Snapshot from a Global Summit – Department Store Focus 2009 Moscow
- May 05, 2009
Attending events over the last decade organized by the IGDS – Intercontinental Group of Department Stores, the Zurich based organization of more than 30 flagship stores worldwide, has always been an illuminating global snapshot of the pulse of leading retailers across the globe. I’ve met with them in Dusseldorf, Hong Kong, London, and Manila. The summit last week in Moscow at the historic GUM department store (shopping center) adjacent to Red Square included presentations by 14 leading CEOs.
Through the lens of the financial crisis and falling revenues, forward thinking leaders at the summit were focused on two important issues – engaging their customers emotionally, and the forces of online shopping. Understanding the impact of the digital universe on shopping behavior is considered critical for success and survival.
One of the most compelling talks was Andy Rubin, the CEO of Pentland Brands – UK, “Chief Emotional Officer”, who focused on the importance of truly engaging the consumer as the key to success. His take on major trends:
Economy – the downturn is not over, and may go on for years – plan for worse.
Polarization – growth in value and steady in luxury – most challenges are in the middle of the market.
Internet Wave 3 – the new internet is mobile, unlimited, free, and accessible from anywhere. New websites take advantage of this new kind of mobility and access, such as asos.com, for younger consumer, or net-a-porter.com that offers premium service, free delivery anywhere, free returns, etc. (I would add sites like closetcouture.com and gilt.com as new models in fashion)
Sustainability – environmental responsibility and ethical sourcing are forces of change that will fundamentally change retailers on a global scale.
Mr. Rubin believes that brands love flagships. Why?
Flagships tell stories
If consumers identify with the story they identify with the product. Mr Rubin’s brand stories – Speedo on Michael Phelps winning 8 gold medals, Rene Lacoste creating the crocodile legend, Berghaus with Leo Houlding’s base jumping para-alpinist adventures. His flagship stores allow him to fully tell the story through images, video, events, and activities.
Flagships are brand laboratories
Flagships are labs for new product development and testing, for bold cross-merchandising. A flagship allows for consumer insight – regular thorough feedback from consumers is essential. A flagship is a place to build customer service – qualified product experts and service are critical. It is particularly important in specialized gear stores – choosing a wrong sized suit in a Berghaus store can cost you a life. New brand propositions, brand educations, ethical messages, community connections, media venues, event stages, parties, celebrities – flagships are entertainment venues.
Other talks included Mr. Alberto Alessi, on Italian design factories and the market niche that they occupy – not quite mass production, very high quality design and manufacturing, producing ‘art multiples’, and the importance of poetic and spiritual value of things in addition to functional value (relative to the history of craft).
Mr. Allan Namchaisiri, President of ZEN lifestyle store in Thailand. ZEN is an 8 story hybrid containing a wide range – from very well organized and top of the line shopping experience, to cafes, restaurants, to spas, medical offices, childcare, clubs, movies. On Friday, while presenting at the conference, he was missing a DJ night that sold 4000 tickets to the club at the top of ZEN store… he believes that a successful store is a place where people come for everything – entertainment, socializing, medical treatment, good music, food, and, of course, shopping!
In general many presenters talked about the importance of entertainment and events (cultural, parties, special causes) taking place in the flagship stores as a way of emotionally engaging the consumers and building customer support. Flagship stores more and more become a stage for brand, showing a brand’s history and personality for customers to experience.
Mr. Michael Gould, CEO of Bloomingdales talked about identity as primary importance for their multiplying stores. The use of characteristic black trim and black & white floor patterns are critical to the identity of the stores in their various locations and sizes. It allows a distinctive connection between a much smaller downtown Soho store and a much larger 59th street location. Bloomingdales also is making a shift toward more upscale merchandise.
Mr. Teymuraz Guguberidze, CEO of GUM thinks differently – he believes that mixing the upscale brands such as Chanel or Hermes with more budget brands such as Zara or Sasch is a key to the most important and biggest luxury – freedom – freedom of choice (today you may want to go to Chanel and tomorrow to Zara).
Given the shopping activity at GUM in the morning of a work day – he seems to have it right…
Summit report contributions by Anya Bokov, Director – Moscow Office, NBBJ