Your browser is no longer supported. For the best experience of this website, please upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

Property Special: What does the flagship of today look like?

What rising rents and increased online shopping mean for London’s traditional flagships.

At what point does a store morph from being a shop to becoming a flagship? The answer used to be pretty simple. It was that moment when a store became
one of the retailer’s biggest and most important, with an almost complete representation of the range under its roof. With this in mind, chains and brands put their best feet forward and created stores, mostly in London, which visitors would feel were significantly different from smaller branches and made
their trip worthwhile.

This status quo was fine as long as there were enough customers and rents were manageable. But in the internet shopping age when break-even on a flagship store can be hard to achieve, things look a little more difficult.

Craig White was previously leasing retail asset manager at The Crown Estate, responsible for much of the current shape of Regent Street. Now project director at Argent, the property developer reshaping the King’s Cross Central scheme, he says: “The flagship arms race in London is over. The mega ocean
liners for [the] central London race are a thing of the past. The list of requirements for retail supertankers virtually dried up in 2013 and that list had been diminishing for a year before that.”

For confirmation of this view, look no further than London’s Regent Street. Here there are flagships but very few spaces left for new arrivals. However, currently under construction is a larger Michael Kors flagship store, set to open later this year. This will increase the brand’s presence from the current 5,800 sq ft outpost at 223 Regent Street to a three-storey 16,000 sq ft store at 169-183, itsbiggest in Europe to date. It is not yet confirmed whether the brand will close its existing store. But if it is expensive to trade on the likes of Regent Street, Oxford Street and Bond Street (rents runnorth of £1,300 per sq ft on Bond Street Zone A and at around £800 and £700 per sq ft on Oxford Streetwest and Regent Street respectively), are flagships more about brand message than profit? Mike Shearwood, chief executive of Karen Millen,says: “A flagship should be the evocation of your brand. It should be where you can access the full product range.”

But he adds: “There is no Karen Millen store that can house the entire range. We have flagships in Knightsbridge and Fifth Avenue [in New York] and with the clever use of technology [such as in-store iPads] we are still able to offer something of the kind.” Shearwood says a number of retailers “are laying
down a couple of flagships in each country and then a good digital offering”. This means that for relative UK newcomers such as J Crew or Michael Kors, the flagship could be viewed as a marketing tool for the online element of their offer. But there is more to it than this. Flagships, by their very nature, have to be in high-profile locations. Sam Miller, head of leasing and interior at H&M, puts the point succinctly: “Location is crucial. A flagship could not be a flagship without being in the best location for business in that city.”

This raises another question about UK retail flagships: are they purely a London phenomenon? Hugh Radford, chairman of central London retail at property adviser CBRE, says the picture is mixed: “Therewill be brands where it’s London and London only for a flagship, but this will generally only be the case if you’ve got or plan a large network of stores.”

Steven Stedman, CBRE’s head of central London retail, says Oxford Street is characterised by large flagships from the likes of Selfridges, Primark, Topshop, Nike, Marks & Spencer and Zara, several of which have more than one store on the street. He adds: “A true flagship store is one that portrays the
brand holistically and talks to the global shoppers in London. Stores in regional centres will always be led by their Oxford Street hub.”

One example, NikeTown, has frequently been highlighted for showing off the best face of a brand to passing shoppers on what is one of the busiest shopping intersections in the world. This is why since its inception the store has been a showcase for visual merchandising, product personalisation and an
interior that has changed constantly throughout its lifetime. The store has to remain relevant if it is tobe a brand beacon.

Outside of London the case for investment in a flagship has to be clear. Radford says: “Retailers will not sign off any store development, flagship or otherwise, unless it can demonstrate it’s going to make money.” Glasgow, Edinburgh, Leeds, Manchester and Birmingham all fall into this category. Iain Mitchell, UK commercial director at developer Hammerson, points to the forthcoming opening of a River Island in Birmingham’s Bullring this Easter: “It will trade from two floors and, at 33,000 sq ft, it will be the same size as on Oxford Street. It’s worth saying thatevery retailer has different reasons and criteria foropening flagship stores.”

Despite this regional focus, retailers will seek to make things work in London first. But is this still a realistic ambition? Radford thinks so, but points to Greater London. “The Westfields are considered easier locations to establish a flagship,” he says. “Not simply because the excellent transport links create
large footfall, but because under single ownership the landlord can amalgamate units to create exactly the right boxes from which to trade. In central
London you have to create the space combining different buildings and working with other users.”

If space is hard to come by and online can fill the GAP, will shoppers and retailers view flagships differently in the future? Stuart Naysmith, a partner at design consultancy GPStudio, which has worked with Jigsaw following the opening of its flagship Emporium store on London’s Duke Street in 2014, says that for this retailer the strategy has been to “create flagship stores” across multiple locations. He says the life of a big flagship is five to seven years and this means smaller flagships, which take advantage of online soless stock is required, are “more flexible”.

So future flagship stores may be smaller, but retailers will still want to apply the flagship label to them. Large-format fashion stores, to use a previous
definition, are still being created, particularly by new international market entrants wishing to make a strong impact. Tommy Hilfiger and J Crew on Regent Street are recent examples.

In conclusion, what constitutes a flagship store seems to be shifting in line with the huge changes in the wider retail market. H&M’s Miller sums things up: “As the world gets smaller and increasingly connected, more customers are aware of flagship locations and visit them more frequently. If a customer visits our store in Times Square or Melbourne they should not only feel they are in aglobally recognised H&M, but in an amazing and inspiring shopping destination.”

Gobsmacking stores in awe-inspiring locations, replete with the latest technology, might therefore be the best way in which the flagship moniker can currently be applied.
be the best way in which the flagship moniker cancurrently be applied.

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Links may be included in your comments but HTML is not permitted.