Why luxury brands are a must for every retail space
Category Commercial and Industrial News
There are certain things that every shopping centre should have. For starters, they need an anchor tenant (think SPAR, Shoprite, Pick n Pay or similar). Depending on the size of the centre, the tenant mix should also include smaller tenants whose product offerings work together to meet as many shopping needs as possible. While luxury brands are not traditionally seen as must-haves, they do especially well in South Africa and will add a certain kind of clientele to your foot traffic. 3Cube Property Solutions investigates the benefits that luxury brands can bring to a shopping centre.
Tightening belts around the globe are doing little to lessen consumers' desire to own luxury merchandise. In a discussion about the US market, an article by Forbes, published in September 2023, shares that the U.S. saw luxury sales reach $70 billion last year, a figure that was up approximately 9% from 2022. Brands falling under the world's leading luxury conglomerate, LVMH, opened 108 stores in the US in that year. LVMH incorporates brands such as Louis Vuitton and Dior.
Why luxury brands thrive even amid financial hardship
The desire for luxury goods is tied to the basic human instinct to aspire to bigger and better things. The journey from imagining and browsing to buying and owning is a gratifying one and being seen to own a status symbol can elevate one's social standing and even self-confidence. An article published by BizCommunity makes the point that in some South African centres, only approximately 20% of retail space is let by luxury brands, but that these retailers contribute around 40% of the centre's total turnover.
Technology and the evolution of online shopping have also played a role in the ongoing success of luxury brands. People who aspire to own luxury products interact with these brands online and tend to transition from browsers to buyers, even if they wait for a sale or Black Friday to do so.
Unique shopping experiences that lead to increased foot traffic
Luxury brands often offer unique and immersive shopping experiences. This can serve as a draw card for customers and differentiate a particular shopping centre from its competitors. Such retailers also attract tourists and shoppers from other regions who are specifically seeking out luxury shopping experiences. A great example to consider is Sandton City's Diamond Walk, which is home to an array of luxury brands from Gucci and Prada to Giorgio Armani and Patek Philippe. This shopping centre is now a tourist attraction in its own right. The Western Cape's V&A Waterfront is known as one of Africa's most popular tourist destinations, thanks in no small part to the luxury shopping experience on offer.
The prestige of a luxury brand overflows into its surroundings
Centres where luxury brands can be found offer prestige and this prestige in turn leads to higher tenancy rentals and lower commercial property vacancies. In a nutshell, other brands want to gain the benefits that proximity to a luxury brand provides. South Africa's three biggest residential centres (Cape Town, Gauteng and KwaZulu-Natal) are our frontrunners in luxury retail, as they are home to widely respected shopping centres where luxury brands are well represented. Cape Town's V&A Waterfront, Gauteng's Sandton City and Kwazulu-Natal's Oceans Mall offer some of the country's best luxury brand representation. With that said, getting luxury brand representation into smaller malls and new areas will uplift the area and lead to significant returns on investment for retail property owners.
3Cube Property Solutions has its finger on the pulse of retail real estate in Gauteng and the Western Cape. If you're looking for the ideal locale for your brand, get in touch today.
Author: 3Cube Property Solutions
