Despite this summer’s alarming rise in COVID-19 cases due to the Delta variant, luxury executives remain optimistic about business for the rest of the year and see shoppers returning.
On the down side, raw material challenges continue as demand for luxury grows, and on Madison Avenue, luxury executives want landlords to make it more attractive for brands to open shop to reverse the high vacancy rate, which doubled last year to 16 percent and is said to be under 20 percent currently.
Those were some themes emanating from the Fashion Group International “Frontliner “Panel” on Thursday, co-organized by the Madison Avenue Business Improvement District, where three executives from luxury brands — each with Madison Avenue flagships on the block between 63rd and 64th Streets — also discussed how they’re engaging differently with customers due to the pandemic and learnings from the health crisis. Mickey Alam Khan of Luxury Daily moderated the panel.
“Luxury is experiencing somewhat of a unique moment. We all hope it will last,” said Marc Hruschka, chief executive officer of Graff U.S.A.
“I’m bullish for the reminder of 2021.…I am a big believer when you have a fire, you pour gasoline on it in retail. That’s been our outlook since October/November. Knock on wood, it’s paying off. We have been through a lot, nothing scares me anymore. We can ramp up or make adjustments quickly if necessary.”
Also on the panel was Paul Lorraine, CEO of Longchamp U.S., who said he sees “blue skies” ahead. “People are coming back. We went through a lot of pain and learning,” but he believes Longchamp is “set up for success,” though likely to see “peaks and troughs. Nothing really frightens me now with what we went through.”
The third panelist, Andrew Wright, president of Manolo Blahnik for the Americas, said he was “cautiously optimistic” about the year ahead and said there are “still worries and concerns from clients and retailers.” Blahnik will soon be celebrating its 50th anniversary, Wright noted.
“Madison Avenue was the first retail store in the world for Graff and it was a tiny little jewel box originally,” Hruschka said. “After about a decade, we moved to the corner of 63rd and Madison; it is what drives our total business in the U.S. We rely on and expect Madison to be successful.”
The former Barneys New York flagship at 660 Madison has been vacant since February 2020, but a report Thursday from The Art Newspaper indicated that the site will become a gallery hub called Art House this November. That could spur business and additional interest in taking sites on the avenue. According to the report, “five stories in the building have been overhauled by the architect Kulapat Yantrasast and WHY Architecture and will contain private viewing rooms for international galleries, a member’s club in the former Fred’s restaurant and event spaces that will be available year-round.”
Graff, just a couple of blocks north of the former Barneys store, is very careful about changing its formula but due to the pandemic, “we compressed about six years of changes both from a technology and client engagement perspective to six months. It was game changing at the brand, in terms of learning how to pivot,” Hruschka said.
Graff is doing a lot more home visits, about 10 times more in the last year, and “perfecting” how information is archived and presented to clients. He said the company looked closer at the best practices in the industry, but unlike other brands, Graff invested a tremendous amount of time and energy into print, mailing out print catalogues and placing them in stores, because the company heard from clients that they were being overwhelmed by digital. Clients were visiting stores with the print catalogue to show associates what they were interested in.
Hruschka cited a raw materials challenge, with supply needing to catch up to demand. “All of the mines and cutting and polishing was closed for a year,” he said. “For us, the biggest focus has been and continues to be the experience of the client.”
Lorraine said Longchamp also has supply issues because of the global slowdown, but that the pandemic has motivated the brand to be “focused more on the business on their doorstep. We started really looking at what is around us. We think global and act local…that engagement, I think, it has to be a little bit more bespoke. Consumers’ taste has evolved. The role of the store has to evolve as well. We have to elevate the overall customer experience.”
Wright noted the brand opened a new store a couple of months ago, on Madison in a landmarked building. “It’s bigger than anything we have done before.” With the pandemic, Blahnik’s approach is, “Let’s not make it too formal. Let’s be personal with everybody; if you are feeling relaxed, you are actually going to spend money. We actually installed a bar in our Madison Avenue space, which is brand new for us. It’s a little bit less about selling and more about socializing.” Clients are coming back to the store and buying but being “very specific on what they want and what they will spend their money on.…We are very much waving the flag of creativity. We keep people guessing what the next new thing will be. You have to have a reason for people to keep coming back.”
Wright also said people are “all a bit overdosed on digital and desperate to get back to face-to-face meetings,” though “our digital presence right from the beginning was never just about selling shoes. It was about engagement, more of a gallery experience, like a sketchbook with different styles, colors, heel heights.”
Asked about the high degree of retail vacancies on Madison Avenue, Wright said, “We were aware of the prevalence with empty stores. We were very concerned, but we’ve been encouraged by the new arrivals on our block along Madison, and we signed a lease and would go through with it, whatever. Hopefully, we can encourage more specialists and more creative people to come and dip their foot into the retail business. If they have the funds to do it, our block is probably prime in New York City at this point.”
According to Lorraine, “Across the globe and in the U.K., it’s the same challenge on occupancy. I’ve noticed mostly in the U.K. that landlords are getting closer to retailers and understanding the challenges. There has to be a movement to encourage more brands, start-up brands, to take these spaces because no one wants empty spaces. As retailers, we have to be more creative in our stores. We have to show creativity, enough to drive customers in, to spend time on the street. The challenge is an international one. It will be with us for quite awhile unless there is a bigger movement to interact, share the risk and encourage people to come, even if it’s short-term leases. People need a chance and people need the support.”
It’s a “great moment” for anybody that’s ever wanted to move to Madison Avenue to take a space there, not for price per square foot yet, but certainly there are some key and very interesting spaces available,” said Hruschka. “I do believe the block that the three of us occupy, and down to 62nd and maybe 61st. Our block is critical on Madison and sets the tone for the rest of Madison Avenue in many ways. I’d like to see the Cavalli space filled. Graff made a conscious choice not to go to Fifth Avenue not because we don’t think Fifth Avenue is amazing, but it’s a foot traffic driven environment and not necessarily where our clients want to shop.”
According to Matt Bauer, president of the Madison Avenue BID which stretches from 57th to 86th Streets, “There are vacant stores but the situation has definitely become better. There are quite a few stores that have expanded their footprint on Madison, doubling their size. In addition, there are new stores, some left and have come back. Madison is where it is because of the residential community around it — that residential community is strong.”
Despite the pandemic, “it is heartening for both Madison Avenue and New York City that some of the world’s leading fashion and jewelry brands, including Brunello Cucinelli, Fendi, Giorgio Armani, Graff, Hermès and Montblanc have spent the last six months working toward expanding their physical presence on Madison Avenue,” Bauer continued. “With three new residential buildings under construction containing retail, restaurant or other commercial uses at their base, even more residents will make Madison Avenue part of their lifestyle.”
According to the BID’s 2021 First Half report, recent openings on or by the avenue include: Franklin Parrasch Gallery, 19 East 66 St.; Gem Gallery Fine Jewelry, 25 East 61 Street; Hugo Galerie, 755 Madison Avenue; Kate Oh Gallery, 31 East 72 Street; LTD x Lizzie Tisch, 828 Madison Avenue; Mykita Shop, 962 Madison Avenue; Manolo Blahnik, 717 Madison Avenue; Repurpose, 1122 Madison Avenue; Something Navy, 1055 Madison Avenue; Eleventy, 769 Madison Avenue, and The Frick Madison & Joe Coffee Café, 945 Madison Avenue.
Recent expansions include: Fendi: 595 Madison Avenue; Montblanc, 635 Madison Avenue; William Greenberg Desserts,1100 Madison Avenue.
Upcoming expansions include: Brunello Cucinelli, 689 Madison Avenue; Christofle, 595 Madison Avenue; Giorgio Armani, 760 Madison Avenue; Graff Diamonds, 712 Madison Avenue; Hermès, 702 Madison Ave., and Serafina, 1022 Madison Avenue.
Upcoming openings include: AG Jeans, 1009 Madison Avenue.; Alexis Bittar, 1001 Madison Avenue.; Casa Tua, 20 East 76th Street; Corinthia New York Hotel, 20 East 76th Street; Roller Rabbit, 1156 Madison Avenue; Seaman Schepps, 824 Madison Avenue, and Tuscan Provisions, 20 East 69th Street.
Upcoming mixed-use developments include 760 Madison Avenue by SL Green; Giorgio Armani at 1045 Madison Avenue, and the Naftali Group at 1165 Madison Avenue.