Call it ‘revenge’ or, more simply, ‘resurrection’: the pandemic has not sung the de profundis of physical boutiques in favour of online platforms. This is demonstrated by the real estate investments of the fashion and luxury brands: much more select than in the past but in constant and continuous growth. Tired of digital coldness, consumers want to return to real shopping experiences
More and more people prefer to go to the shop to buy a dress or fashion accessory rather than search for it on the web. It is more than a return; it is a resurrection. The convenience of being at home, surfing, and almost certainly finding the cheapest price are no longer sufficient motivations. The consumer seems to prefer the services offered at the point of sale. Here, for instance, he can check precisely the colour of the product, the size, and the quality: he can wear it and see himself in the mirror. Above all, they can have an experience that is incomparable to staying in front of a screen and compulsively scrolling through social and web pages.
The resurrection of physical retail
Many believed that the pandemic had sung the de profundis of boutiques, with online platforms inevitably becoming the shopping destination for consumers of all ages – a hasty assessment. As soon as the restrictions were relaxed, people (even the very young) returned to the shops, tired of buying a fashion product online without experiencing any particular excitement. “The pessimistic cries about the end of physical retail now seem to be a distant memory as the industry enters a new normal“. So says Rob Travers, head of retail for Europe, the Middle East, and Africa at Cushman & Wakefield, one of the world’s largest private real estate companies.
Involve, first of all
Cushman & Wakefield has recently published the European Retail Radar report noting that, in the first six months of 2023, fashion brands covered more than 40 percent of the retail space rented in Europe by the same real estate company. This is the highest percentage compared to any other business. “Our analysis clearly shows that physical retail remains vital, as a brand touch point, supporting customer engagement and a wider range of commercial activity,” adds Travers. It is no coincidence that the Spanish fast fashion brand Mango has announced plans to open 500 shops in the next three years.
Resurrection, then. But well thought out. A Bernstein study presented in June 2023 found that the retail investments of brands are focusing on a few but significant openings or restyling projects to make the shopping experience increasingly unique. For example, in the case of the Dior boutique at 30 Avenue Montaigne in Paris or the Tiffany ‘Landmark store’ in New York. Or, as in the case of the flagship stores that luxury brands are opening or renovating in certain key locations, among which Milan stands out.
What happens in France
The recovery of global tourism. The arrival in Europe of US tourists attracted by the favourable exchange rate. Due to Brexit, the abolition of tax-free shopping for foreign visitors in the UK. These are some of the factors that have prompted French luxury conglomerates to invest in the local property market, particularly in central Paris. ‘In recent months, luxury brands have invested several billion euros in acquiring retail space, demonstrating that they want to maintain a long-term, high-quality distribution network,‘ note analysts at Cushman & Wakefield. One example is the reopening of the department store La Samaritaine. LVMH bought it in 2001 and closed it in 2005 to allow renovation work to be carried out. After almost 16 years of renovations and discussions between the old and new owners about its intended use, La Samaritaine reopened in 2021.
The American case
According to a recent report by the global real estate services company JLL, total US luxury goods sales have increased to almost $70 billion. One of the reasons lies in the commercial policies of brands that have expanded their national retail presence by more than 60,000 square metres. One of the most recent transactions saw Prada take over the entire building housing its flagship store in New York for $425 million.
The Chinese experience
In China, digital is still crucial (see the success of platforms such as WeChat, Douyin, and Xiaohongshu), but physical shops are increasingly driving local spending. According to the results of a survey on Chinese luxury consumption in 2022, about 53% of the consumers surveyed (who shopped between September 2021 and September 2022) bought luxury items in physical shops.
The triple in Italy
Altagamma Consensus 2024 estimates that the retail channel will register +7.5% in sales this year compared to 2022, followed by online with +4.5%. The difficulty is wholesale. According to the Altagamma-Bain Worldwide Luxury Market Monitor 2023, on the other hand, single-brand sales channels have grown three times more than multi-brands over the last five years. It is easy to notice this in Milan, a city where the fashion district is in whole ferment.