In a world where a thousand uncertainties distort the maps of retail, the latter goes in pursuit of luxury consumers by building new paradigms that make the physical shop the outpost of a new paradigm of engagement and loyalty
Never – perhaps – as in recent seasons have investment strategies and planning related to the development of fashion retail been tested by geopolitical factors. The most obvious case is the consequences of the conflict between Russia and Ukraine, which has led to the decision by many brands and chains to abandon Moscow. But also, the tensions between China, the USA, and Taiwan make it complicated to envisage an expansion of physical spaces in the latter destination. Especially without a local partner and with the risk of not knowing how long it will take to amortise the investments made. Not to mention the pervasiveness of unwritten and unspoken sentiments that manage, however, to influence the choices of each brand in their desire to penetrate new markets or approach established ones in a different way; new maps are therefore needed.
Fashion draws new maps
Tensions have become fertile ground for the nomadic movements of the most discerning Affluent consumers. For example, the Russians have conquered new locations, where they move for political and economic security: to the Middle East, South Africa, and the USA. Or, in some Eastern European cities. For example: Budapest, Bucharest, Prague, Vienna. Not to mention Turkey, with Istanbul. Nomadism requires the brand to interpret and intercept these new routes with extreme timing, even though it still has some fixed points to rely on. For example, the United States remains in the spotlight. The reason is simple: they are a testing ground for multicultural and geopolitical dynamics and, consequently, for strategies.
Retail migration in pursuit of consumers
Brands have combined business with pleasure and have become nomads of themselves. It may sound like a simple play on words, but it perfectly identifies the diffusion model of brands that have penetrated the tourist, work, and travel locations of all generational groups and the urban spaces of the communities they want to reach. Thus, the US – in the words of Jean-Marc Duplaix, CFO of Kering – “has been the locomotive of the sector in recent quarters. It is a market that has changed, but it remains very promising, with powerful potential in the long term’. Then,’ he continues, ‘there are markets that should be particularly monitored. One of them has already exploded, the whole area of the United Arab Emirates and Turkey, which sail on Russian spending, not to mention Cyprus, a strategic destination for Russian citizens’.
Differently physical
But beyond the geographical component, there is one factor that is revolutionising the concept of retail: its digitisation. A phenomenon that is completely transforming, rather than eclipsing, the role of the physical shop.
Today, the actual value of a high-end retail space is no longer solely related to its ability to cash in, which is the essential matrix of e-commerce. A physical boutique should be judged by the less tangible but critical value of the emotional and experiential engagement it requires and offers customers. Here, then, we come to the concept of the moment – that of Destination Retail.
Retail as a destination
Destination Retail is a notion that describes a retail outlet, a store, or a boutique as a place of arrival: a destination, in fact, as if it were the destination of an organised journey to get there. Such a shop, therefore, will do much more than simply sell a product, offering consumers more than one reason to enter, visit, and buy, but – most importantly – to stay. Choosing a Destination Retail means, for a consumer, investing not only money but also time because time is part of the retail proposition. A PWC report revealed that when brands offer such an experience, their customers are seven times more likely to buy from them than their competitors. A trend that was glimpsed before the pandemic and is now growing exponentially.
The factors at play
A series of elements and concomitances favour the growth of a business model linked to retail as a destination. It has to do – above all – with the pleasure of travel combined with the possibility of discovering new cultural elements at the highest level. The Destination Store is a retail business that consumers find attractive for particular reasons, to the point that they are willing to make a memorable trip solely for the purpose of shopping in that shop located in that particular location. From big brands to premium brands, the new fashion retail maps are designed in the light of a creative search for unique locations, where to open a store, sometimes a temporary one, to build a narrative where the taste of the place and the style of the brand meet.
The Dior case, for example
Dior made a journey in the early part of 2023 from South Korea, from Seoul. An almost obvious choice: it is well known that the Korean consumer is the most demanding but also the most influential in both Southeast Asia and the USA. Then he went to India, to New Delhi, where he presented an event dedicated to the mastery of the art of Indian embroidery, which took place in one of the city’s historic venues. This was a way to get closer to the sentiment of the local consumer who, according to the rules of today’s multiculturalism, considers the value of a brand that enhances its own culture to be very high. In fact, the event, according to Social Corporate Sustainability experts, had a positive impact on both local Affluents and all Indian tourists travelling to the world’s most renowned shopping locations.
Dubai, Paris, and Milan, but also the new spotlights in Zurich, Lake Como, Capri, and Cannes. Another stop in May is Mexico City, the city currently enjoying the highest interest of the Latin American New Affluent Society. A metropolis that offers a refined, eclectic, and multicultural culture. As well as art and design cultural activities, exclusive hotel chains, membership clubs such as Soho House, and emerging but already highly followed and influential opinion leaders. Here, Dior organised, at one of the iconic locations for intellectuals – the Collegio de San Idelfonso – a fashion show inspired by Frida Kahlo, also representing Woman Empowerment: next stop, Lake Como, Italy.
Lifestyle contamination
If retail becomes a destination, its contamination with lifestyle projects becomes natural. It opens up other sectors involving other dimensions in the fashion world. Like the almost obvious gastronomic one. Example: Louis Vuitton Dream, a Parisian exploration of the senses, brings together fashion and food next to the historical headquarters of the fashion house and collaborates with the renowned pastry chef Maxime Frédéric. Let’s be clear: the brands should not be considered pioneers of these collaborative ideas; they came to it almost forced by the market. But thanks to their firepower, they are, even in this dimension, building new paradigms.
In collaboration with Orietta Pelizzari (cross cultural fashion business advisor)