Paris: The hidden opportunities in luxury retail

To receive the Vogue Business newsletter, sign up here. After a 15-year-long renovation project, LVMH-owned department store La Samaritaine will open its doors in Rue de Rivoli this summer. The location, in Paris’s 1st arrondissement, is one of luxury retail’s most promising, according to exclusive data from luxury and fashion data analytics firm IFDAQ. The analysis sought to understand the most valuable neighbourhoods in Paris for luxury retail real estate, as well as emerging areas brands are beginning to invest in. IFDAQ included factors like purchasing power, luxury store density and tourism flows. The report found that in Paris, luxury stores are currently clustered around the 8th and 9th arrondissements, home to well-known destinations like Avenue des Champs-Élysées (8th) and Galeries Lafayette (9th), but high demand for luxury categories is also present in the 1st, 2nd and 6th arrondissements, where store density is less saturated. New developments reflect a shift outside of the most popular districts. Currently, there are nearly 30 or so luxury projects underway, including those on Rue Saint-Honoré, another location that is benefiting from the shift from Avenue Montaigne. Despite hard lockdowns, the decline in the number of luxury boutique openings in Paris in 2020 was still optimistic, with only five less luxury store openings than 2019, according to data from Knight Frank. The forecast for 2021 is 27 new store openings. Many brands may be overlooking the opportunity to open stores in less crowded but still in-demand areas, says luxury fashion analyst Iva Mirbach, deputy CEO and head of research at IFDAQ, who led the study. The aftermath of Covid-19 and related lockdowns could force companies to reconsider plans for real estate. That’s playing out in other regions, like the US, where many high-value shoppers have relocated outside of city centres. Brands could follow suit in Paris, and look to build in areas that might not have made sense before, as evidenced by IFDAQ data. “The pandemic is forcing many companies to invest more in diversification, with brands looking beyond the more traditional locations,” adds Mirbach. “The 8th arrondissement is still very attractive for the luxury market, but the more traditional Avenue Montaigne is losing traction to the benefit of Avenue des Champs-Élysées,” says Antoine Salmon, head of retail leasing at Knight Frank. He cites the opening of the Dior flagship store on Avenue des Champs-Élysées in 2019, which acted as a catalyst for other brands such as Moncler, which opened in December 2020 and Saint Laurent, which will open a store on the Avenue soon. “Avenue des Champs-Élysées was mainly mass market, but now we have more and more luxury,” echoes Christian Nehme, head of retail for Savills France. Arrondissements: The breakdown The IFDAQ Brand Index considers brands in Luxury, its top segment, as haute couture and high jewellery brands; Premium are those that offer accessible luxury and ready-to-wear such as Chanel, Gucci and Prada; and Prestige as influential but affordable brands such as Ralph Lauren and Coach. Currently in the 8th district, brands such as Cartier, Bulgari and Chopard reign supreme in the Luxury categories; Christian Dior, Chanel and Louis Vuitton in the Premium category; and Max Mara, Emporio Armani and Kenzo in the Prestige category. In the Premium category, districts 8 and 9 are again saturated, and like the Luxury category, there is also high demand in 1st, 6th and 2nd districts, demonstrating the growing shift and popularity of places such as Rue Saint-Honoré (1st). In the Prestige category, district 8 and 9 again is saturated, but utilises only 17 per cent of demand. However, district 16 has 33 per cent of demand but is currently underserved. There are also key opportunities in the 7th and 15th districts. Other districts that appear to be ready for luxury stores according to the IFDAQ analysis are the 7th, the 15th and the 16th, but retail property experts say it’s too early for luxury to move there. Salmon of Knight Frank makes the example of Le Marais, a neighbourhood popular for shopping and cafes that has been on a repositioning path to luxury for years but still can’t be considered a true luxury destination for brands. “I don’t see how brands could consider expanding in other arrondissements before doing it into Le Marais, except for specific marketing operations or pop-up stores,” he says. Rather than open new locations, many brands are dedicating resources to improving existing stores. “The quality of these stores is how these brands can convey real luxury,” says architect Eric Carlson of Paris-based design agency Carbondale, who has worked on stores including the Louis Vuitton on Champs-Élysées. “Luxury is at the forefront of innovation, but these brands also want to have the sort of permanence and timelessness in architecture. A lot of them are looking to renovate their existing stores with better quality, sustainable materials.” Shifting luxury: Rue Saint-Honoré, Le Bon Marché and Le Marais “The classical luxury high-end [location] of Avenue Montaigne is losing a little bit of power for the benefit of Rue Saint-Honoré, which today is the trendy location,” says Nehme. The rue, between the 8th and 1st arrondissement, hosts brands like Versace, Acne Studios and Saint Laurent, which took the place of beloved concept store Colette after it shut its doors in 2017. With its varied offering and price points, the concept store played an important role in making Rue Saint-Honoré the trendy spot it is today. The store attracted a “melting pot” of consumers and a huge footfall, says Salmon, including Asian tourists, fashion-forward shoppers and young millennial consumers who would buy entry-level products or just enjoy the store atmosphere. “That’s probably missing today, but Saint-Honoré remains a priority destination for the majority of luxury brands,” he says, adding that the very core of the street is now West, around the Hotel Costes. Rue Saint-Honoré has become a popular home for luxury brands as it strikes the balance between accessible and high-end, says Carlson. Celine’s fragrance boutique, dedicated only to perfumes, opened on the street, expanding it to emerging categories. Another department store, LVMH-owned Le Bon Marché, is influencing luxury retail trends in the 6th arrondissement, which according to IFDAQ data shows high-demand for luxury. Salmon says the successful repositioning of the store has led some brands that had independent stores on the high-street, like Burberry and Cartier, to close them in order to focus their presence inside Le Bon Marché. Others have felt a gravitational pull to the area. In March, Hermès unveiled the renovation of its 14,000-square-foot flagship in Rue de Sèvres, 400 metres from Le Bon Marché. Other brands could follow, says Salmon, depending on the opportunities that they can find in the vicinity of Le Bon Marché. In the 3rd and 4th arrondissement, Le Marais is moving towards a higher-end positioning, but luxury brands have previously struggled to find their place in the historic district. In the last six years, brands like Gucci, Moncler and Valentino have all opened and closed stores in the district’s Rue des Archives. “They probably arrived too early,” says Salmon. The opening of Dover Street Parfums Market in the heart of Marais and a potential Chanel store opening in Rue Vieille du Temple (there is already a Chanel beauty) are likely to boost luxury presence in the district again. Other places of note include Rue de Rivoli, where luxury may have a bigger attraction with the opening of La Samaritaine. The Bourse de Commerce, a new museum opened on 22 May 2021, also has big potential to further attract luxury shoppers to the area. Nehme of Savills France says that brands are trying to readapt retail strategies to a post-Covid market and expects a period of creativity, with pop-ups and short-term leases taking the lead. “We don’t have the codes so it’s a testing period,” he says. Comments, questions or feedback? Email us at feedback@voguebusiness.com. 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