How Paris and luxury retail complement one another
The French luxury retail market has a formidable reputation, bringing together renowned local designers and international high-end brands on the streets of its big cities.
France, once again, had the highest global sales of luxury goods in 2017, according to a study from Deloitte, and these were largely driven by its fashion-forward capital.
Indeed, whether it’s through its long history of luxury retail, the craftmanship in its ateliers or the promise of authentic goods rather than the fake goods rife in many other countries, Paris is a favorite with well-heeled shoppers – and in particular with growing numbers of affluent Asian tourists.
“Paris will always benefit from the emotional attachment of visitors,” says Véronique Nocquet, director, retail agency, JLL France. “Many people think of the city as the cradle of haute couture and fashion, making it synonymous with elegance and sophistication.”
New targets in sight
Despite its enduring popularity, Paris’ luxury retail market is not resting on its laurels. Its big designer brands now have ambitious plans for the future.
“The luxury sector is looking to expand its offering and Millennials, who are in search of well-known brands and quality products, are now their target audience,” says Nocquet. “The luxury brands are doing more to attract their younger customers by better promoting more accessible products such as cosmetics and perfumes.”
Their real estate choices are therefore shifting accordingly. Chanel, for example, opened a beauty boutique in the heart of the Marais in 2015, joining other high-end brands that are opening in new stores in areas outside of their traditional heartlands.
In the last decade, Hermès has relocated to the St Germain quarter, converting an Art Deco swimming pool built in 1935 into a store. More recently, Moncler and Givenchy, as well as Italian brands, Fendi, Gucci and Valentino, have all opened menswear stores in the Marais.
“We’re seeing disruption to the traditional locations of the luxury retail market,” says Nocquet. “Although the luxury brands have been long-time residents of the grand avenues of the capital such as the Champs Élysées and Avenue Montaigne, they’re finding a new lease of life in certain markets which are successfully bringing together luxury and mass market brands.”
The arrival of luxury brands is doing more than just changing the look and feel of these new locations. Growing demand for units combined with a limited supply is increasing retail rents, with price per square meter now around €5,000 to €6,000 a year, according to Nocquet.
Yet despite branching out into new areas, luxury brands, who often have more than a single store in Paris, are still keeping a presence in more traditional luxury areas.
Chanel, for example, has snapped up several premises around its original home on Rue Cambon during the last decade, while Balenciaga and Dior recently opened new stores on Avenue Montaigne. Furthermore, Louis Vuitton has a new 1,500 square meter flagship store at Place Vendôme.
In these locations too, rents are rising. “Rental values may reach more than €23,000 per square meter along the Champs Élysées,” says Nocquet.
Rethinking use of space
Rising rents across the city are leading even high-end retailers to think carefully about how they can get the most from their space. In 2020, Chanel, for example will open a fashion factory, merging 15 of its workshops in a single location between the 19th arrondissement and Aubervilliers en Seine-Saint-Denis.
“These fashion houses need spaces with lower rents for the behind-the-scenes work to ensure they can stay at the top of their game,” says Nocquet. “The aim is to create high-quality creative laboratories by bringing together skilled milliners, embroiderers and even shoemakers.”
Luxury retail also faces a further challenge through the growth of e-commerce with research consultancy McKinsey predicting that a fifth of luxury sales will be online by 2025.
“Customers who regularly buy from luxury retailers still like going in-store to see how the products look and feel in real-life and experience the ambiance the brands create through elegant interior design,” says Nocquet. “But with the growing use of mobile devices by Millennials, the luxury sector could see similar changes to mass market fashion retailers.”
While luxury retailers figure out new omnichannel strategies to cater for different generations of affluent shoppers in an increasingly digital world, they can at least rest assured that France will remain synonymous with luxury shopping for many years to come.