WHAT'S THE STORY 069
New Ground
Parcel delivery trucks full of online orders are stuck in a traffic jam outside the shop windows of deserted stores. Classic, ten-year leases have become unpopular in the fashion industry. They are too long-term, too expensive, and too inflexible. There is no way out? There are at least six! Allow us to explain with the assistance of important pioneers of the industry… Text: Petrina Engelke. Illustration: Claudia Meitert@Caroline Seidler
It seems like the
preferred destination of the fashion industry is Soho, New York. On Broadway one can find Topshop, Prada, Hugo Boss, and Aritzia, as well as Acne Studios, Bogner, Burberry, Helmut Lang, Alexander Wang, Chloe, Miu Miu, and Diesel. However, the number of vacant spaces has been increasing alarmingly of late. In summer 2017, there were no less than 188 empty stores on Broadway, one of the most popular shopping streets in the world. As in most locations, the question of “stay or go” is a question of price. The spread of rental fees is considerable. At 360 Euros per square metre in the 2nd quarter of 2016, Munich’s Kaufingerstrasse ranks 11th among the most expensive locations worldwide. The top spot is occupied by the strip of Fifth Avenue between 49th and 60th Street, where a square metre of retail space costs more than 29,000 Euros. Many fashion retailers are speculating that rental fees will soon decrease in the face of rising vacancies. That’s why they are unwilling to commit to longterm contracts. In turn, landlords are banking on the fact that the fashion industry cannot afford to be underrepresented in shopping streets for long. It’s a little like the game in which the one to break eye contact first loses. In the meantime, both sides are losing money. Maybe it’s high time to come up with some new ideas?
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A Store Shared is a Store Doubled: Co-Retailing
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Something Completely Different: Take “Trade is Change” Seriously
What happens when one takes the motto “Trade is Change” seriously and actually executes it? One discovers all sorts of new connections. “Everything is connected in some way”, says Cambis Sharegh about his move from a concept store to the hospitality industry. “Both sectors are places of interpersonal encounters and exchange.” Both the industry and the clientele were somewhat surprised when Sharegh and Peter Hannewald decided to close Pool, a legendary store in Munich. Instead, they teamed up with partners to open a hotel that will exist for no longer than two years. “I believe that long-term leases are outdated”, Sharegh explains. “The market is very fast-paced and one needs to adapt.” So there is an alternative to begrudgingly signing the next lease. One can change industries and - while one is at it - interpret spaces in a completely different context. Sharegh and his partners turned a former bank into a place equally suitable for sleeping and partying. The short-term nature of the project is part of the overall concept. “Temporary happenings create a very specific, almost spiritual dynamic”, Sharegh gushes. However, one also has less time to recoup investments. Among other things, the Lovelace team compensates with cooperations: they have persuaded manufacturers such as Qvadrat, Vitra, and Coco-mat to join the project.
While some have opted for turning their back on the world of stationary retailing, others are embracing it with the same euphoria as if they had just succeeded in landing on Mars. Pure online brands have recently cottoned on to the idea that a store can boost their business. That’s why Supreme has opened branches in Paris, LA, NYC, and Tokyo. That’s why Amazon has acquired Whole Foods. And that’s why Alana Branston and Ali Kriegsman have changed their business model. With Bulletin, they founded an online magazine to promote and sell their curated online brands. However, they needed to communicate their plans to open stores before they managed to raise 2.2 million Dollars from investors. On the basis of monthly, terminable contracts, online brands can apply for space in Bulletin’s stores and the company’s complementing e-commerce site. The respective brands pay between 300 and 2,000 Dollars and surrender 30 percent of the generated sales. Co-retailing closes a gap for those who have realised that they need a presence in the physical world to function properly, but don’t have the resources to commit to a long-term lease or prefer to change locations frequently for market research purposes. Talenthouse N.Y., for instance, has an additional strategic purpose, even though Swiss fashion entrepreneur Veronika Brusa initially had no more than a second store for her Berenik brand in mind (see interview).
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Clone the Poster Campaign: Sales Floor = Marketing Space
After years of expansion, some big players within the industry have reached their growth limit. How many flagship stores does one really need? Richard Hayne, the CEO of Urban Outfitters, firmly believes that retailers have accumulated too much sales area. At least in the US, where he estimates the per capita fashion offering to be six times higher than in Japan. The term “downsizing” is already in the air. Behind closed doors, industry experts are of the opinion that the shop windows of certain upscale stores are glossing over losses. These stores supposedly merely exist to enhance brand value. The luxury brand Hermès recently launched a surprising pop-up project. From June to November 2017, an orange-coloured laundromat named Hermèsmatic appeared successively in several cities. In this pop-up store, owners of Hermès cloths were afforded an opportunity to change the colour of their treasures in special washing machines - but only for two weeks. Cartier, on the other hand, installed a champagne vending machine in the French-Vietnamese luxury restaurant Indochine. While New Yorkers were allowed to try on the re-launched watch for which this project was realised, they were not allowed to take it home. The watch was later sold via Net-A-Porter and in the Cartier Store. This approach could lead to completely new business plans. How about merely having one or very few flagship stores and temporary stores for targeted marketing campaigns? Here today, there tomorrow…
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