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Property Special: Flagship stores

Huge flagships are becoming a must-have to showcase brands and retailers’ strengths.

The rise in online shopping has changed the retail property landscape for good, with the trend for opening fewer, but larger, stores showing no signs of abating as retailers continue to generate a return on investment from key showpiece stores.

As a result, retailers have become more selective with their property portfolio, leading to the emergence of supersized flagship stores, which have transformed the consumer experience.

“A flagship store showcases the very essence of a brand,” says Anne Pitcher, managing director of Selfridges. “It encompasses all the elements a customer could hope for, from product range and environment to service. It’s where the latest collections and campaigns are showcased for our customers to touch, feel and experience, and therefore crucial to our retail strategies.”

Retailers’ choice of city is crucial when planning a flagship in order to hit the widest audience possible. European cities including Paris and Berlin have proved popular, with the likes of Marks & Spencer, Topshop and Levi’s opening on the Champs-Élysées in Paris, while Nike and Uniqlo have opted to launch flagships in Tauentzienstrasse, Berlin’s major shopping street.

In the UK, London is the obvious choice for a flagship. Phil Cann, head of UK retail at CBRE, says demand is high in super-prime locations such as Bond Street, Knightsbridge and Regent Street. “Significant lease premiums to secure the best trading locations continue with demand from retailers to own and occupy, allowing for investment into key buildings.”

Beverley Churchill, creative director of Covent Garden London, which is owned by Capital & Counties Properties, says the retail flagship experience should be “like a great performance or stage production”. The Covent Garden area has recently welcomed some exclusive arrivals, such as New York-based cult indie Opening Ceremony and Canadian sportswear retailer Lululemon Athletica. It is also home to new concepts, including a standalone beauty shop from Burberry.

“Our purpose when introducing a new flagship into Covent Garden is to seek out brands that share the unique, artistic and avant-garde personality of the district,” adds Churchill.

Luxury accessories label Longchamp is among those to have plumped for Regent Street. Longchamp’s flagship opened in September, and its Bond Street store will reopen in August after being closed a year for extensive refurbishment and expansion.

“A flagship experience is more than just bricks and mortar,” says Longchamp UK general manager Paul Lorraine. “It is how the consumer is welcomed, advised and engaged.” He adds that a flagship is hugely beneficial in raising brand awareness and engagement, as well as flexing digital muscles.

Burberry is a prime example of a brand that has utilised digital in its flagship to enhance consumer experience. In September 2012, the British label opened a four-floor store on Regent Street. Covering 27,000 sq ft, it blurs the boundary between digital and physical. Features include a 22ft video screen that projects Burberry catwalk shows, and fitting room mirrors that display information about garments.

Eric Eastman, executive director of luxury retail at CBRE, says flagships are primarily about brand positioning and have previously focused on marketing the retailer. However, he points out that retailers are becoming intent on making a profit from each store, no matter what the size: “We are seeing a sea change, because rents have got too high and in this climate the stores need to stand on their own financial merit.

“There is an awful lot more rigour around things at board level. They will not get sign-off unless the profit and loss looks positive.”

Young fashion business SuperGroup, which owns the Superdry brand and the Cult chain, has been intent on plotting key flagship stores across Europe, but has also seen a strong return on investment, according to chief operating officer Susanne Given.

In the UK, SuperGroup has its global flagship, which opened in 2011, on Regent Street. Last year it launched its northern flagship in Leeds, and later this year will open its first German flagship in Munich. It is also on the lookout for a suitable site in Paris.

Given says the company now hunts for units of about 5,000 sq ft, with territory flagship stores of between 10,000 sq ft and 15,000 sq ft. Despite the higher rents for bigger stores, she says these supersized stores are definitely generating a return for the business.

She adds that research on branded fashion consumers “sets out the critical nature of retail stores when it comes to defining any given brand’s values and the brand experience, which in turn underpins the multichannel opportunity”.

Many retailers have focused on London for UK flagships, but Tony Devlin, head of UK retail agency at CBRE, says retailers will look to other key cities around the country as they target as large a catchment as possible.

He says: “Rents are rising again in the regional shopping centres such as Manchester, Birmingham and Leeds. We will definitely see more of this.”

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