Luxury retail spreads to new Paris quarters
So far, only two neighbourhoods in Paris (F) were suited for luxury retail locations, namely Avenue Montaigne (Dior, Chanel) and Rue du Faubourg Saint-Honoré (Hermès) and Europeans, Japanese and Americans were the main customers
Nowadays wealthy tourists from China, Brazil and Russia are focusing on luxury and are on the buying spree in Paris. Because space is scare the boundary for plush shopping will probably be extended eastwards when the former Samaritaine department store reopens with a Louis Vuitton store drawing visitors to the nearby Louvre museum. New space is allocated also around Boulevard Saint-German and Rue du Bac, both are known by their association with booksellers and the literary world.
Ralph Lauren and Hermès crossed the Seine to set up their first shops on the other river bank. They are followed by Tag Heuer, Burberry and Brunello Cucinelli. The next opening is known it will be Vuitton’s Saint-Germain store by taking over the adjacent iconic bookstore La Hune. Balenciaga’s choice is the Faubourg Saint-Honoré district and there it is renovating a former gas station for its third boutique in the French capital.
The problem is that brands such as Vuitton, Gucci, Prada and Chanel wish to present their image and luxury goods on large scale space or a minimum of about 400 m2. Unfortunately the average shop in Paris is only 67 square meters. Therefore the players in the luxury segment are betting on high-end and historical buildings and buying them instead of renting these. Richemont’s new 2000 m2 realty is a wood-panelled historical monument that housed the Old England clothing boutique for more than 100 years but last year LVMH bought the building that houses its flagship in London on New Bond Street for around USD 487 million. Luxury labels are quite focused on their bricks-and-mortar stores than on e-commerce and flagships are the cornerstones of their existence might it be in Paris, London or New York, and there are rarely changes in ownership or vacancies. The average price tag for a prime location in Paris now goes for around EUR 8000 per m2 but there are exceptions, of course, such as Estée Lauder the cosmetic line signed the license for a boutique on Champs Elysées and the rent is around EUR 18000 per m2.
Space is rare in Paris and expanding into other neighbourhoods would not serve the prestigious luxury brands. Therefore the hunt for excellent location is underway and leading to steady price increases for appropriate properties and rentals, if available at all.