Can multi brand department store retailers expand internationally? What are the risks and opportunities?
During my career in luxury retail/fashion, I had the opportunity to develop international multi branded department stores in emerging markets in Central Asia, Mexico and the Middle East under local market license agreements.
During my extensive travels, I have found that there are still relatively few markets where International multi brand department store retailers have entered. I found that the key to a successful entry included: having a strong local retail operating partner who has a (capable management team and logistic infrastructure, good reputation, relationships with high wealth consumers and access to premier real estate) Other key factors include: ability to obtain a flagship level vendor matrix and instore experience and services. The multi brand department store retailers who have found success internationally have been able to check off all of these boxes.
Having said this, challenges exist including: Import tariffs, local market regulations with regard to International multi brand retailers, strength of local operating partners, ability to recruit and train local talent, availability of premier real estate, ability to acquire a superior brand matrix, and International digital commerce operators who can now ship to countries worldwide.
While the markets I have mentioned are maturing, there are still opportunities for multi brand retailers to expand internationally.
What emerging markets to target for long term growth?
I believe there still remain long term growth opportunities in China, S.E. Asia, India and Latin America. In particular I have spent a great deal of time in China and India over the past few years. In China, as the Chinese retail market is changing at light speed, there is also a fundamental question of how Chinese Department stores will survive. Many are looking for ways to reinvent and therefore are looking for opportunities to work with International partners. Also, while 1st tier cities in China have matured with luxury retail, 2nd and 3rd tier cities are still in their infancy. I was recently in Xi’an for the opening of the new SKP Shopping Centre. The mall is a game changer for luxury retail in China and the initial results have been very favorable.
India with few exceptions is void of multi brand luxury retail. Over the past 10 years I have personally witnessed the evolution of the Indian consumer and I believe that there is a great opportunity for a first market mover.
I am currently in discussion with several multi brand retailers to help them expand internationally.
What is your view of mono-brand versus multi-brand (wholesale).
For me, multi brand retailers play a critical role in emerging markets. In my experience, many mono brands were reluctant to invest in new emerging markets without first having the support of a multi brand retailer. In the International stores that I developed, many of the brands that we acquired for our stores worked on a wholesale basis because they did not have an owned local structure to support their business. Some would later convert to concession as the market grew. What was important was that the multi brand retailer became the epicenter for luxury experience, brands and services.
In some emerging markets, multi-brand stores are often susceptible for including outlet merchandise in their regular offerings.
The global consumer today is very savvy. They know brands, products and pricing and have instant access to international ecommerce players offering in season and end of season discounts. Multi brand retailers must develop more exclusive proprietary brands and brand exclusives to help differentiate them vs their competitors. They also must develop world class infrastructure/logistics to ensure that they receive products as early in the seasonal delivery window to ensure their customers buy these products first at their stores. Finally, the brand houses must establish legal requirements with their international operating partners with regard to seasonality of merchandise and merchandise sell off guidelines.
How would you define a multi-brand store versus a concept store?
For me, a multi brand store can be a single category or multi category store selling multiple brands and services. Concept store can be mono or multi brand stores, but they are experiential in product offering, store environment and services.
Luxury high-street shoppers are increasingly seeking an experience. To what extent do you believe in temporary interior designs, art collaborations, installations or capsule collections exclusively available at the respective store?
I believe that it is critical to continually provide consumers with experiences. You will see more and more experiential retail that not only offer products but also art and culture. Brands like Gentle Monster are a good example of this. They are selling an experience that happens to also offer products. I also expect technology to play a larger role in store experience going forward.
David Pilnick is a senior Global Branding and International Development executive with extensive experience and expertise launching brands globally and driving growth in competitive environments and emerging markets. As President of Pilnick Associates, LLC, David is a strategic advisor to top global business leaders on international business development, growth, expansion and transformation including: strategies for multi and mono brand retailers, brand development, licensing and franchising; shopping center strategy, development of target customer, shopping center layout, brand acquisition; and mergers and acquisitions.
With a high profile, outstanding reputation as a top performer within the fashion industry, David has successfully driven extensive business development in China, Japan, Central Asia, the Middle East, Latin America, and Europe, and has an extensive global network of investors, fashion brands, digital and brick & mortar commerce operators, and real estate developers. He has successfully negotiated deals directly with HRH Prince Al Waleed bin Talal in Saudi Arabia and Carlos Slim in Mexico. A market strategist with a visionary approach to disrupting international development and entering new markets, David has been interviewed and quoted in numerous International publications including The International New York Times (Herald Tribune), The Financial Times, The Wall Street Journal and Women’s Wear Daily. He is also a sought after speaker on innovative international development and global branding.
Previously, as Senior Vice President of International Ventures at Hudson’s Bay Company/Saks Fifth Avenue, David successfully launched Saks Fifth Avenue as an international brand, developing and leading Saks international development strategy and expanding into new markets. He was the first market mover in Mexico, the Middle East and Central Asia opening 7 full line Saks stores with average size of 100,000 FT2 . During these projects, David led all functional areas of the international team including: Real Estate, Merchandising, Marketing, Operations, Recruitment and Talent Development, Legal, IT and Logistics. He also developed the international digital strategy for Saks B2C store digital marketing sites, and established Saks Fifth Avenue’s brand presence and brand voice on all major International social media platforms.
Prior to his leadership role at Hudson’s Bay Company/Saks Fifth Avenue, David was an executive at Liverpool Mexico S.A DE C.V., the largest department store group in Mexico where he was responsible for negotiating and developing Liverpool’s international brand matrix as well as the development of many proprietary store brands. David began his retail career at Bloomingdale’s where he held various management positions under the leadership of Marvin Traub.
David holds an MBA degree from New York Institute of Technology and received his bachelor degree from New York University. In addition to his speaking engagements, he is a lecturer on International Retail Topics for the International Council of Shopping Centers (ICSC) and has been a Workshop Advisor and Lecturer at Columbia University.
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