European luxury brands have reportedly acquired $9 billion worth of boutique properties since the start of 2023 (symbolic image). ALEXANDER NEMENOV/AFP via Getty Images
Luxury brands are looking for new store locations because they are betting that customers prefer the in-store shopping experience.
The Wall Street Journal reports that Kering, which owns Gucci and Saint Laurent, spent $1.4 billion on a building in Milan.
E-commerce experienced a surge during the pandemic. But luxury brands thrive in a more personal environment.
This is a machine translation of an article from our US colleagues at Business Insider. It was automatically translated and checked by a real editor.
Since the pandemic, retail property vacancies have skyrocketed. Still, luxury brands from Gucci to Chanel are betting big on their in-store experience to attract customers in the long term.
The Kering company, which owns Gucci and Saint Laurent, recently spent $1.4 billion (about €1.3 billion) on a building on Milan’s Via Montenapoleone, according to the “Wall Street Journal“ reported. The purchase comes in addition to a $1 billion property on New York’s Fifth Avenue that the company acquired in January, the paper said.
Kering representatives did not immediately respond to a request for comment from Business Insider.
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Business Insider previously reported that Kering’s investments are part of a selective real estate strategy. It aims to secure particularly desirable locations for its leather goods, jewelry and fashion houses, including Balenciaga and Alexander McQueen.
The Milan property, acquired by Blackstone Property Partners Europe, is one of the largest on Via Montenapoleone – an iconic upscale shopping street. It includes more than 5,000 square meters of retail space.
The Journal reported that other luxury companies such as Chanel and LVMH are seeking similar investments on New York’s Fifth Avenue and the Champs-Élysées in Paris.
European luxury brands are spending billions on boutique properties
E-commerce has increased significantly since the pandemic – loudly Census data by 244.2 billion dollars (about 225 billion euros) or 43 percent in 2020 compared to the previous year. And while more retail stores have closed their doors permanently in recent months, luxury brands haven’t been afraid to open new locations to serve customers in person.
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„Forbes” reported in October that luxury stores accounted for 38 percent of new openings and 40 percent of retail leases last year. Dior opened stores in Orlando, Detroit and Austin, while Alexander McQueen opened new locations in Atlanta, Boston and Charlotte, North Carolina.
European luxury brands have acquired boutique properties worth $9 billion (about 8.3 billion euros) since the start of 2023, the Journal reported. The paper noted that spending on business costs and capital expenditures accounted for about nine percent of its revenue last year. Before the pandemic it was six percent.
It doesn’t look like this development will stop. As spending on luxury goods rose again in late 2022, analysts were quick to point out that the ultra-rich continued to rely on traditional luxury designers like Dior and Louis Vuitton, even in difficult economic times.
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“It’s just an intensification of bigger getting better,” Oliver Chen, managing director of retail and luxury at investment bank Cowen, told Business Insider.
Representatives for LVMH and Chanel did not immediately respond to Business Insider’s requests for comment.
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