This post was originally published on voguebusiness.com
Post-pandemic, it seems people want to spend less time in major city centres. What does that mean for high-end retail?
Article By: George Arnett | Vogue Business
While the Western world waits to see what the long-term impact of the pandemic will be on working patterns, wealthy consumers across Europe and the US are already on the move.
A significant number of office workers are already gambling that residences further out of towns will suit them better once normality resumes. And the super-rich in Europe and the US are seeking out second homes well suited for enjoying much more than a weekend away.
Real estate agents are surprised at the diversity of places their clients are now happy to consider. Secondary cities such as Vancouver, Edinburgh and Amsterdam are benefiting from a boom in luxury house buying, according to the Knight Frank Prime International Residential Index.
“These are big investments people are making. They’re changing their lifestyles,” says Philip A. White Jr., president and CEO of Sotheby’s International Realty. He adds that in the US the list of hot locations “extends way beyond the Hamptons”, including Aspen, where sales volumes have more than doubled, and the Rocky Mountains. In Florida, buyers are picking up residences in Miami and Palm Beach as always, but also in lesser known places like Destin, where Sotheby’s reported $1.6 billion in sales volume over 2020.
Within megacities like New York and London, real estate agents say the focus of buyers is on urban neighbourhoods where space is more readily accessible. The move out of the centre is being boosted by a wave of new urban planning focused on the concept of “15-minute cities”, where all daily urban necessities and amenities are within 15 minutes on foot or by bike for residents.
The demands of work or attractions of the city centre may pull some consumers back into the centre, but it is clear that a new array of bricks-and-mortar opportunities are opening up in new parts of towns for the right high-end brands. “These are customers coming out of a very expensive urban lifestyle, who have disposable income, and they’re trying to get acclimated, but they have urban sensibilities and tastes,” says Jessica Curtis SVP, restaurant practice leader — emerging concepts at realtor CBRE. Curtis reports that some Manhattan suburbs, such as Westchester and Fairfield County, are seeing residential sales volume increases of between 75 and 120 per cent a year. “And we’re seeing the retailers and restaurants follow them out of the city.”
The introduction of luxury or premium brands into these up-and-coming neighbourhoods often requires an area-specific approach. “The cookie cutter retail of the past that goes ‘there’s people here with money, and there’s footfall — let’s just open up the store that we’ve got everywhere else’ is not going to work and actually would be detrimental to brand value,” says Ross Bailey, CEO and founder of Appear Here, known as the Airbnb for retail, helping retailers to find short-term leases via its online platform (clients have included Chanel, Hermès, Nike and Supreme).
Demand for leases in local neighbourhoods has increased by 56 per cent on Appear Here by comparison with pre-pandemic levels, while interest in city centres has declined by 63 per cent over the same period. Bailey stresses the importance of focusing on retail concepts that are authentic to the demographics and needs of the area, a perspective that tends to favour independent brands over multinationals. “There’s an opportunity for bigger brands to do something in those areas for a moment of time or permanently, but they should be questioning what can they do that also contributes?”
Emily Gordon-Smith, director of consumer product at trends research firm Stylus, agrees that these new movements of the affluent represent a great opportunity for independent brands and independent luxury boutiques in the first instance. Multi-brand sellers in these locales will have the resources to curate selections particularly relevant to their residents and will also benefit from the perceived cachet of being local businesses. “I think there’s more opportunity for personalisation,” says Gordon-Smith. “And that’s quite appealing.”
High-profile New York City restaurants such as Il Buco and Carbone chose to follow their customers out to the Hamptons last summer, suggesting that new wealthy suburbanites don’t want to forsake what they left behind in the city. Sotheby’s International Realty’s White says restaurants and brands have been moving into other popular holiday destinations, such as Palm Beach in Florida, where some consumers are contemplating more permanent residence.
Any brand with a retail presence in a city centre is advised to consider carefully the relationship between any new locations and those in the centre. Furthermore, a true multi-channel approach considers how physical and online retail offerings inter-relate in the mindsets of consumers just arrived in a new part of town.
Considering the UK market, footfall in outer London and market towns fared considerably better during 2020 than city-centre locations dependent on public transport. Some residents will most certainly travel into central districts to shop recreationally again, says Christopher Choa, executive director of urban strategy firm Outcomist. But, he notes, the experience of shopping locally “will continue to support some of those alternatives”.
The sense among experts is that retail will be boosted in locations with established retail networks, such as secondary cities and affluent outer city districts. Appear Here’s Bailey is convinced it’s a big gap waiting to be filled. “I think if you’re walking down that street in the place that you love, which you’ve chosen to be home, there’s a huge opportunity to build brand loyalty and a massive connection.”