Text by Tim McKeough
Photography by Elvis Ho, David Joseph, Dennis Lo, and Nacasa & Partners
The luxury retail landscape is in the midst of a radical transformation. Shoppers may have once trusted a handful of stores to present them with the latest, most enticing fashions and accessories, but today’s consumers are more independent, educated, worldly, and discerning than ever before. Brand loyalty is increasingly difficult to cultivate and maintain, and the continued rise of online shopping opens up a whole new borderless world of commerce.
However, luxury shoppers are spending more money than ever. According to Bain & Company, a leading global management consulting firm, spending on personal luxury goods reached an all-time high of about €224 billion (or about $250 billion US) in 2014, after increasing 3 percent from the year before. Similar growth numbers are anticipated for 2015. Over the past 15 years, the overall value of this market has nearly doubled, while the number of luxury consumers worldwide has swelled from about 140 million to 350 million. Tourist spending has also emerged as a key driver of sales during this time, now accounting for about half of all luxury spending activity.
With an increasingly discriminating base of consumers and a rise in online shopping, simply putting products on shelves and refreshing displays with the seasons is no longer enough to command people’s attention. “A few years ago, lots of commentators were keen to say e-commerce was the death knell of physical stores, but it’s now really clear that that’s not the case at all,” says Jonathan Openshaw, editor of LS:N Global, the trend-forecasting arm of The Future Laboratory in London. “There’s a demand for something that’s much more human and direct. Stores are becoming performance spaces, galleries, and cultural theatres.”
“Unlike other department stores that change by the season, this one can change overnight.” –George Yabu
Coining the shift “Revelation Retail,” Openshaw notes that luxury brands are beginning to view physical stores as a counterpoint to impersonal digital experiences, which tend to focus on algorithms and data and on making quick, efficient sales. “There’s this other thing coming through now, which is the brand that’s like a maze you want to get lost in and spend time with,” he says. “It’s not necessarily an efficient experience, but it’s an experience that leads to human things like serendipity, chance, surprise, and revelation. It’s fascinating for industries like fashion, where you want to have interesting, complex touchpoints with your consumer.” For instance, Openshaw points to special exhibitions organized by luxury brands earlier this year, such as Hermès Wanderland at London’s Saatchi Gallery and Louis Vuitton’s Series 3 show, where visitors were encouraged to explore the essence of the brands outside retail environments.
Even inside stores, savvy retailers and designers are now working to make their stores much more than just cold places of commerce. “There are a million places to buy a shirt or tie and a lot of retail fatigue,” says Glenn Pushelberg of Yabu Pushelberg. “A lot of stores aren’t really fun—they’re kind of drudgery—but people are looking to them to create memories. So stores need to engage the customer and offer emotional content. They’ll come to a place that makes them feel special, where there’s a mood and energy.”
One pioneer in making a store a larger event space was Prada. Its Rem Koolhaas-designed boutique in New York’s SoHo, completed in 2001, featured a two-story wooden wave with bleacher-style seating offering risers for mannequins and a space for performances. Plenty of brands have since followed that lead, including Burberry, which made a live performance space and interactive video screens key components of its latest Regent Street flagship in London.
Other retailers are finding more subtle ways of weaving a multitude of experiences throughout their stores, creating convivial atmospheres that encourage customers to hang out. These include everything from dispersing food and beverage services throughout multi-brand stores rather than relegating the café to the basement or a top-floor space to using rapidly transformable display elements that ensure there’s always something new to see.
One example is Yabu Pushelberg’s recent design for the Siwilai multi-brand store in Bangkok, Thailand. With a host of branded shops around the perimeter of the space, the largest space in the center is reserved for a shifting schedule of special events. “I call it a town square,” says George Yabu of Yabu Pushelberg. “It can magically change or disappear at a moment’s notice. The 4.5-meter-high walls are made out of hardwood frames and cotton-linen canvas, but any sales associate can pull up little mounting locks and fold these massive partition walls away.”
Because the space can be easily divided or opened up, it can quickly be adapted for different events and product launches. “Unlike other department stores that change by the season, this one can change overnight,” says Yabu. “That immediacy is very important because it reflects how people shop today and their impatience with waiting for new products.”
Other multi-brand stores, such as Rei Kawakubo’s Dover Street Market, which offers the vibe of a small community while celebrating constant change and chance encounters, have had enormous success capturing shoppers’ imaginations. This approach is now even being embraced by food vendors and restaurant developers, who are establishing curated markets and food halls at a rapid clip. Chef Anthony Bourdain, for instance, recently announced plans to build New York’s largest food hall on Manhattan’s Pier 57, where he expects the clamor created by about 100 different vendors to create round-the-clock entertainment.
Another retailer having tremendous success keeping its customers engaged is the Pedder Group, part of Hong Kong’s Lane Crawford Joyce Group. Through its On Pedder shops and its outposts in Lane Crawford stores, it has become the go-to source for footwear and accessories in cities across Asia. In addition to frequent product launches and in-store visits from celebrities and designers, such as Pharrell Williams, Christian Louboutin, and Manolo Blahnik, the stores feature dazzling art-like installations and a steady stream of new products.
“Our challenge as a retailer is to keep our customers in our stores for as long as possible—a changing store environment lengthens the time they spend there and increases their engagement with products.”
“An ever-changing store environment, through windows, store setup, and merchandise delivery, is a defining element of all stores operating under the Pedder Group,” says company president Peter Harris. “Our challenge as a retailer is to keep our customers in our stores for as long as possible—a changing store environment lengthens the time they spend there and increases their engagement with products.” Because shoppers are encouraged to linger, the stores can at times feel like something of an exclusive club. “Our customers often come not only for the express reason of purchasing,” notes Harris, “but perhaps to have a social moment with friends or staff.”
Online shopping is creating new challenges for retailers, but it also offers a host of new opportunities. People such as Harris, Yabu, and Pushelberg see digital and physical stores as complements to each other. Rather than taking customers away, e-commerce sites can help drive more traffic to stores and support mutually beneficial transactions.
At stores operated by American eyeglass manufacturer Warby Parker, for instance, in-store sales aren’t a priority. Instead, the boutiques offer meticulously designed environments where prospective customers can get a feel for the brand’s aesthetic and access a range of services, including eye exams and eyeglass fittings. When it’s time to buy new glasses, a majority of shoppers use the website, and the products are shipped directly to their homes.
The South Korean eyeglass company Gentle Monster has taken this idea to the extreme. After starting as an online business, it is now rolling out physical stores that each offer an intensely different experience. Most radical of all is its Quantum boutique, which has an interior that changes every 25 days to feature different immersive installations, such as an indoor rainstorm, robotic arms that present products, and a simulated rally car experience. “They manage to create the hype of a new gallery opening each time it changes,” says Openshaw.
Some retailers also offer in-store pickup for online purchases, which allows customers to come in and try on clothing before deciding whether to take it home. However, according to Yabu, much more can be done in this space. “Why not make it central to the store experience and so seductive when you get there?” he says. It’s an opportunity to offer not just a plain fitting room but to celebrate and pamper the shopper. With the right design, says Yabu, the pickup could take place in a special, memorable space that shoppers will want to return to again and again.
In other words, it could offer not only support for a transaction but also an unforgettable event.
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