What are your role and responsibilities in the Gucci Group? Can you describe what you do for living?
With respect to the brands of the Gucci Group portfolio, my department and I are involved in virtually all phases of the vast majority of their projects of commercial development and of retail expansion. I stress ‘all phases’ because it may be interesting to know that our work starts much earlier and ends much later than people may think.
How do you mean?
I mean that our role is first of all to ‘brainstorm’ as to which new cities, streets, resorts and developments are coming up for luxury retail. Thus, paradoxically, we start working on a retail project long before the project itself is even conceived. Likewise, it doesn’t end once a store has been opened; virtually all our locations are leased and not owned, which means that the management of the location is very much the management of a relationship with the landlord. This requires a lot of maintenance and sometimes results in a sort of strategic partnership.
Which kind of strategic partnership?
In fact, the partnership concerns several aspects and is, basically, a mode of cooperation in which respective roles blur and the luxury retailer is called to bring its contribution to the set up and enhancement of the retail potential of a real estate location.
First of all, our brands are obviously large and powerful generators of traffic and this may be a major driver for the landlords of certain developments. Certain areas have, practically, been turned into luxury location by illuminated and long-sighted developers through attracting powerful brands. Luxury brands are, therefore, capable of bringing a substantial contribution to the value enhancement of a location in terms of traffic, exposure and goodwill.
Such brands ‘like to stay together’. In other words, in order to create an appealing, various but consistent offer. Thus, for a real estate developer, establishing a relationship with one brand may mean pitching into a whole system.
Further, our retail and commercial organisations have a lot to offer in terms of retail know-how, experience, and knowledge of the flows, habits and behaviour of the luxury customers. Finally, from a mere architectural point of view, we invariably bring substantial enhancement and upgrade to the locations we lease; this is our contribution to the partnership and it seems very valuable to me.
And what do you require in exchange?
First of all, sustainable rental conditions. We cannot be victims of the real estate bubble our own industry creates. Landlords and real estate developers which are aiming at maximizing short-term profitability of their real estate miss opportunities of long-term, consistent value enhancement.
Once we are in a location, we are loyal and reliable tenants and as such we are capable of offering a key contribution in improving or sustaining the value of a piece of real estate. But often, greedy landlords and real estate developers make us walk away, they aim at valuations that are either the very top of the market, or even above, and seem to disregard that creditworthiness, reliability, goodwill and good standing are, in today’s world, valuable commodities.
Cooperation and flexibility are key to our operations. The mode in which we conduct our retail business is (particularly in the present era of digitalization) ever changing and sometimes we need to adapt the architectural set up of the store and/or the usage of certain parts to new commercial projects and initiatives. For these, we often need the active cooperation and assistance of the landlord.
For the full article, please see the November 2010 issue.