The most popular slogan in retail is the following:
The three most important things in retail are: location, location, location.
This watchword is used to emphasize the indispensable nature of an appropriate location in retail. Retail location involves more than physical space but includes the choice of a place that is most suitable for the sale of the products or services in question. An inappropriate retail location is difficult to overcome, irrespective of the feasibility of the rest of a company's overall strategies. Poor retail positioning can also negatively affect a store's accessibility and attractiveness to shoppers, regardless of the brand's positioning. This factor is even more crucial for luxury brands because in addition to visibility and accessibility, luxury brands ought to be situated in the most elite and prestigious locations of the cities where they operate. Retail location is therefore of paramount importance to the luxury goods sector.
In general goods retailing, the choice of store location is determined through utilizing socio-economic pointers like population, geography and consumer disposable income. Other factors include human-traffic flow and in some cases, tourist-traffic flow. In addition, technical business models that aid the choice of store location have been developed by experts, including the 'Catchment Area' method and the 'Central Place Theory' method. The main aim of these techniques is to identify the most commercially viable store locations for optimal sales turnover. These models are, however, more appropriate for general goods retail, so they will not be discussed in this book.
Luxury brands have a central requirement for retail location choice. This is the 'Prestige' indicator. The main distinguishing factor between luxury retail location and that of mass-market retailers is the requisite need that luxury
brands have to position their stores in exclusive and high-status districts and cities, which are at the same time commercially feasible. The prestige store location reinforces the core brand values and the differentiated brand status of luxury brands. Prestigious retail locations also attract and retain a niche-customer base while satisfying their ego needs during shopping.
In Paris, prestigious luxury retail locations can be found at Avenue des Champs Elysées, shown in Figure 4.1, and its environs, including Avenue Montaigne and Avenue George V. This district is also known as the 'Triangle d' Or' or the 'Golden Triangle'. Other locations are the historical Rue Saint Honoré, which is considered the global luxury fashion industry's foundation, and its extension on Rue du Faubourg Saint Honoré and their environs. These streets are lined with several luxury brands.
The same pattern follows in other cities such as London, where the Knightsbridge area, including Sloane Street and Bond Street, is considered the epitome of luxury store positioning. In Milan, the 'Quadrilatero d'Oro' or 'The Golden Rectangle', which runs between Via Monte Napoleone and Via Della Spiga, is the luxury retail district. It features the stores of Gucci, Armani, Prada, Tiffany and Louis Vuitton, among others. New York's prestigious shopping streets include Madison Avenue and Fifth Avenue and their environs, while in Los Angeles, Beverly Hills is the location of luxury fashion brands. Tokyo's Omotesando district represents the equivalent of luxury store positioning in Japan, while other examples abound in several cities around the world.
In addition to being located in high-status districts, luxury brands need to be in the fashion cities of the world to ensure both brand visibility and commercial viability. The fashion cities are those that have the highest catchments of luxury consumers in terms of indigenous population and visitors. They include Paris, Milan, New York, London, Tokyo and increasingly Los
Angeles and Hong Kong. Luxury brands usually begin their global expansion in these cities irrespective of the brand's origin. In addition to these locations, other rising 'fashion cities', in terms of style and commercial returns, include Moscow, Shanghai, Bombay, Dubai and Johannesburg.
Strategic store location guarantees a brand's visibility, which reminds the consumer of the brand's existence and core attributes. The store location also acts as an extension of the brand's personality and is used as a tool to ensure the vitality of the brand. Although luxury brands ought to be at the right locations to reflect their 'prestige' status, careful attention should also be paid to hasty store expansion at the same location in order to avoid over-exposing the brand. For example, Japan is host to numerous luxury fashion stores which often have multiple stores within the country, like Coach, which has more than 100 stores in Japan. This strategy ensures high sales returns, but at the same time it is important for luxury brands to attain the right balance between commercial feasibility and brand over-exposure. This can be done through a continuous evaluation of the costs and benefits of extensive store openings against the long-term effect on the brand equity. The 'prestige' brand attribute of luxury brands should be maintained through the store location choice, while pursuing global growth and expansion.
In addition to exclusive stand-alone stores, luxury brand store locations are also found in high-end departmental stores, where they rent retail spaces. Such department stores include France's Galeries Lafayette, Printemps and Le Bon Marché; America's Bloomingdale's, Sak's Fifth Avenue and Macy's; the UK's Harrod's, Selfridge's and Harvey Nichols; and Italy's The Galleria Vittorio Emanuele in the Piazza del Duomo. Others are Japan's Mitsukoshi, Core, Matsuya, Seibu and Matsuzakaya in the Ginza district of Tokyo; and Hong Kong's Lane Crawford. Other parts of the world also have impressive high-end department stores, which are emerging so fast that the level of competition has more than doubled in the last five years. Notable examples are the world's tallest building, Taiwan 101, where brands like Chanel, Prada, Loewe and Yoji Yamamoto have stores; and the highly publicized Dubai Mall also known as the Burj Dubai building, still under construction, set to become the world's largest shopping centre on completion. Other retail monuments in the Middle East include Dubai's Mall of the Emirates, which houses almost every major luxury brand as well as a five-star hotel and a ski slope; and the Villa Moda store in Damascus.
In Russia, luxury department stores include the Grand Palace in St. Petersburg and the new 'Luxury Village' in Moscow. India is also not left out in prestigious department stores, with its opulent shopping area at Mumbai's Taj Mahal Palace & Towers and the Hotel Oberoi. Also, countries that are usually classified as the 'rest of the world' or 'other countries', by luxury brands, where luxury retailing is still in the introductory phase, are catching up with the construction of retail and entertainment malls. For example, British luxury departmental store Harvey Nichols recently opened a store in
Istanbul, Turkey, and plans a Russian expansion. Also South Africa's largest city Johannesburg has the Sandton City Shopping Centre, often described as a 'World of Splendour', where Louis Vuitton has a store. In addition, the Nigerian city of Lagos has just seen the completion of two high-end retail shopping centres, although luxury brands are yet to enter this market. At the South American end, Brazil has witnessed the growth of independent retailers of luxury brands like Daslu in Sao Paulo, in addition to other luxury departmental stores in Brasilia and Rio de Janeiro. In most cases the retail spaces in these departmental stores are leased by major international luxury fashion brands.
Retail location techniques can also be exploited in order to create a more viable niche for luxury brands. This can be done by creating 'special products stores', which retail specific goods not usually found in the brand's permanent collection range. These goods could include limited edition products, special order goods, bespoke products and co-branded goods. Several brands have adopted this strategy, in following with the current consumer needs of constant delight and individualism. A notable example is sportswear brand, Puma, which currently has a New York flagship store called the 'Puma Sports Fashion Lab', devoted to its collaborative product ranges with Alexander McQueen, Christy Turlington, Philippe Starck and Neil Barrett. Nike also has a concept store called the 'Nike-ID Lab', which retails only limited edition products. Although several luxury brands have stores which retail specific products from the permanent range, the luxury sector is yet to make the concept-store retail location technique an important aspect of its retail strategy.
Retailing is a core aspect of the luxury fashion business. However, retailing doesn't end when a brand has successfully found a location. There are several additional tactical factors that determine retail success, and which make up the retail strategy. The retail location choice is the first step to the retail strategy, followed by the store concept.
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