Walking into Levi’s flagship store in Regent Street, London is a bit like taking a stroll through John Hegarty’s head. The store is a 3-D representation of the Levi brand as developed by advertising agency Bartle Bogle Hegarty, complete with cowboy paraphernalia and Forties Americana.
The aim of the 10,000 sq ft store is not so much to provide an outlet for selling Levi’s products, but to create a walk-in advertisement for the Levi brand.
It is a testament to the heritage of the brand that has been built up through UK advertising campaigns. Levi’s marketing director Roy Edmondson says the company is aiming for the Regent Street store to break even, rather than to make a profit in its
“It is a live, 24-hour-a-day statement about the brand, as well as a marketing laboratory where we can invest time in trying out new things,” he says.
It is part of a growing trend by manufacturers to seek alternatives to media advertising as a way of building their profiles. They are looking to open stores where consumers can “see, feel, touch and hear” the brand’s values, and hopefully take a piece of that brand away with them, even if it is only a carrier bag and a handkerchief.
Ken Nisch of brand consultants Cato Consulting says: “In many markets, channels of communication have widened and it has become economically ineffective to put money into traditional media channels. By picking the right retail environment, brands can have a 3-D billboard to communicate directly with consumers.”
Nisch predicts Central London’s upmarket shopping thoroughfares, such as Regent Street and Bond Street, will soon go the way of Fifth Avenue in New York and Michigan Avenue in Chicago.
In the US, the development of concept stores is already advanced. Brands such as Coca-Cola, Levi-Strauss, Nike, Sony, Harley-Davidson, Disney, Warner Brothers and Motown have all opened stores in classy shopping areas.
The Nike Town store in Michigan Avenue, spread over eight floors, now claims to pull in more visitors than any of Chicago’s museums and other tourist attractions.
Coca-Cola is to open one of its “Showcase” stores in Las Vegas, including entertainment attractions, displays of Coca-Cola memorabilia and retail space for Coke merchandise.
Nike is now actively looking for a site in Central London to open a Nike Town department store, and has appointed property agent DTZ Debenham Thorpe to assist in the search.
It is looking for a site with up to 50,000 sq ft of sales space. One property agent says: “These stores are extremely impressive and very unusual. Nike will need the right building in a top location such as Regent Street or Bond Street.”
As awareness campaigns go, concept stores are expensive. The prerequisite is a sizeable chunk of property in a top location in a capital city. Added to this are the costs of design and fitting, along with all the multimedia gimmicks the manufacturer can muster.
But for brands used to spending tens of millions of dollars on international advertising campaigns, shelling out a few million for a brand outlet makes sense. Not only is a concept store a permanent reminder of the brand, it can also offset some of its costs through retail sales.
Boot and shoe manufacturer Dr Martens opened its first store in November last year, and found a top location on the Covent Garden Piazza. The company spent 3.5m buying the 14,000 sq ft building, and a further 2m in renovating and refitting it.
R Griggs Group, which owns the Dr Martens brand, plans to open Dr Martens Dept Stores in cities all over the world. Managing director Stephen Griggs says: “The Dept Store is a mecca for shoppers and tourists as well as for cult fans of our brand. Dr Martens is one of the best known brand names in the world. The store provides us with an opportunity to showcase our product range and to visualise what the brand stands for.”
In the UK, concept stores are in their infancy, and some observers say the companies have a lot to learn about how to operate them.
Yaron Meshoulan, strategy director of design consultancy 20/20, says the Levi’s store in Regent Street and the Dr Martens Dept Store in the Covent Garden Piazza fail as retailers. “As a brand proposition, these stores are one thing, but as retail outlets they don’t aid the customers’ understanding of the brand.”
He says the Dr Martens store has an excellent location, but has “very little ‘wow’ factor”. “The brand owners understand the market, but their customers are retailers rather than shoppers,” he says.
They fail in effectively putting forward the vision of the product buyer. He says: “The stores are fine if they are paid for out of the advertising budget, but there is not a lot of money going into the till.”
New pressures are mounting on manufacturers to turn to retailing. As retailers become more powerful, they exert ever greater control over brands, squeezing both the manufacturers’ margins and the facings products receive. Witness the battles that rage between supermarkets and grocery brands.
Manufacturers who decide to cut out the middleman and turn to retail have to build brand values into the retail design.
Daewoo, the Korean car manufacturer, has bypassed car dealers altogether by opening its own sales outlets on retail parks. These “Motor Shows” as the company calls them, take retail onto a new level of theatricality.
The Motor Shows opened with the launch of the Daewoo brand at the beginning of April, and display all nine models. According to Daewoo marketing director Patrick Farrell, they aim to embody the core values of the Daewoo brand – peace of mind and courtesy.
The outlets, ranging between 8,000 sq ft and 20,000 sq ft, feature coffee shops, children’s play areas and vast video displays on the walls, as well as interactive screens providing information about prices and car models.
One example of brands moving directly into retail lines in the development of factory outlet centres. These are mini-shopping centres where brand owners can sell excess stock and end-of-line merchandise at discount prices as a way of cleaning up their distribution systems.
The most recent opening was at Bicester village near Oxford last month, boasting brands such as Nike, Timberland and Ralph Lauren.
But there are problems in store for the brands if these outlets become too widespread – they threaten to damage their premium edge. One stockist of Ralph Lauren in Oxford has already threatened to discontinue selling the brand, since shoppers can buy the goods at a 30 per cent discount a short drive away.
Manufacturers are increasingly looking to become retailers. But this move poses problems for the brands, as they grapple with the new retailing skills they must develop.
Using stores as a form of advertising is one thing. But when it comes to selling direct to the shopper, the brands have a lot to learn.