For decades, the mantra of retail success has been scalability. A brand’s ability to replicate the same look, feel and customer experience in each and every physical location has been a prerequisite for expansion, brand-building and economies of scale.
However, in the luxury retail sector, it’s advantageous to use the available space and the geographic location to create a unique design concept for each brick-and-mortar store, according to Rich Johnson, Principal at Odyssey Retail Advisors. While this strategy adds complexity to the design and construction processes, he believes it pays off in customer experience.
Johnson discussed luxury retail design, optimal roles for landlords and the challenges of making predictions during an election year with Retail TouchPoints.
Retail TouchPoints (RTP): What are some of the key elements that go into creating a high-quality retail space?
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Rich Johnson: You need a well-thought-out design and to use quality materials, but it’s really about whatever makes the customer feel particularly special. Brands in the jewelry category, for example, are doing interesting things with private viewing rooms and offering customer experiences — they’re taking it up a notch. The Audemars Piguet concept provides a unique social aspect, which adds to the specialness of the shopping experience or shopping “ceremony.”
At lower price points, creating that experience is more about the breadth of assortment, but there are offerings like the Canada Goose Snow Room that gives the brand an opportunity to show off. A Wilson store near me has a basketball court in the back, which reminds you that they’re the official basketball of the NBA and that they do more than tennis, which is what they’re best known for.
RTP: In luxury retail in particular, what should store designers/planners be looking to accomplish?
Johnson: Whenever there’s a unique approach, with different iterations in each store, that’s a lot better than cookie-cutter concepts. Yes, it’s challenging to create a unique space for each store, but if you can give each store its own design concept based on the space and the market, that’s a win. At retailers like Zimmermann, every one of the stores has a different design concept and feel, but they are also similar enough to each other.
RTP: What about the malls and shopping centers housing these stores? What elements are needed to create a positive shopper experience?
Johnson: The best landlords try to create a cohesive story with the retailers they work with. I was talking with a landlord yesterday that’s doing a deal for a location that will have a unique mix of high-end tenants, great restaurants and tenants representing the local style. He’s also working on a high-end childrenswear concept and he’s very keen that, as soon as that’s done, that the space would have an approachable ice cream shop next door. That’s really smart: parents can bribe the kids to go shopping next door with the promise of ice cream, and those visiting the ice cream shop will probably stain their clothes, encouraging the parents to buy something new.
It’s also about knowing the demographics of your visitors. When we were working on the Shops at Wynn in Las Vegas, we were shooting for a “California Chic” vibe, because we knew there were a significant number of southern Californians visiting and shopping there. That’s why we chased the [California lifestyle brand] Aviator Nation and featured Los Angeles-based food and beverage.
I applaud landlords that look at things holistically, but today there are very few that don’t do this. Big mall players are thoughtful, to the extent that they can be, in bringing a creative flair or a consistent concept of which brands interact with which other brands. For example, they might try to establish a menswear or a jewelry/watches “district,” because having [similar shops] all together makes sense.
RTP: What’s your forecast for the rest of 2024 and into 2025 in terms of retail real estate performance?
Johnson: Election years are always really wonky, it doesn’t matter who is running, and in 2024 we have a unique election that we’ve never seen before. Uncertainty always creates additional challenges, and then you throw in inflation and shifting attitudes in terms of shopping patterns. Some brands are doing exceptionally well; other brands that you’d think would be doing well, aren’t. That makes it very hard to project what’s going to go on.
RTP: What’s one thing you’d like tenants/retailers to better understand about landlords?
Johnson: That’s hard because there are so many different versions of landlords and tenants, but in my opinion, it’s always better [for a landlord] to be collaborative. Some people think “tenant versus landlord” is a zero-sum game, but the most successful landlords are the ones who try to say “yes,” if they can. There are some things they can’t do from a financing perspective, of course, but there are a lot of creative ways to make a real estate deal happen. If you try to say yes, the parties can come together and make it happen.
