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23 Aug

How Growth in Celebrity Brands Is Affecting the Retail Industry

When Khloé Kardashian and Emma Grede launched their Good American brand in 2016, certainly one of the primary things they did a yr later was plant their first pop-up store inside VFiles’ outpost in Latest York City.

Seven years later, the famous duo branched out with their first everlasting Good American store, which opened in June on the Westfield Century City mall in Los Angeles.

And more stores are on the way in which. “We’re scaling quickly. There shall be quite a bit more stores opening next yr,” Grede, the corporate’s chief executive officer, said throughout the opening of the three,000-square-foot space. Two more stores are scheduled to open later this yr at Fashion Island in Newport Beach, California, and The Forum Shops at Caesars Palace in Las Vegas.

Good American followed the trail that many celebrity brands have taken. A recent study by industrial real estate and investment management company JLL shows that celebrity brands are inclined to place their first pop-up store in Latest York but go for Los Angeles after they establish their first brick-and-mortar outpost. Within the last decade, the report said, celebrity-backed retail brands have opened greater than 300,000 square feet of retail space.

“In terms of where pop-ups resolve to open, Latest York has been a breeding ground for this retail concept,” said Ebere Anokute, the report’s writer and a research manager in retail for JLL, also referred to as Jones Lang LaSalle.

The researcher noted that Latest York has more foot traffic than most urban areas, which is a plus for attracting customers, and is populated with a variety of prime retail streets. “There are numerous developers and landlords in Latest York which can be really dedicated to testing out recent retail concepts, whether you have a look at the shops at Hudson Yards and their entire Floor of Discovery otherwise you have a look at what has been done on Bleecker Street. It’s a breeding ground for digital-native concepts to check out opening physical stores.”

SoHo might be probably the most popular areas for pop-ups, he noted, and Brooklyn’s Williamsburg is emerging as a recent hot pop-up store spot due to lower retail rents and younger customers living within the hip neighborhood.

Pop-up stores are cheaper to establish than everlasting units, help brand owners test consumer response to their products and supply experiential marketing opportunities.

When it’s time to leap into everlasting retail, celebrity brands often go for Los Angeles, where neighborhood outdoor and indoor malls attract shoppers from various locations and rents are cheaper than in Latest York. “The give attention to L.A. has quite a bit to do with a greater deal in rents, and the preponderance of individuals within the entertainment industry living there who can promote their brand,” Anokute said.

Skims, cofounded by Kim Kardashian, is opening its first brick-and-mortar location next yr on Sunset Boulevard in West Hollywood. Other celebrity brands that opened their first stores in Los Angeles include Gwyneth Paltrow’s Goop, Tyler, the Creator’s Golf Wang, and Mary-Kate and Ashley Olsen’s The Row.

A transient history of celebrity brands and their owners. Courtesy: JLL

The rise of celebrity brand stores is becoming the silver lining for malls and retail streets which have been struggling to fill vacant storefronts. Fabletics, the athleisure brand cofounded 10 years ago by actor Kate Hudson, now has 13 of its 95 stores in Los Angeles-area malls.

These sorts of retail stores are coveted by shopping malls. Late last yr, mall owner Simon Property Group teamed with Leap, an organization that brings online brands into the brick-and-mortar retail world, to assist populate their nearly 100 malls. Simon and Leap began by bringing 4 stores — True Classic Tees, ThirdLove, Sugarfina and Goodlife — to the Del Amo Mall in Los Angeles and Town Center in Boca Raton, Florida.

Within the JLL report, researchers found that in relation to starting a brand, most celebrities gravitate toward the wonder category, which may turn a profit quickly. Kylie Jenner had a lucrative return on investment when she began Kylie Cosmetics in 2015. Five years later, she reached a deal to sell a 51 percent stake in her company for $1.2 billion to legacy brand Coty. And Rihanna launched her Fenty Beauty brand, with a 40-shade foundation range, in 2017. LVMH Moët Hennessy Louis Vuitton backs the brand, which Forbes now values at $1.4 billion.

Since 2017, 53 percent of celebrity brands have been in beauty while 41 percent have been in apparel. “I believe numerous these brands find yourself in beauty because there’s a lower barrier to entry,” Anokute of JLL said. “In terms of apparel and other categories, you might have to give attention to having a extremely wide size range, returns and folks coming in to feel the garments.”

Opening stores can be becoming a less expensive solution to attract customers. Celebrity brands, which emerged in 2017 and took off throughout the pandemic in 2020, are discovering that retail is likely to be a more economical way of acquiring customers. The JLL report noted that the typical cost to amass a web-based customer in 2023 was about $70 compared with $58 in 2021 and $25 in 2018.

“Without delay, we’re seeing that celebrity brands are very bullish about opening physical stores,” Anokute said. “They’ve seen that malls are a terrific place to market to consumers. I also see a little bit of symbiosis happening between mall operators and these digital brands to resolve vacancies.”

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