It took a $152 million divestment to inspire the opening of a flagship store for online luxury retailer Reebonz.
Reebonz Australia general manager Neil Guo had spent two years scouting for potential retail sites when he stumbled across 570 George Street, Sydney.
The property had previously housed state-owned electricity provider Ausgrid, before going under the hammer as part of a $152 million government divestment.
The vacancy was just the spark Guo needed and last year, Reebonz Sydney opened its doors.
“We visted different sites for a while and that location opposite to Town Hall is perfect with a great deal of foot traffic,” he recalls. “From planning, renovating and marketing, it took us six months to open.”
Guo says the CBD flagship store welcomed 5000 customers during its grand opening day. Within six months, it reached profitability and has prompted a Melbourne store search to emulate its success.
The Singapore-based Reebonz, which offers accessories from brands such as Hermès and Chanel, operates no physical stores in any other markets and first entered Australia via an online model in 2011.
Guo believes Australia, which makes up 30 per cent of online sales, can currently offer more opportunities than luxury-saturated markets such as China.
“The concept store definitely increases our brand awareness and consolidates Reebonz as a premier fashion brand in Australia,” he says. “It also offers a physical adress for our members who want to view our products and enjoy our after-sales services.”
But is the clicks-to-bricks strategy a guaranteed pathway to success for all vendors?
Clearly.com, the world’s largest online glasses and contact lens retailer, is currently revisiting its Australian omnichannel strategy following a AU$420 million takeover by global optical giant Essilor.
In March, the company opened a spectacular destination store in Sydney’s George Street, and flagged another six Australian store openings for 2014.
When contacted by Ragtrader for this story, PR representative Eleni Toskas advises this expansion could be under review.
“Due to the brand’s recent acquisition by Essilor, the retail strategy is currently being re-evaluated, the actual model and how it can complement the optical market,” she says.
“We wouldn’t want to be providing information for a story around the online to retail concept until this evaluation is complete and the strategy has been confirmed.”
Australian designer etail destination The Grand Social has also recently, and quietly, shut the doors to its inner-city flagship store. When asked about the closure, a representative claims the move was prompted by a relocation and confirms there are no immediate plans to open another retail store.
Perhaps the most significant example of this local clicks-and-bricks dichotomy is MyCatwalk, launched 12 years ago as an online destination for designer fashion.
After selling a stake to AR Management in 2011, the company immediately adopted an omnichannel strategy via a four-store rollout program across Australia. But just a year after the papers were signed, co-founder Jon Reid and AR Management billionaire Andrew Roberts took to the courts.
Reid claimed, among other things, Roberts had breached the terms of their agreement by enacting a retail expansion strategy. Reid was not supportive of the decision and by 2012, the store network had been shuttered and the two warring parties settled out of court.
Type in MyCatwalk.com.au today and you are redirected to competitor Robby Ingham, who acquired the rights following the fallout.
Was there a difference in strategy between Reebonz and MyCatwalk?
Guo credits a number of factors to the success of Reebonz’s first concept store, including a willingness for the right location. The store is just moments from luxury flagship stores in the city, transport hubs and corporate offices.
“The best thing about our store is definitely the location and the amount of foot traffic,” he says. “We are still looking for a suitable location in Melbourne. We might consider other openings if we come across a suitable location, however, there is no timeline at the moment.”
For global online marketplace Etsy, which topped $1 billion in sales last year, temporary stores have proven to be a more successful strategy. Etsy opened its first pop-up store in Sydney last November, where it showcased local wares and partnered with nearby vendors to host DIY workshops, haircuts, styling days, tea sessions and ornament-making.
William-Sonoma’s West Elm stores have also hosted Etsy pop-up stores this year, showcasing vintage and handmade merchandise from Australian Etsy sellers.
Etsy Australia and New Zealand managing director Helen Souness says location was also an important factor in its first local pop-up store in Castlereagh Street, Sydney.
“We were looking for a high traffic area where would we would stand out from our neighbours, plus with enough space to creatively merchandise our sellers’ products and creatively enrich the environment with workshops and events,” she says.
“We worked with four curators in the design and lifestyle space to select products that represented to full breadth of products available on Etsy from kids toys to food, fashion, homewares and vintage pieces.”
It’s not the only pureplay retailer that can vouch for the success of a pop-up store model. Designer footwear vendor The Mode Collective trialled its first temporary store this year, opening a site in the Sydney suburb of Paddington for over 10 days.
Founder David Sorrell says the store hit its sales targets, with customers incentivised to receive a free monogrammed coin purse valued at $99 with purchases over $200.
Sorrell says the concept provided an opportunity to build brand awareness and clear excess inventory outside of its online platform and a 30-store stockist base.
But he admits there were some hurdles.
“We did originally consider a CBD or Bondi location, however the availability of short-term rental spaces can be difficult to find,” he explains. “Another key consideration is the cost of rent. Unfortunately, many real estate agents are not interested in short-term tenants paying rent than having an empty storefront for months on end.”
Despite these challenges, the brand was able to secure an affordable space for the venture and is now considering pop-up sites across Australia over the coming year.
“As a predominately online retailer, there’s always the desire to want to engage with your customers on a more personal level. Being able to touch the products, feel the leathers and try on shoes was a great experience for our customer database.”
Assia Benmedjdoub