Luxury Brand Distribution: Working with Landlords

How, exactly, did you approach that relationship with the landlords?

Unfortunately, it is something that is specific to each brand and confidential to each brand, so I cannot go into the details of it. But I can tell you the general principle. Obviously, if you manage a department store, if you manage a shopping mall, what are you trying to achieve? You’re trying to achieve the highest possible rent, because you want return on your square footage, which is fixed; you cannot extend it. Also, you want to position yourself versus your competition. Most cities, nowadays, every department store and shopping mall has two to three competitors. There is usually one leader, sometimes very clear and sometimes not. If you take Beijing, in China, for example, it is SKP. If you take Shanghai, it’s Plaza 66, which is usually recognized as leader, with the IFC close behind. If you look at Tokyo, you have, obviously, Isetan, which is a major player. So the strategy could be, very well, to interact with those first, to try to get a foothold into those very important figureheads, in terms of distribution, for the simple reason that, being there, will make you exist on the radar of all your other competitors. Just entering the Isetan will wake up Takashimaya and Hankyu and so on, because they look at them, all the time. So that could be one strategy.

Again, the strategy needs to match your brand strategy. Or you can say, okay, I cannot get access to the location I want, in SKP. I cannot get the location I want, in Isetan. So I’m going to go for the nearest competitor and I’m going to open a super-prime space. I’m going to tell them, for example, I’m a very nice, niche brand and I’m going to work with you, if you give me that floor space that I need. Ground floor, next to the entrance. If you’re convincing enough, if your product is good enough, if your brand story is good enough, some of these managers will give you that space, because they need, obviously, to try to make a difference with the number one. Everybody is trying to be number one, in their own market, including the department stores and shopping malls.

It’s trying to build a relationship; it’s trying to build a story that works for them. Over the years, many brands have developed different strategies. Some are well-known and now they are very popular, such as partnership. You have a very strong brand, but yet, you try to capture more audience by partnering with another brand. The best example, the most famous example and one of the most successful examples is Louis Vuitton with Supreme. That was one of the first ones. Hats off to Louis Vuitton management, for taking on the risk of exposing the brand to such aspects. But it helped them to change the brand image, to some customers and, also, with the distribution networks. Some other brands have applied the same technique and have done some partnerships, RIMOWA being one them. This has really been a key aspect of the negotiation with key distribution partners. By bringing an exciting product, which is already a good thing to bring to the table, but by bringing a limited edition, with another exciting brand, that’s going to huge demand, huge queues. It’s another level of excitement that is really helping these managers, these landlords, to make a difference.

That’s what they want. They want to make a difference; they want to stand out from the crowd, like any maison wants to do.