The rising tide of experiential retail
There’s a rising tide of experiential Aussie retailers who are straddling the digital/in-store divide like champions. In the post-COVID economy, where online shopping grew 57% year-on-year to reach an all-time high in 2020, having a holistic and integrated approach to eCommerce, distribution and retail stores is crucial to succeed as a retailer.
A prime example of this retail innovation is Culture Kings, a premium streetwear brand, positioned at the intersection of music, culture and fashion. In the words of founders Simon Beard and Tah-nee, the vision for the business “has always been to create the next global retail phenomenon where culture and style collide.”
In March, Culture Kings was acquired by a.k.a. Brands, a global platform that is pioneering a new approach to driving growth in digitally-native fashion brands. “Culture Kings is a leading digital and retail destination and exactly the kind of hyper-innovative brand that a.k.a. is designed to support.” said Jill Ramsey, the group’s CEO.
Fellow Australian challenger fashion brands Princess Polly and Petal & Pup, and the US-based Rebdolls, are already part of the a.k.a. Brands portfolio. The move comes along with plans to expedite the expansion of Culture Kings into the U.S.
Many retailers still bear heightened concerns about their property footprint in the post-COVID climate, which is absolutely fair enough. For some, rationalisation is going to be the answer. And for others, it’s actually going to be expansion – take Ikea: despite a dip in full-year sales, the retailer opened 26 new locations globally to October 2020, and plans to open a total of 50.
As we reported in our recent article 6 Retail Opportunities for 2021, despite the growth in online, “The physical store is certainly not dead, otherwise Amazon wouldn’t be building them” – a quote from Michelle Beeson at Forrester Research.
Many larger brick-and-mortar retailers are restructuring — capital allocation often now works on a tiered basis, where flagship destinations exist in prime locales and are complemented by smaller-format, specialty locations anchored around a specific purpose or localized effort. Culture Kings have opened flagship locations in key Australian cities – including the Melbourne laneways and the prestigious Pacific Fair shopping centre on the Gold Coast.
“Partnering with department stores will also continue to be reimagined as they restructure and reposition as collaborative marketplaces, and there will be a deeper dedication to pop-in-shop retail,” says Melissa Gonzalez, founder of The Lionesque Group, an award winning firm of experiential retail strategists and pop-up architects.
In addition to their immersive in-store experiences, influencer-marketing, partnerships and online exclusives, Culture Kings have made waves by selling big brands like Puma, Under Armour and Nike as part of a streetwear apparel range. Their in-store and online events feature high-profile DJs including Marshmello and Diplo, other musicians including Kehlani, French Montana, Anderson .Paak, Tyson Beckford, Aminé and Stephen James, actors like Dennis Rodman and sports stars including Serena Williams and NBA star Ben Simmons. The latter is actually now investing in a.k.a. in conjunction with the Culture Kings transaction.
Another response to COVID’s long-term impacts is a combination of rationalizing physical retail space whilst increasing product assortment, to focus more on niche products and local suppliers that shorten supply chains. The blurring of lines between online and offline commerce means retailers have more opportunities to create blended in-store experiences. 82% of smartphone users now use their phone while inside a store to make purchase decisions — showing the importance of online channel experiences to success in traditional retail spaces.
For years now, retailers have been adapting to structural changes facing the industry — including rental cost pressures and the growth of eCommerce. The growth of alternatives to CBD-area retail — like new commercial-residential precincts in cities and regions across Australia — is becoming ever-more pronounced. As are prospects for Aussie retailers to make it internationally! Considering lease strategy, fit-out options, and overall retail pipeline and property strategy is crucial this year.
Tenant Leasing Group is partnering with new and established retailers looking to take advantage of occupier-friendly market conditions in 2021. Whether you want to find a new site, re-negotiate your lease, extend or get smart about your property footprint – we’re here to support retail businesses to minimise leasing costs and improve customer experience.
Tenant Leasing Group is the Australia and New Zealand tenant representative for Culture Kings.
Director, Tenant Leasing Group
Phil has 25+ years experience advising and representing tenants on retail, office, industrial, large format retail, healthcare and other commercial property leasing.
A trusted veteran, Phil knows how to work negotiations in the tenant’s favour. He builds relationships directly with founders, business owners and senior executives to help optimise their business property situation.