Flagship stores: a strategic approach to brand management

16.02.14

Why flagship?

As the brightest diamond in a retailer's crown, the flagship store has a key role to play in the company's brand strategy.  Normally the biggest, most impressive store in the retail chain, it is, nonetheless, not simply about being a larger, better looking store.

The flagship store is a showcase for the brand.  Unlike other stores within the chain, the purpose of a flagship is not to generate a profit.   Instead, it has a particular job to do in drawing attention to the brand, broadcasting its brand status and marking itself out against its competitors.  A flagship store says clearly, "This is who we are; this is what we're about".  It's big, bold, beautiful - and full of itself.  Everything it does, it does to get noticed. 

Flagship shopping itself is less about ‘shopping for purpose', more about shopping for leisure and pleasure.  The flagship store provides an opportunity for customers to experience the brand in an innovative and memorable way, so raising brand awareness on a truly personal level.

The flagship store is also the most flexible store in the chain.  As well as making a strong brand statement, it may be used to test the market, re-position the brand, trial new products, assess retail store design concepts or act as host venue for a range of PR activities.

Key constituents of a flagship store

But how does one define a flagship store?  A simple definition does not fully convey the creativity and vision surrounding a flagship.  However, we have identified key elements common across the world's most successful flagships:

1.     Usually the largest store in a retailer's chain
2.     Situated in a prestigious location or high footfall area
3.     Stocks the chain's complete range of merchandise
4.     Experimental, inspirational or opulent - often all three
5.     World class design execution and attention to detail
6.     Visual and experiential embodiment of the brand

It wouldn't be out of place here to add a 7th point: ‘ticks every box'.  Flagship stores generally have the best of everything.  Store design and layout is luxuriously spacious, the best products are on display - some unique to the flagship, merchandising is innovative with stock maintained at optimum levels, window display is stunning, lighting is perfect,  the store is spotlessly clean and meticulously tidy, and customer service is second to none.   

Choosing the right location is essential.  The first decision to consider is whether to open your flagship in a prime, affluent catchment area, such as Brompton Road in Knightsbridge or in an area with high footfall such as Westfield Shopping Centre in Stratford, East London.  In certain prestigious locations, a whole area may be considered ‘flagship', such as or the ‘Triangle d'Or' in Paris, home to a multitude of flagship stores from luxury retailers such as Guerlain, Calvin Klein, Yves Saint Laurent and S.F.Dupont. 

Your decision concerning the location of your flagship will ultimately be led by a combination of brand identity, financial considerations and brand strategy objectives.  For example, for a top end global fashion retailer to achieve credibility, it must almost certainly have a store in one of fashion's exclusive world shopping capitals, such as Madison Avenue in New York, Faubourg Saint Honoré in Paris, Via Montenapoleone in Milan or Bond Street in London.  Not only does this signal their status to the rest of the world, but the area itself draws in the tourists and provides unrivalled access to the world's fashion buyers.

In comparison, Leicester Square, a high footfall area and one of London's tourist hot spots, is perfect for M&M's fun brand.  M&M's 35,000 square foot, four storey flagship is at home in this ‘buzzy' area, matching the vibrancy of its surroundings with a colourful, energetic retail environment, complete with 1963 red double-decker bus.

The building chosen to house your flagship also plays a part.  If you want to convey a sense of heritage or say something specific about your brand, choosing a historic building can be a clever move.  In Russia, retailers clamour for space in the GUM shopping centre in Moscow's Red Square, a late 19th century architectural design masterpiece with flagships from brands such as Christian Dior, Sony and Hugo Boss; while Louis Vuitton reinforces its quality image with a jaw-droppingly beautiful store in Via dei Condotti, Rome, situated in what was once Rome's first cinema.  Patagonia, the outdoor clothing designer, chooses to position all its stores in historic buildings "to create a living, breathing version of the brand" (Robert Cohen, Patagonia's Vice President of Global Retail).

Flagship stores: the emotional element

A stunning retail store design will immediately gain attention and is an essential component of a flagship store, but it is in the combined application of both aesthetics and experiential elements where the most successful flagships stand out. 

Providing something unique, something that enables customers to interact with the brand on a multi-sensory level, generates an emotional response and attracts attention.  The best flagships offer customers the opportunity to be inspired, to have fun, to be entertained, to be awe-struck, to free their imaginations, to be pampered, to socialise or to relax.  In short, they provide the best, most memorable shopping experience - ever.

And this is what generates publicity.   The pinnacle of success for any flagship is to become both a national and international tourist destination.  Publicity can make this happen.

Starbucks flagship store in Amsterdam, ‘The Bank', starts from a good place (it is, after all, a social environment) and is impressive.  Situated in a historic bank vault, its contemporary design reflects both Dutch culture and the building's banking heritage.  Walls are decorated using bicycle inner tubes and antique Delft tiles, the ceiling is covered with pieces of recycled Dutch oak and the material used for the floor is the original concrete and 1920s marble.  Starbucks pitches the store as a ‘coffee laboratory', experimenting with new brewing methods and trialling coffee not available anywhere else on the continent.  It has its own in-store bakery (which tweets the arrival of warm cookies!) and provides a venue for cultural activities such as poetry readings and music.

Other particular examples of flagship store elements which inspire an emotional response include:

  • Timberland's huge, eco video wall at Westfield Shopping Centre in Stratford, London.
  • Burberry's Retail Theatre, installed in its flagship stores worldwide, which broadcasts fashion shows from its London-based catwalk.
  • The interactive, virtual hockey game at the Olympics-themed MegaFon store in Moscow.
  • The 3D Foot Mapping and Gait Analysis facilities/services at the ASICS store in Argyll Street, London.
  • Everything about Louis Vuitton's cinema-inspired Rome store, which includes a 19 seat cinema, a library room dedicated to Italian film and a sweeping staircase, reminiscent of the golden area of cinema and which resembles a strip of film.
  • The ‘chill out zone' in Goldsmiths Boutique concept at Westfield Stratford, where customers can browse products on in-store iPads.
  • The brand fragrance circulating throughout the Turkcell store in Istanbul.
  • The art gallery in the Channel store, Avenue Montaigne, Paris.
  • The range of events held at Selfridges in London including poetry workshops, book signings, make-up lessons, wine tasting, film screenings, fashion shows and charity events.

Flagship stores: the risks

While flagship stores can have a tremendously positive impact on a brand, acting as a kind of status symbol and raising its profile, the introduction of a flagship store is not without risk. 

Everything about a flagship store is more expensive - the store design and build, property rental and day to day running costs.  Notably, flagships experience greater levels of wear and tear than other stores due to high footfall and require more regular re-design and refurbishment to remain fresh and innovative.  Assuming that most flagships are not self-supporting (although some flagships do make a profit) the financial implications are even greater.

A flagship store can also cause confusion if the look and feel of the store is very different to others within the chain, leading to alienation of customers who may be unable to engage with, or relate to, the new flagship identity.  Conversely, customers can experience feelings of disappointment or frustration with other stores in the retail chain when they do not meet the same standards as the flagship.

And occasionally a flagship store simply doesn't work.  While the store design may be absolutely stunning, it may not be fully functional - a case of style over substance, you might say.  Examples of this may be seen in poor traffic flow through store, restricted visibility due to architectural blind spots, or alienation of customers on the threshold due to confusion around the retail offering or lack of clarity around store navigation.

The role of flagships as a strategy for international market entry

Brands seeking to move into a country for the first time often introduce the brand initially by way of a flagship.  A flagship enables the brand to make a grand entry, to stimulate interest and assess the country's response.  It makes an immediate statement about the status of the brand while suggesting the brand's confidence in, and commitment to, the country. 

The flagship also acts as a hub for the development of relationships with customers, distributors, suppliers, landlords, franchise partners and investors and attracts immediate media attention.  For those brands looking to establish relationships with wholesale stockists and distributors, the publicity generated by the flagship can seal contracts, so generating valuable income.

Brands choosing to enter a country with a flagship store include: Zara in Australia and South Africa; H&M in Japan, South Korea and Hong Kong; and Hermès in India.   Jimmy Choo also entered its first directly operated store in Switzerland as a flagship.

In recent years, following the growth in national wealth and the increase in international visitors, Shanghai and Moscow have emerged as key flagship locations. 

M&S moved into China in 2008 with a flagship store in Shanghai.  Since then, the company has opened a further three stores in Shanghai (not flagship) with a fourth planned for 2013 - Shanghai forms a strong part of the company's international strategy.  Harman chose to open its very first flagship store in Shanghai while Gap began its ‘official' move into China with a flagship store in the area (its first store is in Beijing).  In Russia, McDonalds, Miss Sixty and Ralph Lauren all entered the market with flagship stores in Moscow.

Flagships: their future in retail

For many of the biggest names in retail, flagship stores are an essential part of their brand strategy.  While flagships may not necessarily achieve financial returns conducive to their size and status, the commercial advantage they offer in terms of brand awareness, market positioning and customer engagement can provide significant long term value.

The confidence in flagship stores remains strong.  House of Fraser and Top Shop upgraded their original stores in Sheffield's Meadowhall Shopping Centre to flagships, while Burberry has signalled its commitment to the flagship concept by implementing a ‘flagship cluster strategy' to support its global retail development.  Its focus is on key, high profile flagship locations around the world such as London, where the company already has four flagship stores in Bond Street, Knightsbridge, Convent Garden (with its first Brit store in the UK) and Regent Street.

And as exciting new retail markets emerge and develop across the world, the interest in flagships will continue.  Ensuring the success of your flagship store means minimising potential risks, choosing a location and venue congruent with your brand strategy, creating a fully functional store design concept that maximises engagement with the brand and, if using the flagship as an entry to market, adapting the offering to meet the unique requirements of that particular market.  Doing your homework first is essential.  Louis Vuitton is renowned for the level of research it carries out before implementing any new flagship store.  With their 11th flagship store due to open in China and over 100 flagship stores worldwide, they clearly understand how to make the concept work.

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