Many luxury brands are refurbishing their flagship stores to generate new excitement and give customers a reason to visit them again.  Brands like Ferragamo, Louis Vuitton, and Moncler are refurbishing their existing retail space to generate fanfare and reinvigorate interest in the brands.  Other stores like Pucci and Fendi are relocating stores to more prestigious addresses.  Many of these brands are re-opening their new stores during Fashion Week to capitalize on the huge industry presence in Paris.

Re-tailoring existing stores is a new trend in the luxury market.  For years, high-end brands like Gucci, Vuitton, and Hermes, could do no wrong and couldn’t open enough stores to satisfy demand.  Dozens of stores were added in China as well as older markets in Europe.  But now, these brands cover the globe, and have even reached customers as far-flung as Mongolia.  However, analysts suggest that most of the luxury brands’ growth came from space and price increases rather than volume sales increases.  Analysts also worry that the luxury sector can’t grow without an aggressive “shot in the arm.”

Companies like Ferragamo have said that its plans for growth involve increasing the size of stores rather than the number of stores. Ferragamo’s boutique in Milan is on one of the most prestigious shopping streets.  The company took advantage of the slow shopping season this summer to renovate the store.    LVMH (Moet Hennessy Louis Vuitton) has also said that it will limit the number of store openings, although it did recently open a new Vuitton store in Barcelona.   Vuitton has the biggest chain of owned retail stores with nearly 500 stores.

Still, not all brands are stagnant in store openings.  Prada is still opening new locations at a breakneck pace, including a new boutique in Milan in the same shopping complex as an existing store.

Discussion Questions:

1. What is happening to same store sales for some luxury goods retailers?

2. How have they been growing sales for the past few years?

3. What new strategy are they implementing to positively impact same store sales?

4. Using the growth strategies outlined in Chapter 5, which strategy are they using?

 

SOURCE: Christina Passariello, Wall Street Journal, September 29, 2013