LONDON, United Kingdom — The fast-growing Kering SA luxury brand Balenciaga has found a home on London’s most exclusive shopping street, in a boost for luxury retail after the coronavirus pandemic.
One of France’s most well-known fashion houses, Balenciaga reached an agreement with footwear retailer Russell & Bromley Ltd. to take over its lease on a store on New Bond Street, according to people familiar with the matter, who asked not be identified because the deal is confidential.
Kering reached a separate accord with the building’s owner, the City of London Corp., to take over the first floor of offices as well so it can convert the entire space into a flagship store, the people said. Balenciaga follows luxury rivals Versace and Brunello Cucinelli, which have plans to open stores on the same stretch of New Bond Street within yards of the famous Sotheby’s auction house.
Balenciaga paid about £5 million ($6.2 million) to take over the lease, one of the people said. Kering declined to comment, as did the City of London and Russell & Bromley.
Balenciaga plans its debut on coveted Bond Street a time of significant turmoil for luxury retail. The pandemic has forced the world’s top retailers to close many of their stores across the globe and decimated international high-end tourism — the lifeblood of luxury shopping.
The UK is in the sixth week of a lockdown that could lead to the sharpest economic collapse in centuries, and a decision on whether to extend the measures is due this week. There is every indication that Prime Minister Boris Johnson will say the closures of schools and most shops need to continue, but he is likely to set out a plan to get businesses running again once scientists are sure the coronavirus can be kept under control.
With fears that global tourism may not recover until next year at the earliest, the future for brick-and-mortar stores has never been more uncertain. Even when stores can reopen, there are questions over whether high-end retailers can still offer a luxury experience for the world’s richest shoppers while observing new social-distancing measures. Retailers are pushing landlords to cut rents.
Helen Brocklebank, chief executive officer of Walpole, an organisation representing luxury retailers in the UK, predicts that the crisis will increase the popularity of upscale, “experiential” stores. Retailers will continue to invest in flagships in key locations like Bond Street, while pulling back from areas with less cachet, she said.
Luxury stores are already drawing up blueprints on how to reopen safely without marring the experience or making it “clinical or impersonal,” Brocklebank said. Booking appointments will become crucial to managing customer flow, particularly for luxury department stores and bigger high-end retailers.
The experience of luxury stores in China might be helping to fuel some optimism. The chief executive officer of Hermes International told reporters last month that sales have been increasing by a double-digit percentage at stores in mainland China since they reopened.
By Deirdre Hipwell