Tag: real estate news 2019

Luxury brands are locked in a retail arms race that favors players with the scale to keep up with ever-escalating costs and capital expenditure requirements.

In recent years, flagship stores have grown larger as well as more lavish, not to mention the new generation of VIP facilities. The toolbox of store animation activities has grown to encompass restaurants, bars, temporary exhibitions and other cultural events, as well as more frequent merchandise drops. Efforts to generate foot traffic have reached new heights, too.

Now, top luxury groups are opening a new front in the competition: buying real estate to secure landmark locations. And the implications for second-tier brands are serious.

Second-tier players with lower retail space productivity were already struggling to stay on key luxury streets — such as Fifth Avenue in New York, Avenue Montaigne in Paris and Canton Road in Hong Kong — as rents hit new highs. They certainly can’t keep up with top luxury groups offering hundreds of millions of euros to buy store locations outright.

The strategy was pioneered by LVMH, which snapped up the Louis Vuitton store at 57th Street and Fifth Avenue in the early noughties. But the magnitude of today’s luxury real estate