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Megastore Backlash: Designer Units Strive For Cozier, Local Style

Gone are the days when luxury brands raced to open mega-flagships. Now, they’re bringing novel themes to retail design to burnish their images.

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Balenciaga's raw art space.

Photo By Dan D'Errico

McQueen's floating garments.

Photo By Robert Mitra

Burberry’s truly British touches.

Photo By Talaya Centeno

NEW YORK — In these tough times, retailers are desperate to attract increasingly blasé consumers with everything from unique store design to products. And they’re running smack into Wall Street as a result.

Gone are the days when the race was on for brands to open mega-flagships worldwide, so that the string of cities would look impressive on their shopping bags. Given the sluggish economy, made even worse by the war in Iraq, the mere word "flagship" is taboo in many financial quarters these days and designers are focusing on smaller, intimate stores that are adapted for every location.

More and more, luxury companies and their architects are bringing novel themes to retail design in an effort to define their brands and burnish their maverick images. Over the last year, shoppers have been lured into Prada’s study of Chinese culture, Jean Paul Gaultier’s maharajah chamber, Alexander McQueen’s futuristic space odyssey, Nicolas Ghesquière’s airy art space and Stella McCartney’s edgy, fairy-tale boudoir. And that’s just in New York.

Designers’ new strategy for their stores marks a sharp departure from the cookie-cutter blueprints that companies have espoused for years. “I think it’s a cultural reaction to globalization,” said Trey Laird, president and executive creative director of New York-based ad agency Laird + Partners. “Maybe five, six, seven years ago, it seemed like there was a desire for this unified image all around the globe. But now that that has become so predominant, there’s sort of a reaction against it.”

There are other changes behind this trend, as well. Megastores, once the be-all-end-all symbol of a designer’s status, have come to be perceived as financial liabilities by Wall Street. Given that they’re often situated on well-trafficked streets that demand exorbitant rents, in recent years analysts have shied away from them because of their lack of immediate profitability.

Catherine Guinee, a fixed-income analyst with Moody’s Investors Service, noted that flagships have never been seen as a source of profits. “Just like couture is more of a loss leader, but it sets the tone for a brand, the same is true for flagships. It’s hoped that [a flagship] would at least cover its costs, but in most cases it doesn’t,” she said.
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