema and an adjoining book section, devoted mainly to the movies.
Luxury department stores are following suit, both eliminating marginally luxurious product lines and investing heavily in opulent retail experiences. Late in 2011, Lane Crawford opened doors on the largest shoes and accessories showcase in Asia, designed by Andre Fu, incorporating 200 brands over six distinct zones.
“ After a period of rapid geographic expansion, perhaps 2012 heralds a strategy of consolidation ”
One particular space is decorated with library armoires in bronze and abstract French panels, where floors are finished in Romano marble and covered with elaborate rugs from the Andre Fu Collection for Tai Ping Carpets. There are eighty-something bespoke pieces of furniture and hand-embroidered silk wall panels echoing the work of French fashion illustrator Christian Berard.
Physical retail remains an important part of the distribution landscape, but vast and rapid adoption of the Internet – as both a communications and retailing tool – does well to alleviate the pressure on brands to be everywhere immediately. Luxury brands can retail directly online whilst taking the necessary time to perfect value-added flagship boutiques in the most effective locations.
Wealthy consumers in emerging markets are also increasingly travelling overseas, preferring to buy luxury goods in the famed retail destinations of Paris, New York and London, where product range is larger and costs often lower. Whilst 2011 was a year of retail expansion, 2012 is proving to be a year of consolidation and focus on supreme quality.
Published on 19 Mar 2012 under Consumers
Be the first to comment