GUCCI: Creating Luxury Culture

Luxury brands rarely mention "returns" when talking about flagship stores. In their view, store value is not just a contribution to sales.

In the bustling Ginza Business District of Tokyo, the road people look up at the giant bronze screen on Sony Building, intoxicated with the above virtual image - a glittering building across the street.

When Gucci flagship store opened a while ago, it not only attracted consumers' attention, but also attracted the attention of the business community.

The dazzling store is decorated with gorgeous mahogany, which includes three handbags, two jewellery department, men's wear and women's wear department, a cafe providing Gucci chocolate, an art gallery and an activity hall.

Gucci did not disclose the cost of the store, but it was located in one of the most expensive commercial locations in the world, the Japan Real Estate Institute, which released a report in 2004 that the land price of Ginza was 12753 US dollars per square foot.

The store that is comparable to Gucci's store is the Prada store located in Castle Peak District, which was built in 2003 and costs about 80 million dollars.

However, although Ginza flagship store is one of Gucci's biggest investments in retail stores, its real significance lies in the fact that luxury retailers are beginning to adopt a department store strategy.

This is the latest stage in the evolution of retail mode, said Tao Xin, a luxury analyst at Goldman Sachs, an investment bank.

"15 years ago, luxury brands were withdrawn from the third party retail outlets such as department stores and other brands, and moved to private stores.

Then they began building eye catching buildings for flagship stores.

Today, they are looking at adding new elements to the shopping experience and increasing the brand connotation by creating the modern flavor of the brand.

The necessity and risk of creating "culture"

"We think this is the second stage of globalization," said Pino, chief executive officer of Gucci group, Paris spring.

At first, all stores looked the same; now they are made according to the local market. "

Earlier, the London consulting firm's future laboratory conducted a study of American Express, and concluded that "eager experience" is the primary factor for luxury consumers to be loyal to a brand.

This is evident in the changing appearance of retail stores.

From Prada New York store (with its own cultural performance space) to Louis Weedon's flagship store in Champs Elysees, Paris (with art galleries and bookstores), luxury brands are increasingly betting large sums of money on the belief that only products are not enough.

Mark Lee, chief executive of Gucci, said: "the original plan has been to use two storeys as retail outlets, plus several office offices."

But after taking over the company in 2005, he decided to maximize the retail space.

"It seems to be a better investment."

At the same time, the retail store's management strategy has also changed, while paying attention to income, it also pays attention to brand communication.

For example, Louis Weedon allowed the art gallery of the Champs Elysees shop to open on Sunday, and the company thought it added a cultural element to the store.

Li said that the vertical structure of Gucci stores enabled them to put coffee shops and promenade high and encourage customers to go up through shops.

The art gallery and cafe have another attraction: just as a new fashion series can boost retail sales, an art exhibition or a new set of Gucci chocolates may also have the same effect.

Department stores are accustomed to providing restaurants and cafes in the store, and also equipped with Borders and other high-end stores and Colette popular stores.

And the business model of luxury brands is also the same: the longer you leave potential customers in the store, the greater the chance that they will spend money there.

Hugh Devlin, a partner in Withers, a law firm specializing in luxury goods, said, "suppose you go shopping with friends, they want to go to the Gucci shop for coffee, even if you may not go, but because you are with them, you go."

In Japan, it is particularly important to encourage consumers to develop this habit.

Over the past decade, although Japan has always been a crucial market for luxury brands, the taste of consumers in the country has recently shown signs of change.

"Japanese consumers seem to be away from luxury brands that offer a full range of outfits.

They may even think that it is cool to wear something that is not very expensive.

Dawson said.

Li said that Japan is the highest retail sales and retail market in Gucci.

In 2005, the market accounted for more than 1/5 of Gucci's global income.

Therefore, the company must try to extend people's stay in the shop.

But this strategy seems to hide a risk faced by luxury brands: the loss of the privileged status of the elite suppliers.

Dawson says that since a luxury brand has opened a large store that attracts all visitors, it has also created a "Great Hall" for a wide audience.

Broadly speaking, a broad audience is not exclusive.

As a high-end brand, Gucci, of course, has been trying to dispel the feeling that it puts high-end leather bags next to the store entrance and puts the lower price canvas bags on the two floor.

Customers can make use of coin pallets, shoe handles and handbag sticks when shopping.

When displaying the handbags, the leather mats are spread out, while the dressing rooms are equipped with long Gucci letters.

Buying behavior is called "sales ceremony" here.

In Li's view, one of the main purposes of all this is to show the most luxurious aspect of Gucci.