Major luxury fashion brands slow down retail expansion, worldwide
Gucci and Louis Vuitton are among the latest international luxury brands to announce a slower pace in expansion of retail, with fewer stores, in the case of Vuitton even ”freezing” expansion in certain markets. Recently, analysts have unanimously attributed Louis Vuitton’s slower growth in 2012 to excessive brand exposure.
As for Gucci, the company said it will focusing on enlarging and refurbishing existing stores, much like its sister brand within the PPR Group, Bottega Veneta. Both Gucci and Bottega Veneta are set to open in Milan, this year, their largest store worldwide, targetting the solid number of wealthy tourists from Asia, Russia and South America.
Although it has not formally confirmed, Prada Group (Prada and Miu Miu) has also slowed down the pace of its international expansion, following its IPO on the Hong Kong Stock Exchange, in 2012 the group opened a record number of stores. Italian luxury menswear house Ermenegildo Zegna also seems to have tacitly decreased the number of new openings planned for 2013.
Geographically, China is no exception when it comes to opening new stores, many luxury fashion brands taking a more conservative approach. Some brands such as Gucci and Bottega Veneta have already opened men’s only stores in China - other major brands are likely to follow suit, particularly Dior and Ralph Lauren.
Chanel has also taken a similar approach, without overtly confirming it, focusing on enlarging and refurbishing flagship stores rather than opening new ones. The more windows a brand would open, it seems the more accesible it would appear to consumers, both in emerging and mature markets. Louis Vuitton‘s strategy to open two ”categories” of stores – Maison ones (larger and with added services) and regular stores seems to have been highly inefficient, providing for further confusion among luxury consumers.
Despite the recent cash injection from its new Qatari owner, Valentino too is taking a more cautious approach, focusing on expanding more its Red Valentino line, especially in shopping malls and remaining more conservative when it comes to its main line. The house will also focus on refurbishing several stores in the U.S. and Europe, which do not represent the new interior design concept of the brand.
Luxury fashion brands which do not seem to have lost appetite for retail expansion and which pursue with a high number of mono-brand store openings in 2013: Michael Kors, Tod’s Group (Hogan), Tom Ford, Brioni (acquired in 2012 by PPR) or Salvatore Ferragamo.
But this is not the case for luxury watches, many of the world’s leading brands being in their early phases of expansion with mono-brand stores, most of them directly operated. Luxury watch brands have thus proven greater control over their positioning and are thus able to better fine tune research as well as education and awareness, especially in the case of major emerging markets. Mono-brand watch stores are also an opportunity for the watchmakers to provide consumers with a genuine experience, which in many cases, multi-brand stores cannot.