Life Of Luxury
As the demand for luxury items grows, high-end retailers are looking for new ways to bring their products to the market.
Lara Fuller

The face of luxury is changing. Luxury items are no longer reserved only for the rich and famous. Today, due to the influence of the media, celebrity culture and a number of other factors, everyday people are looking to own a piece of the luxury lifestyle. Luxury retailers now face the challenge of bringing their products to the average consumer while still maintaining an air of sophistication and style. Shopping Center Business recently took a closer look at the new face of luxury in the United States.

The History Of Luxury

Luxury retailers like Lacoste are finding more locations in places where the wealthy spend time.  The retailer recently opened in the Beverly Center in Beverly Hills and on Charleston, South Carolina’s King Street.

“Until the post-World War II period, luxury was available to sophisticated Europeans and those Americans that traveled and understood certain quality and luxury that was for the most part coming from designers and boutiques,” says Stephen Stephanou, executive vice president with Madison HGCD. “Fashion leaders were for the most part social leaders, women whose standing, by birth or wealth, made them models of quality. But for most, this was unapproachable.”

Today, with every celebrity flaunting the latest and greatest in the fashion world, teenagers, and even adults, are quick to try to follow the trend.

“Much of this [fascination] is due to media saturation as Hollywood, music and other venues of entertainment grab a hold of the public attention,” says Stephanou.

Because of television, magazines and the Internet, the average consumer can more easily learn what is hot on the runways and in Hollywood, creating a clamor for certain luxury items.

Retailers like J.Crew fall into the luxury niche because they hit a crossover market. Photo courtesy of Madison HGCD.

Retailers then respond by exploiting that product, adds Cohen. They create a buzz by offering the product to a select few, and offering only a limited number of items to the general public. “The curiosity of the client is piqued by this one hot item and this drives sales for the brand,” says Cohen. “Other companies make copies or similar styles of the hot item — mutating it across the market and driving sales through the high-end segment.”

The word luxury has now come to be synonymous with certain brand names, whereas it once defined items that were simply of high quality. For many people, luxury now equals trendy. “The fact that these big names are now so widely distributed makes one wonder if this is really luxury, or just good marketing,” says Stephanou. “Particularly if the prestige comes from ‘name recognition’ as opposed to a real quality difference in a particular item.”

From Teenagers To Baby Boomers

While many of the celebrities that help drive the luxury market are under 30, people both young and old look to buy luxury items.

“There are two facets we are seeing,” says Steven Greenberg, president of The Greenberg Group. “First, the aging baby boomer population with both time and money and second, the younger group, who are often buying up.”

Sephora’s products are a splash of every day luxury. Photo courtesy of Madison HGCD.

The younger generation, on the other hand, does not have the income or leisure time of the baby boomer group, but desires luxury items all the same. Many in this group want the status of the luxury logo, but cannot afford large pieces.

“Go into Louis Vuitton and you will see young women buying small goods,” says Greenberg. “They don’t buy as much, but they are pickier about what they buy.”

Adds Stephanou, “Even if you take the top names, like Gucci, Hermès, Prada, Louis Vuitton — much of what they sell is not the couture lines, but accessories, handbags, shoes, small pieces of jewelery, fashion watches, etc. This is what the popular term of ‘luxury’ is in the public mind.”

Accessibility

Now that high-end retail items are more widely desired by a range of age groups, luxury retailers must decide where to locate their stores in order to best reach people and yet remain profitable. Naturally, cities like New York and Los Angeles are obvious choices when it comes to luxury retail locations.

“New York City is a global city, a financial, cultural, business and fashion center with ties to the entertainment industry at multiple levels,” says Stephanou. “There is a large segment of the population that is affluent and urban. In this type of environment, where competition is keen, there is unabashed spending on the whole gamut of luxury items.”

Eileen Fisher is a retailer who locates in upscale markets. Photo courtesy of Madison HGCD.

Most major cities across the United States now have their fair share of luxury retailers. Because they have already expanded to the major markets, luxury retailers are now looking at smaller cities and towns.

“The luxury retailers are in major cities already,” says Greenberg. “We are now seeing them look at smaller, more affluent markets and resort markets.” Greenberg cites Aspen, Colorado, a ‘playground’ for celebrities and wealthy individuals, as one example. Other vacation spots, like Palm Springs, California, and Miami, Florida, are also prime locations for luxury retailers. “When choosing these markets, you have to ask ‘Where do the wealthy spend their vacation time?’” says Greenberg.

Another factor in choosing locations is the actual product that is being sold. Once retailers decide on a location, they must review the demographics to ensure that their products are suited to the consumer. “For example, if a retailer is seasonally driven, then they would be more interested in the Northeast,” says Cohen. “Conversely, if the clothes are for warm weather, they would target the southern part of the country. Once the markets have been chosen, the driving force becomes availability, rent, landlord contributions and co-tenancy.”

The ‘In’ Crowd

After choosing the next hot spot to locate in, luxury retailers must go about choosing a site that doesn’t take away from the label’s prestige but is also accessible to a number of people.

“As a group, luxury retailers tend to have a herd mentality,” says Greenberg. “They like to be next to each other, want to be placed together.”

In any major city, or even in smaller cities, most luxury retailers can be found clustered together in upscale areas.

“Luxury retailers follow the leader when it comes to selecting a site,” says Cohen. “New luxury brands, from the United States or internationally, look to the retailing landscape to determine where major brands are already successful.”

Stephanou has also found that the majority of the time, luxury retailers stick together. “For the most part they want to be with other high-end retailers,” he says. “There are some occasional exceptions, like the well known example of Jeffrey going to the Meatpacking District in Lower Manhattan when no other retailers were there, in fact any retailers at all. That move has changed the entire district, as other retailers have been added seeking the chic of an edgy neighborhood that is now no longer that edgy.” That example, however, is the exception, not the rule.

Some areas where there are a number of high-end stores grouped together include Madison Avenue and Fifth Avenue in New York City; the retail triangle in Beverly Hills; Grant Avenue and Post Street in the Union Square area of San Francisco; Newbury Street in Boston; and Oak Street and Michigan Avenue in Chicago. However, these well known areas aren’t the only places with multiple luxury retailers.

“There is the same clustering of retailers in those parts of the country where there are larger urban-type populations but perhaps no viable downtown areas, like Phipps Plaza in Atlanta and NorthPark in Dallas,” says Stephanou.

Other areas that have high-end centers include Bal Harbour Shops in Bal Harbor, Florida; The Americana in Manhasset, New York; and South Coast Plaza in Costa Mesa, California.

Recent Moves

Luxury retailers are always on the move, looking for new destinations to sell their products. However, for some widely recognized companies, this can be a challenge.

“Now, as Louis Vuitton has 30 or more stores, they really have to hunt for small clusters of wealthy people,” says Greenberg. The Greenberg Group has handled challenges like this by experimenting and trying out new strategies.

Some recent transactions that Greenberg has completed include the opening of several Lacoste stores. Lacoste already has a location on Rodeo Drive, but was looking to reach a different customer with the opening of a store in the Beverly Center. Also wanting to locate in smaller vacation markets, Lacoste chose King Street in Charleston for one of its stores. “The opening of a store in Charleston actually worked out better than we had planned,” says Greenberg. Another recent opening is Lalique on Rodeo Drive.

Robert K. Futterman and Associates is also busy handling its luxury retail clients. Cohen recently helped bring CH Carolina Herrera to South Coast Plaza in Costa Mesa, NorthPark Center in Dallas and The Forum Shops in Las Vegas. He worked with Agent Provocateur to open stores in Union Square and at The Forum Shops. Los Angeles-based Chrome Hearts is another client that recently opened locations in Waikiki, Hawaii, The Forum Shops and Paris.

Stephanou and Madison HGCD recently represented Coach and its flagship store on Rodeo Drive and Faconnable with its flagship at Rockefeller Center in New York. The company also brought Juicy Couture to San Francisco, and to Madison Avenue and Bleecker Street in New York. Other transactions the company has handled include Tiffany & Co. stores in Chevy Chase, Maryland, and Greenwich and Westport, Connecticut.

As evidenced in the growing number of high-end stores in all areas of the United States, luxury is becoming more and more accessible to all. This accessibility, along with a celebrity-driven culture, will continue to change the way luxury is marketed and perceived in the U.S.

©2006 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.