Luxury brands are breaking off pieces of their full inventory to turn them into standalone, tightly focused specialty stores.
Chanel announced last week that its first boutique selling only footwear would be opening in Hawaii. In October, Saks Fifth Avenue opened its first standalone shoe store in Connecticut.
The move for Chanel came after the brand restructured its retail strategy in the U.S. The 1,100-square-foot shoe store is meant to offer an elevated customer experience to shoppers and also access to Chanel’s entire shoe collection. It’s not the first standalone store for the retailer—it has an accessories store in Las Vegas—but it is an experiment, said Joyce Green, the brand’s evp of fashion.
“We’re seeing how this will work for us,” Green told WWD. “Shoes are a very important piece of our fashion business, so it’s a great link to ready-to-wear and to recruiting a new client.”
The strategy is being adopted by the beauty industry, too: The first Dior Beauty standalone store opened last week in Manhattan’s Westfield World Trade Center, and Estée Lauder’s Estée Edit—a millennial-minded beauty and skincare store, which comes complete with a digital “selfie mirror”—opened earlier this month in London’s Soho neighborhood. Burberry’s Beauty Box retail concept set the stage for this trend—its digitally infused beauty stores began popping up in the U.K. in 2013.
With cosmetics increasingly becoming popular entry-level luxury purchases, brands are figuring out how to capitalize on the category. According to a report by Euromonitor, the beauty industry saw a 6.5 percent value growth and total sales of $56.590 million in 2015. Beauty has traditionally been sold through wholesale-like department stores and specialty retailers like Sephora, but its growth offers an opportunity for brands to make direct connections with their customers and build loyalty by selling to their shoppers directly. It’s not just luxury brands identifying this opportunity: Nyx Cosmetics opened its first store in Manhattan this October.
“Standalone beauty stores are becoming an important feature in fashion brands’ strategy in beauty,” said Euromonitor’s Nicole Tyrimou. “Fashion brands looking to raise their profile and boost market share use standalone beauty stores to make bigger statements to beauty consumers and improve consumers’ experience with the brand.”
Tyrimou added that beauty is a prime industry for brands to experiment with in-store digital activations, and standalone concept stores open up the flexibility to experiment. Burberry’s Beauty Box offers virtual try-on capabilities and displays a digital chandelier that runs beauty content. The Estée Edit stores display user-generated content on in-store screens, and Dior will follow a similar approach by incorporating 16-foot digital screens that display backstage runway and beauty videos.
The move for brands to take their physical beauty experiences into their own hands comes at a time when department stores are facing declining foot traffic, and massive, sprawling flagship stores have lost their luster with on-the-go shoppers. They’re also much more expensive to maintain than boutique concept stores. According to a report by real estate firm Cushman & Wakefield, the cost of rent for the most popular retail shopping locations (like New York’s Fifth Avenue and London’s Regent Square) has dropped for the first time since the financial crisis—vacancies have risen to 15.9 percent, up from 10 percent last year.
According to Cushman & Wakefield’s report, sales at these stores aren’t justifying the cost of keeping them going. When retailers downsize, they’re also able to improve customer experience and product offerings at the more nimble stores.
At the opening of the Saks shoe store in Connecticut this month, president Marc Metrick explained the concept strategy: Saks has plans to open two more concept stores in the area in 2017, one for jewelry and one for contemporary designer clothing.
“To really make a standalone store work, you have to have the marquee categories. You also have to have a highly productive main store so that when you move the footwear out, you can expand inside the existing building and improve your overall productivity,” he said.
Not every luxury retailer is jumping flagship, however. Coach, which is currently undergoing a brand restructuring to get back on pace with upper-tier customers, unveiled its 20,000 square-foot Coach House flagship store on New York’s Fifth Avenue, which will open adjacent to the first Stuart Weitzman flagship. Both will house every category offered by the brands, and at Coach, a special emphasis will be made around its leather heritage. The Made to Order Rogue and Coach House Workshop concepts will open inside the flagship, offering customizable bags and monogramming.
The store opening rounds out Coach’s defiant move to take the brand back to its luxury roots after years of damage from discounting products and use of cheaper fabrics.