The Metaverse, Virtual Worlds And The Future Of The Flagship Store

The flagship store has long been part of luxury brands' marketing strategy. It is literally a gateway to the brand for newcomers, and for devotees it is a temple within which to worship.

Until now, the assumption has been that whatever else gets junked as online sales replace bricks-and-mortar retail, the flagship store will survive. Without it brands will be diminished, so the argument goes.

But could the metaverse make the seemingly essential flagship store redundant?

If trends in branded virtual worlds now emerging in Japan prove durable, we could soon be replacing the brand-awareness functions of the flagship store with a metaverse of virtual worlds. The idea takes the so-called stockless store, already beginning to appear in major cities, a dramatic step further.

The threat is an extension of virtual stores, of the kind accessible through 3D headsets, but rather than stand-alone virtual immersive experiences, the metaverse joins them to other virtual experiences to create an immersive experience that is claimed to be as compelling as real life.

The idea of the metaverse is that the 3D virtual worlds created by businesses and individuals begin to join up seamlessly, in the way that the 2D internet does today. It would give virtual stores a new dimension of reality.

The advantage is that access to the metaverse is fairly easy and universal, but access to actual physical flagship stores is limited at the best of times and, during pandemic travel restrictions, all but impossible.

If the metaverse-based flagship store takes off there will be a lot of big empty shops nobody wants.

Welcome To The Metaverse

Until now only the gaming world has transitioned to the metaverse: The expectation is that, thanks to acceleration provided by the coronavirus pandemic, much of the world of retail and social media will move onto the metaverse this year. It could be a shift as profound as the invention of the internet itself.

Burberry, the luxury fashion house, has already created a metaverse-friendly version of its Tokyo flagship store, whilst skincare brand SK-II has gone one step further and created an entire virtual city.

Fortunately, there is an alternative to a descent into the metaverse, and this too is being trialled in Japan.

In essence the alternative amounts to doubling-down on everything the flagship store is supposed to be: Faced with a challenge, the flagship store simply offers twice as much of its secret ingredient, charisma.

That means stunning design to create a must-visit destination.

Louis Vuitton’s new flagship store in Tokyo’s upmarket Ginza district is a case in point. Designed by architect Jun Aoki and interior designer Peter Marino, it resembles an enormously tall column of running water.

The seven-storey block on a prominent street corner truly shimmers. A wavy four-storey staircase and a giant monogrammed jellyfish in the entrance add to the wow factor. You can see pictures here.

Is The Flagship Sunk?

London-based retail consultants are watching with interest but don’t buy the idea that the flagship is sunk.

The debate comes as one of the most prominent flagship stores in London hits the market with a price tag reported to be as high as £420M. The 100K SF former Topshop flagship on London’s Oxford Street is being sold by the administrators to a subsidiary of Philip Green’s Arcadia Group.

“Topshop, as well as many other bricks-and-mortar retailers, has hugely struggled as it struggled to meet the demands of its key demographics so it is less surprising that its estate, including the flagship store in Oxford Circus, was untenable, even if it was iconic,” Cain International Leasing Director Neil Barber said. 

“That being said, Hugo Boss and Mango have both announced new flagship stores on Oxford Street, so there is clearly still a role for flagship stores for retailers that understand the needs and wants of their customers.

“Perhaps more interesting is the evolution of what a ‘flagship’ space can be as we move towards a more integrated and experiential economy. Brands such as Microsoft, Dyson, Samsung and Eataly have all opened flagship-style spaces in locations like Oxford Circus, Coal Drops Yard and Liverpool Street.

“Ultimately, brands will always want to showcase their products in the locations where their customers are prevalent so the concept will never really die, but we will continue to see the move towards flagship-style spaces in areas that might not be traditionally prime footfall sites as the priority becomes a closer understanding of who your customer is and where they want to spend their time and money.”

CBRE UK Head of Occupier Services Graham Barr agreed.

“The role of physical and flagship stores was already changing pre-pandemic,” Barr told Bisnow. “They are now so much more than a simple transactional space, as they have really become a chance to showcase the best of the brand. In addition, they provide a space to build a community through offerings including running clubs, cafés and in-store events.

“Shopping trends have changed significantly over the past year and in turn, a retailer may decide that they don’t need as many physical stores in the future. However, flagships are becoming more experiential, so the physical stores that retailers do have, particularly in major markets, will need to offer a different level of interaction than they did five years ago.”