FINANCIAL TIMES | ELIZABETH PATON A flurry of flagships have opened in our fashion capitals. What role do bricks and mortar shops play in the digital age?

What’s the collective noun for flagship stores? A fleet? An armada? A phalanx? Whatever it is, increasing numbers of outsize luxury shops are opening. From Bond Street to Madison Avenue, and from the Via Monte Napoleone to Avenue des Champs-Elysées, fashion capitals have seen a score of major openings in recent months. Dior and Topshop unveiled stores in New York last week, and Victoria Beckham, Jimmy Choo, Bally and Issey Miyake have all opened flagships in London in the past few months. In spring, Ralph Lauren opened his gargantuan Polo in Paris. It was followed by Tiffany, which opened a 10,000 sq ft shop on the Champs-Elysées in April.

The love affair between big brands and bricks and mortar appears to be more ardent than ever. Yet it is a truth acknowledged, albeit whispered, in the industry that flagships are loss leaders for luxury labels. The rollout of multistorey retail palaces entails eye-watering costs that are rarely recouped by sales. So why does the fashion world remain convinced of their long-term financial dividends?

“With flagships, one measures return on investment in a different way from other strategic spending decisions,” says Bally chief executive Frederic de Narp, who has just snipped the ribbon on a New Bond Street store – the brand’s first flagship for 20 years. “We’re in the business of selling dreams in a highly competitive environment . . . Forging enduring relationships with shoppers who return again and again is the value proposition endgame of a flagship, not the immediate return of a one-off transaction.” Bally’s new store is a triple-tiered, 4,320 sq ft space, with a muscular interior by David Chipperfield that features walls of shoe boxes and a central marble staircase. Chipperfield also designed the glittering Valentino flagship that opened last month in Manhattan, and has been tasked with a £300m overhaul of London department store Selfridges.

That level of exclusivity and magic is hard to create in some mall or in an airport boutique De Narp says the lasting impact of a flagship visit can be more valuable than an ad campaign: “We have to prove how the theatre of physical, rather than lo-fi or virtual, shopping can still excite a crowd. You may get more sales per square foot but that level of exclusivity and magic is hard to create in some mall or in an airport boutique.”

Despite the emergence of upmarket players such as Yoox and Net-a-Porter, ecommerce has yet to gain real traction as a contributor to overall luxury sales volumes. But shifts in how luxury consumers spend (on and offline) have re-emphasised the importance of a distinctive physical presence.

 “The resurgence of bricks and mortar stores spring from the advent of the digital age,” says Robert Burke, a brand consultant and former fashion director of Bergdorf Goodman. He adds that while 82 per cent of luxury purchases still happen in-store, three-quarters will have been researched online.


“The internet flattened the market: savvy marketing made small brands seem large, and vice versa. But managers have realised that original, and expensive, stores are still a necessary unique selling proposition when it comes to standing out from the crowd.”

Architect Peter Marino has designed dozens of flagships for LVMH and Chanel, filling them with libraries, galleries and even flower stalls. He is convinced the boom in tourist traffic from countries such as China and Russia has reinforced the need for luxury brands to improve their retail strategies.

“The more mobile the customer base, the shorter the lifespan of a flagship,” he says. “Once, a store could have remained unchanged for a decade; now they look dated faster.”

Even brands lacking the financial firepower of their larger rivals are proving that small can be beautiful. Rather than investing in a single location, some are spreading costs across several midsized boutiques, a trend that has spurred the growth of shopping destinations such as Mount Street and Dover Street in London, or Greene Street in New York.

Luca Solca, luxury analyst at BNP Paribas, says the benefits of offbeat neighbourhoods are twofold: “The brand equity of these labels derives from being cool and niche, which they are emphasising by geographically distancing themselves from more mainstream contenders. What’s more, given the soaring rents on traditional shopping streets, they get to take advantage of lower real estate costs.”

Multi-brand boutiques such as Dover Street Market, which recently celebrated its 10th anniversary (and now boasts four outposts, of which the latest opened in New York in December last year) and the Gap-owned Intermix appeal to contemporary fashion aficionados on the hunt for alternative items.

“These stores have the sway of the department store of yesteryear – the fortunes of a smaller brand can rise and fall depending on the buyers and these boutiques,” says Burke. “The big brands are bigger than ever but curious consumers are increasingly craving something curated and elite, with lots of choice and a sense of discovery. Multi-brand boutiques are very creative merchandisers and powerful new players on the scene.”

“In an industry defined by constant change, luxury retail is consistently a balancing act but it’s also an art form,” says Bally’s de Narp. “The values and vision of your brand and its heritage are placed on display for all to see. But when you get it right and you watch the sparks fly, then really it’s magic to behold.” As the western retail scene continues its speedy evolution, the store – be it flagship, boutique or concept space – continues to be a barometer of success.