1.0 Introduction
2.0 Rationale
2.1 retail strategy
2.2 what is phygital
2.3 ‘roses’
2.4 gen z in current retail environment
3.0 Recommendations
3.1 atmospherics
3.2 phygital exhibition
3.3 implementation
4.0 Bibliography 2 8 18 24
Luxury retail market in the UK remains highly competitive in the uncertain economic climate. Brands are investing into big data and immersive experiences to tap into the consumers’ emotional space and secure their spot as a brand of choice. Various studies have shown changes in consumer behaviour, reasons for those changes and ways for retailers to adapt to the everchanging expectations. Alexander McQueen is one of the most influential British fashion designers of the century, boasting an impressive flaghship store in one of London’s prestige areas. The brand has immense advantage having an exhibition space in-store, as well as great opportunity to tap into new demographics. This report will discuss retail environment, phygital startegy and current Gen Z consumer expectations, to create a feasible retail startegy for Alexander McQueen’s flagship store in London.
Alexander McQueen has been named as one of the most influential contemporary fashion designers of this century (V&A, ND). The brand’s flagship store on Old Bond Street, London first opened its doors in 2019.
‘V&A’s most visited exhibition, receiving 493,043 visitors during its 21-week run in 2015’. -Vincent and
However, McQueen operates in a highly competitive market (Statista, 2024). The global luxury goods market is growing every year and is projected to generate over 550 billion USD by 2026 (see figure 1). The UK is one of the top 5 countries globally consuming luxury goods (US and China takes lead) – the UK luxury fashion market’s projected value is 8.7 billion USD by 2029 (a 2 billion USD growth since 2019) (see figure 3). Due to the concentrated market and competition, Alexander McQueen must adapt well to the retail environment and the changing consumer behaviour, while staying wary of uncertain economic climate. Batat (2019) identified key factors affecting consumer behaviour:
Figure 1. Global luxury goods market in billion USD (Statista, 2024, p. 9).
• Digitalisation is defined as a development in society, where individuals perform many tasks (work and leisure) digitally (through technology, like phones and computers) (Vogler, 2023). This development has changed society’s daily life, which includes the way we work, communicate, and even shop. Digitalisation has allowed instant access to things like luxury fashion. At the same time, it has forced people’s data to be digitised – this means that it might be treated, analysed and sold as a product. Visible consumer behaviour online (like shopping habits, behaviour patterns and trends) is immensely advantageous to businesses worldwide – it allows easy detection of upcoming opportunities.
• Empowerment is defined as consumer’s perception of their possession of power and control to ‘produce desired outcomes and prevent undesired ones’ (Batat, 2019, p. 15). This essentially means that consumers have more bargaining power in today’s retailing environment. Consumers have ease of access, buyer protection regulations and entitlement to information. This can include requesting transparency on supply chains; learning more about products’ origins and their consumption safety; or demanding more responsible business practices (for example, going cruelty-free).
• Consumer emotion is defined as experiences that can result in evoked emotions, such as pleasure, displeasure or awakening (Batat, 2019). They are a result of interactions with external stimuli and influence daily decision-making. This means that these emotions can arise within the retail environment, and can affect the retailers’ strategies. For example, a commercial perceived in a negative way (like Dove’s 2011 scandal (Slawson, 2017)) can induce emotions of disgust, anger or sadness. This would then affect the consumer behaviour, which means they are likely to spread the word and opt to show elsewhere. It is important to note that consumer emotions change in line with consumer expectations (these are influenced by trends, technology, politics etc). This is reflected in the example of Dove – the scandalous ad was posted in 2011, but backlash didn’t happen until 2017. Brands therefore use emotion as part of branding strategies – inducing positive emotions can result in better business performance.
• Postmodern consumerism is related to a theory where consumption is more than just consuming a product for its functionality and the consumer’s survival. Postmodernism means that a product now comes with a service and meaning. This theory states that ‘consumption is a sociocultural meaningful experience’ (Batat, 2019, p. 31). This is extremely relevant to luxury retailers, as they are not just selling clothing – they are selling lifestyle, exclusivity and status, all of which add meaning to the product, as well as the consumer’s life.
Figure 2. Top five countries for luxury fashion market (Statista, 2024, p. 18).
Retail environment is defined as climate in which retailers operate. This ‘climate’ is a changing environment that can be influenced by technology, government and the consumer. In fact, according to Fernie et al. (2015) the retail environment can be imagined as a triangle, where each factor influences one another (see figure 3).
Luxury designer retailers, like Alexander McQueen, can influence the consumer by innovating trends.
The government can influence the consumer behaviour by increasing or decreasing wages.
Consumers can influence retailers by shopping more or less, setting new expectations and following other lifestyle trends etc.
Technology, however, can influence all – it may be integrated into government systems, consumer lifestyles and retailer strategies – these can affect behaviour of all three.
Figure 3. The retail environment (Fernie et al, 2015, p. 2).
This report will discuss phygital retail strategies and Gen Z in the luxury fashion market. Followed by a rationalised proposal for a new retail strategy for Alexander McQueen’s flagship store to appeal to the Gen Z market in the UK.
A retail strategy is a set of strategic decisions made by the retailer in order to increase sales, customer retention and competitive advantage (Gauri et al., 2008). Those strategic decisions can include product pricing, marketing techniques, omni- or multi-channel strategies, visual communications and so many more. As the retail market, especially fashion retail, becomes more and more concentrated, it is vital for retailers to strategise. However, in order to strategise, businesses must know and be able to analyse the retail environment, its strengths and weaknesses (Fernie et al., 2015). As strengths and weaknesses are identified (this can also include competitor activity), a business can consciously determine a set of actions to follow, which would amplify and take advantage of its strengths. Simultaneously, those strategic actions should diminish any potential issues that may arise from the retailer’s weak points.
Fernie et al. (2015) has visualised a simple framework that can be used to develop a retail strategy (see figure 4). A business must first identify and analyse its mission as well as its goals and conduct a SWOT. Based on those, strategic decisions can be made relating to ways of expansion and new products or markets. Most appropriate marketing techniques are then selected and applied. This process, if completed effectively, results in improved retail performance, customer satisfaction and competition advantage. The ever-changing retail environment and brand equity analysis should be monitored at all times, as these can affect the retail strategy and decision making.
Figure 4. Retail strategy framework (Fernie et al., 2015, p. 54).
The term phygital refers to merged physical and digital spaces (Batat, 2024). Many luxury brands are starting to secure their places in the digital world (Vogue Business, 2024). Examples include Louis Vuitton NFTs, The Margiela Tabi in the metaverse, Balmain selling phygital sneakers and many more. As the digital world evolves and innovates, alongside the digital consumer, brands are seeking ways to meet the ever-changing expectations of today’s consumers (i.e. the digital natives). Expanding into the digital world creates excitement, exclusivity, relevance and brand awareness both for the retailer and its consumer.
Batat (2024) introduced a framework that can help retailers integrate phygital into their strategies and also gain more in-depth understanding of what it means for the consumer. Phygital may mean different things to different retailers. For some, it can be online ordering stations in physical stores (like Argos) (Batat, 2019). In the case of Alexander McQueen, the aim is to innovate the term ‘phygital’ - integrate a phygital exhibition space at its flagship London store. McQueen has immense competitive advantage as it was one of the first to integrate a permanent exhibition in a physical space. Turning this space into a phygital immersive experience would showcase McQueen’s ability to capture the selective and easily bored modern consumer.
Figure 5. The retail environment (Batat, 2024, p. 1230).
This framework (see figure 5) aims to create customer experience and value for the customer. The driving forces are the social and economic climate (digitalisation and finicky consumers) and aesthetic values. The mediums to share those values are via people, media and phygital. The values that are created for the consumer in the phygital space – immersivity, sensory, physical engagement and the social (status) factor.
Integrating a phygital space within a flagship store has great advantages. Not only does it create and deliver values, such as experience, engagement and a sense of exclusivity, to the consumer, but also elevates the perception of the brand. Experiencing a brand can be done in many ways. It varies from seeing ads, browsing the website, to window shopping. When it comes to experiencing a luxury brand, it may not seem accessible to everyone, therefore some consumers may be reluctant to take the time and effort to seek it. This is where luxury brands innovate their marketing and brand experiences, to reach as many consumers as possible, stay memorable and appear accommodating. See below for an example.
Hermes, an ultra-luxury brand, known for their exclusivity and selectiveness of their customers, innovated their window displays, to capture the footfall of various consumers. Their windows integrated a phygital experience – space themed display, with a camera pointing towards the audience (see figures 6 and 7). Subtle engagement with the audience can advance the perception of the brand, shift it from being product-centric and generate word-of-mouth marketing in-person and online (Nuseir and Madanat, 2015). The way this can relate to Batat’s (2024) phygital framework:
1. Driving forces are status, esteem and playfulness. The window display allowed every passer-by interaction with an inaccessible-for-most luxury brand. This may evoke a sense of status and esteem. It also evoked feelings of playfulness through the live cam engagement.
2. Mediums of experiencing the value were physical (physical location), digital (elements of digital window display), media (may be shared online) and people (word-of-mouth marketing, sharing the same experience with your friends/family).
3. The values that may linger with the consumer: immersivity, sociability, technicality, sensory. The post-experience feelings may encourage consumers to share the experience with others, visit the experience again, look forward to updates from the same brand and set new expectations for other brands.
Applying this framework, it is visible how it can be helpful to a brand: it clearly indicates the benefits to the brand, in terms of experiential and emotional branding, and the benefits to the consumer (being introduced to something new, having a lasting impression etc).
The exhibition space ‘Roses’, which was curated by the creative director at the time, Sarah Burton, was exclusive to Bond Street until May 2020 (Bond Street, ND). This exhibition consisted of runway pieces from previous years, and the theme was floral arrangements (see figures 8 and 9). The background posters consisted of the try-on phases, inspiration pictures, as well as the design process. This way, the audience can get insight into the behind-thescenes of one of the most influential fashion houses in the UK. Emotive and thought-evoking elements are present throughout.
On the other hand, there is a lack of engagement and immersivity for the audience. The ‘Roses’ exhibition had a traditional museum feel to it and lacked innovation that is up to standard of the modern consumer. As the post-pandemic society is starting to settle and social distancing no longer a thing, there is space for immersivity and hands-on participation.
On the contrary to Statista’s statistics (as mentioned in section 1.0), Business of Fashion (2024) reports uncertainty in the fashion industry in 2025 (see figure 10). BoF’s report The State of Fashion 2025, finds that ‘80% of Gen Z consumers are overwhelmed by their exposure to brands’, and 70% of UK Gen Zs prioritise affordability when it comes to fashion (Business of Fashion, 2024, p. 50).
Considering the retail environment triangle (Figure 3), the changes in consumer shopping habits affect the retailer’s strategies. Retailers are innovating their strategies to meet consumer expectations (affordability) while staying profitable. See below for what is happening in the luxury industry:
Figure 10. Factors consumers are worried about (Business of Fashion, 2024, p. 9).
• Problem: fading brand awareness.
Marc Jacobs is commissioning minor TikTok influencers to promote the brand. Result: increased Marc Jacobs content on Gen Zs For You Page (McMeekan, 2024).
• Problem: declining revenues.
Gucci invited influencers to its #GucciCruise2025 afterparty.
Result: viral content on TikTok gathering millions of views and hashtag tags. (Edwards, 2024).
• Problem: gathering attention for a new London store. Jaquemus commissioned the viral Bus Aunty to promote the new store with a ‘come have a cup of tea with us’ on the Jaquemus TikTok page.
Result: content generated millions of views and captured the audience’s attention: Jaquemus appeared in touch with the market (mentioning tea, iconic red London bus, down-to-earth tone etc). (McMeekan, 2024).
These examples reveal that the digital natives (Gen Z) are a digital community (Edwards, 2024).
Content spreads quickly, given that it is unique and relevant to the consumer. Cult figures, viral influencers particularly generate significant amounts of buzz and engagement. This relates back to Batat’s (2019) theory – postmodern consumption is an experience and requires positive emotional connection.
According to Statista (2024) survey, 15% of Gen Z respondents (luxury consumers) mentioned Alexander McQueen as their chosen luxury brand in the UK (see figure 11). The survey showed that the brand is more popular among Millennials. This shows there is an opportunity for the brand to restrategise and tap into the Gen Z luxury consumer market.
Figure 11. Most popular luxury brands among UK Gen Z (Statista, 2024, p. 15).
The term atmospherics is defined as a way to communicate the brands or the stores personality (de Farias et al., 2014). This can include elements like music, lighting, temperature, colour scheme, scent and sensory materials (touch). Atmospherics also include exterior variables, general interior, layout and design variables, point of purchase decoration, human variables. Recently there’s has been a rise in earthy tones use of natural materials in luxury retail – stone, steel, glass, wood (e.g Thom Browne, Maison Margiela, Hermes).
Alexander McQueen London has taken great advantage of atmospherics when it comes to a minimalist, ambient and Earthy space in its flagship store (see figures 12 and 13). The space is welcoming communicates warmth and luxury, while allowing the products to be seen at eye-level. However, this strategy can be expanded to reach its full potential – there is high importance on scent marketing (Ramsak, 2024). A study found that a brand’s signature scent can positively influence consumer emotion, spending, duration of visits and intention to revisit (Errajaa, 2021). Given that the flagship store has a theme of nature, and McQueen’s designs are often structured with elements of traditional tailoring – a signature scent of floral wood is recommended.
The current floor plan works well – it avoids overcrowding and allows space to browse and take in the visual displays. Fixtures located in centre of the floor plan allow consumers to circle the floor before moving upstairs. This way the store can make the most out of atmospherics like textured stone and wood walls, glass cylinders and crystal stones for accessory display.
As mentioned in section 2.3, the previous exhibition space may have not aligned with current Gen Z consumer expectations. As Gen Z are described as digital natives, and technology is highly relevant and familiar to this demographic, a phygital exhibition space is recommended as McQueen’s new retail strategy in order to reach the Gen Z consumer. Section 2.4 emphasised the importance of experience and digital consumption for the Gen Z demographic. In fact, various exhibition spaces in the UK are adapting immersive experience technologies (Gov.uk, 2019).
McQueen’s flagship store has a great opportunity in creating an immersive experience for their visitors. Not only does it enrich in-store experience for the customers, it also can be marketed as a visitor attraction. This helps boost brand awareness between Gen Z, gives opportunity to create buzz online and in the press. Immersive experiences will contribute to Alexander McQueen’s experiential retail strategy. This strategy can improve brand-consumer relationship as well as consumertechnology engagement (user experience), which would be in line with the postmodern consumer (as seen in section 1).
The proposed technology is 360-degree camera viewing and holographic mesh projectors.
The 360-degree camera viewing allows users to control and rotate cameras placed in designer workshops. This camera station requires physical engagement through camera control buttons. Users can rotate the cameras 360-degrees as well as zoom in or out. The setting observed by the user may be a designer workshop, a digital space of curated Alexander McQueen designs etc. Users being able to see into the unseen behind-the-scenes or exclusive never-seen-before designs can potentially form an emotional bond with the brand, increase brand loyalty, further engagement with the brand online.
Holographic mesh projectors create image projections onto a mesh fabric, resulting in an immersive realistic image. These can be shaped into cylindrical shapes and showcase products or moving images to create a movie-like experience at the exhibition (philipp7pc, 2023). This phygital exhibition space combines user experience and consumer experience to create immersivity and brand engagement. As mentioned in Section 2.2, according to Batat’s framework (2019), such in-store experience can deliver emotional and social value – such as participating in a unique experience and sharing the exclusive events with others online.
However, Mintel’s 2024 key global consumer trend (2023) found that consumers long for balance between tradition and technology. Mintel’s later report (2025) found consumers are worried about the progression of technology and how much value they place on human connections and communities. This means the phygital exhibition should encapsule physical engagement and community bonding. Strategies involving little to no interaction, or too much exposure to digital technologies may not alight with consumer expectations. At the same time, according to digital consultancy platforms, shifting towards accepting cryptocurrencies as methods of payment may also be of little to no benefit to the brand and the consumer (Edwards, 2023). As consumers place great value on human interactions, emphasis should be placed on the people factor in the retail strategy. This includes emotive and communicable staff and the opportunity for personal shopping in-store.
A new retail strategy involving a grand opening of the new exhibition space requires marketing, in order to reach the intended audience – Gen Z. As Gen Z are digital natives, marketing should involve online platforms. Methods to effectively communicate an upcoming big event:
• Create a web page dedicated to the event.
• Display a countdown.
• Communicate the theme.
• Be clear on who your audience is.
• Allow interested consumers to sign up for details via email.
• Send out personalized invitations.
• Send email reminders.
• Deliver value.
As mentioned in section 2.4, the key platform to reach and engage with the Gen Z consumer is TikTok – the benefits of influencer collaborations have been proven to be immense. As Gen Z have emotional connection to their favourite online influencers, creating lasting relationships with the influencers can help Alexander McQueen build a community of Gen Z consumer.
See below for a Gantt Chart for the new retail strategy:
Figure 14. Gantt Chart.
Figure 15. Most popular SM platforms among Gen Z (Euromonitor, 2023, p. 18).
Figure 16. Influences on Gen Z luxury consumption (Euromonitor, 2023, p. 20).
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