Flagship stores help luxury brands “keep it real”

Despite the noise about online retailing, good old bricks and mortar stores still play a vital role in the luxury goods industry. Online sales rose 28% in 2013, but make up only 4.5% of sales, according to an article in Sphere Life. Indeed, luxury goods brands are opening a wave of ambitious new "flagship" stores across the world. Why is this?

1. Bringing the brand to life

The whole brand "world" is a key part of luxury goods branding. Here, the emotional "sizzle" linked to the lifestyle values of the brand is a key part of what people are paying a premium for. And whilst brands can show online footage of catwalk shows or craftsmen at work, flagship stores are much more effective at bringing to life luxury brands. "Stores allow consumers to experience the brand fully," as Katie Baron of Stylus magazine says.

For example, the new Prada men's store in Milan features a made-to-measure service. And Anya Hindmarch's store on Madison Avenue in New York has master craftsmen in a workshop on hand to personalise your handbag.

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2. Protecting brand authenticity

Counterfeit products are a huge problem for luxury brands. Some estimates suggest that online sales of counterfeit luxury goods are growing at 20%+ per year. In contrast, a flagship store enables a luxury brands to have total control of quality, both in terms of product and also presentation.

3. Enhancing prestige 

Luxury brands can benefit from having retail stores in prestigious shopping streets, such as Bond Street in London and Avenue Montaigne in Paris. Being alongside other luxury brands adds a sense of a brand being part of an elite luxury club, an effect you don't get online.

4. Boosting PR

Flagship stores can have a powerful booster effect on PR for a luxury brand. First, the stores can be a design statement in their own right, such as Burgerry's new Shanghai store, with its huge, constantly changing illuminated store front. "You could never generate such visual impact from a website," said one Burberry insider in the Sphere Life article. Second, a flagship store can be used as a stage for other PR events, such as the visit by Carla Delevinge to the same Burberry store in Shanghai.

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In conclusion, in today's digital world there is still an important role for physical stores that keep brand's real, alive and kicking.