Seduction Booths

By Bill Saporito

Luxury brands haven't had it so good in the past three years. In the post-Internet-boom, post-9/11 world, consumer sensibilities have changed--permanently, some argue--and the economics have been dreadful. But for store designers, these are very good times indeed. Along the moneyed paths of Madison Avenue and Rue du Faubourg Saint-Honore, in the Ginza and on the Via Condotti, stonemasons, carpenters, electricians and designers are assembling new sales wagons for Ferragamo, Tod's, Louis Vuitton, Comme des Garcons, Jil Sander, Prada and other luxe labels. They are exquisite spaces, and they are more luxury priced than ever, now that the stores have commissioned such prizewinning architects as Rem Koolhaas and the Swiss team of Jacques Herzog and Pierre de Meuron.

The risks faced by these new stores have never been greater. Pressure is coming from the economy: rents on Manhattan's Fifth Avenue are hitting $1,200 per sq. ft. (your local supermarket probably pays about a hundredth of that). Moreover, such design-conscious chains as Target and Topshop have proved that they can deliver style smarts at a lower price. Indeed, luxury shoppers are now as likely to be found in Costco or Tesco as they are in Chanel. Those shoppers who traded up to luxury brands in the booming '90s fell away when the market did.

In some respects, the brilliant strategies that preserved luxury brands a decade ago have now rendered them somewhat inert at retail. "All the same streets have the same stores with the same window dressing," complained designer Paul Smith at an industry gathering late last year. That's why one of the hottest stores, Colette, in Paris, is a reseller, not a brand-name designer boutique. Colette is a store as editor, picking the hottest stuff from the hottest new designers and presenting it in a techno-style space. Given the brisk traffic in the store, it's no wonder the designer chose brushed aluminum and chrome for just about everything.

Tod's CEO, Diego Della Valle, has said much the same as Smith, and he's doing something about it. The company is developing unique stores in Tokyo and London and remodeling existing ones in New York City, Paris and Rome to differentiate them from outlets in the provinces. Tod's plans to vary both architecture and merchandise in these new stores so that global shoppers have something new to see as they travel to the world's major cities.

Similarity was soothing once upon a time, when such corporations as Gucci and LVMH (Moet Hennessy Louis Vuitton) began to rationalize the luxury-goods industry. The corporations bought up tarnished designer labels as if they were run-down English castles. They found themselves with a hodgepodge of real-estate holdings and stores. There was little consistency of design--and large corporations absolutely abhor inconsistency. Gucci and LVMH needed to establish firmly in the consumer's eye and mind exactly what each of their brands stood for. "Consolidation intensified the development of a spatial brand identity," says Michael Gabellini of Gabellini Associates, who created Jil Sander's light, white and limestone look in the '90s.

Then Prada blew the lid off the corporate image with Koolhaas' radical design for its $40 million boite in Manhattan's SoHo. The SoHo store jarred retailers, making some rethink the whole concept of what a store has to deliver. The Koolhaas touch includes a stadium-stepped, two-story arc display for shoes that integrates the shopper into the merchandise; technology is melded to the fitting rooms. Strictly speaking, it's not all that practical, but Koolhaas' design made the store a tourist stop. And that's part of the mission. "This spate of very cool, high-design boutiques is the offspring of promotion and the general hipness of design in recent years," says Ellen Ratchye-Foster, a trend analyst at Fallon Worldwide, an advertising agency. Hipness has a very high return on investment. Prada has reaped untold amounts of essentially free advertising from the SoHo store.

That may be why in Japan, which seems to be in a permanent recession, Herzog and De Meuron are completing a store for Prada that will be the company's second "epicenter." Herzog says the much anticipated 30,000-sq.-ft. faceted-glass building will combine the "material with the immaterial." "It's very experimental," he says. "Traditional luxury needs to be beautiful and shiny and nicely framed. That always plays a role. At the same time, there's the luxury of newness and innovation." On the immaterial side, the pair is using technology to create an interactive shopping experience.

Part of the mission of the new wave of stores is to kindle the brand even if the cash register doesn't always ring. "What we're trying to do now is immerse the consumer in activities and experiences that are emotionally based but relevant," says Michael Bills, president of RPA, a retail management-and-design consultancy in Columbus, Ohio. That's a long way from the exclusiveness of Ralph Lauren's classic New York City flagship in the former Rhinelander mansion and Calvin Klein's ultra-urban-cool outlet on Madison Avenue, both trendsetting statements in their day. It's an experience that has now become two way, says Bills, thanks to the reach of technology. Before cable, before TiVo, we were sit-back consumers, willing to watch what was put before us. Now we want to participate. We once wanted department stores like Bloomingdale's to give us a show. Now we want to be one of the actors. "The age of entertainment retailing is no longer what's really relevant," says Bills.

But wait just a darn minute. Wouldn't you trade a little interaction for a little selection? "Retail comes down to how you shelve and hang things. That's all you can do," laughs Michael Gabellini, head of Gabellini Associates, who designs stores for Giorgio Armani, Salvatore Ferragamo, Ultimo and Jil Sander.

Gabellini isn't being dismissive of himself or his colleagues. He is simply making the point that behind the glitz is a mission: put the customer in a set--a retail mise-en-scene, he calls it--that seduces him or her into buying. The store, he says, should be "a rational extension of the [fashion] designer." Gabellini spends inordinate amounts of time with the fashion folks, right down to the artisan, trying to understand the craft of each house. Then he puts on his bean-counter hat and assesses the ratio of clothing sales to accessories sales and factors in other businesslike components to incorporate into his designs. A designer label like Jil Sander, from which clients are more apt to buy head to toe, requires a different take from that of a shoe and accessory brand like Prada.

Gabellini's approach to specialization shows in the spaces he has designed. He has become an expert in the reuse of historic buildings. In London, for example, he converted the ultimate historical edifice, the three-century-old Royal Bank of Scotland on Savile Row, into a soaring yet soft retail space for Jil Sander. In the same vein, he created a modern shop in a 19th century building on 57th Street in New York City. In Milan he developed a 100,000-sq.-ft. emporium for Giorgio Armani, draped in soft blue hues, that complements the muted elegance that is the designer's trademark. "We're designing luxury retail spaces that don't feel commercial," he says. "They're being thought of as grand, modern homes."

The sweet spot may be somewhere in between--somewhere, for example, where Burberry is. Its new stores do a superb job of projecting and updating the brand's stuffy British heritage. Burberry's East 57th Street outlet in New York City is an ebony-and-white-oak fortress as well as a cool place to shop. Its made-to-order trench coats--ranging in price from $800 to $2,155--are offset by less expensive offerings such as swimsuits and belts.

That dichotomy of price and style has always been the industry's not so secret weapon. You make more money selling perfume than you do hawking pret-a-porter. Only 2.4% of the U.S. population has the annual household income of $200,000 that qualifies them as luxury shoppers. You could go broke catering to that lot. "The preponderance of luxury goods is not sold to that population," says Bills of RPA. "The majority are licensed goods sold in Topeka, Kansas, and places like it."

Growth-addicted luxury companies, particularly publicly traded ones, have no choice but to pursue the truly wealthy, the nearly wealthy and the not really wealthy. And as the retailers' struggle to differentiate their goods gets more difficult, the need for more differentiated stores will increase. For shopaholics, this is really good news. For architects, it's even better.