A walk around the Melbourne and Sydney CBDs and suburbs such as Chadstone,home to the mega-mall in Melbourne’s south-east,shows many of the luxury brands such as Hermes,Dior,Chanel,Gucci,Cartier,Louis Vuitton,Burberry and Tiffany&Co have queues of customers eagerly waiting to head into the stores – and these brands didn’t have discount sales on Boxing Day.
The Opal Bar inside Cartier’s glamorous flagship in Sydney’s George Street.supplied
Data from analyst firm Ibis World shows the luxury retailing industry has grown over the past five years,despite challenges posed by the pandemic. Overall,the luxury goods market in Australia is projected to grow by 3.7 per cent (2023-28),resulting in a market volume of $US8.44 billion ($12.6 billion) in 2028.
Alex Alamsyah,partner,head of retail leasing at Knight Frank,has during 2020-21 COVID-19 and 2022-23 post-COVID-19 secured 15 luxury deals in super-prime George,King and Castlereagh streets and Martin Place Sydney.
He said while low-end and mainstream retailers had been struggling with the post-pandemic-hit economy and high interest rates,the opposite was true for most of the high-end luxury brands.
However,he said what we saw in the past three years (2020-23) was that the luxury boom was out of the norm boosted by restrictions for Australians travelling overseas,cryptos boom and COVID-19 spending behaviour.
“This period showed us that it is not clear whether we will live tomorrow or not,so if you have a chance and some money saved,then spend it according to your wishes,hence the luxury boom,” Alamsyah said.
In the main three categories of fashion,jewellery and watches,based on sales,the top five performers each generated between $20 million and up to $35 million a year.
According to Knight Frank data,the top five luxury fashion performers in the Sydney CBD are Louis Vuitton,Hermes,Chanel,Dior and Gucci. Hermes can make $20 million to $22 million of sales a month (not per annum) out of an 800 square metre store in Sydney’s city.
Fast-fashion giant H&M generates $20 million to $30 million of annual sales out of a 5000 square metre store in Sydney’s Pitt Street Mall.
The top five luxury jewellery performers based on sales in Sydney CBD are Cartier,Van Cleef&Arpels,Tiffany&Co,Bulgari and Paspaley.
Hermes can make $20 million to $22 million of sales a month out of an 800 square metre store in Sydney’s city.
In the booming luxury watch category,the top five performers based on sales in Sydney CBD are Rolex,Cartier Watches,Omega,Patek and Audemars Piguet. Alamsyah said Rolex could make $30 million to $35 million of sales a year out of a 100 square metre store in the Sydney CBD.
Such has been the strength of the domestic luxury market that international fashion houses such as Louis Vuitton and Gucci are expanding their physical footprints in Australia,especially in Sydney and Melbourne.
Next year,the new opening will include Rolex by Swiss Concept at 388 George Street at the ex-Sneakerboy site;another store by Chanel,Moncler,Omega,Longines and Saint Laurent,replacing Miu Miu in Market Street Westfield.
The upmarket Bottega Veneta will take over the former Carter site at 74 Castlereagh Street,Sydney,while Missoni,Dolce&Gabbana and Valentino are at 25 Martin Place. Others to be confirmed include the Kennedy Group at 114-122 Castlereagh Street and Richemont Group at 396 George Street.
The Louis Vuitton store on Collins Street,Melbourne.Visions of Victoria
The Rolex by Swiss Concept will join the collection of luxe retail in the precinct including Louis Vuitton,Cartier,Tiffany,Mont Blanc and Hermes.
“We are excited to open our new store in 2024 at 388 George Street. The luxe retail landscape in the Sydney CBD has changed,with iconic global flocking to the pedestrianised George Street and nearby King Street,” Kelly Hau,Operations Manager of Swiss Concept,said.
“We wanted to be part of this new revolution in luxury retail and saw it as the perfect location for our store.”
The 460-square-metre store is located next to Cartier and will feature bespoke interiors. It sells Swiss timepieces including limited edition and exclusive models,with notable brands including Rolex,Breguet,Blancpain,Glashutte-Original and TUDOR.
In Melbourne,high-end jewellery retailer FRED is the latest international brand to nab a spot on the luxury Collins Street shopping strip.
It is the first street-facing flagship store in Australia for French multinational,LVMH-owned FRED,which joins stablemate Loewe on the corner of Flinders Lane and Russell Street.
AP’s Zelman Ainsworth said luxury retail on Collins Street had become so popular that many of the high-end brands were extending their leases to five years or even 10 years in the current flagship locations.
He said luxury retailers all over Australia were expanding their range within the stores,from traditional handbags and shoes to clothes and jewellery.
“It is becoming more common for luxury groups to secure flagship stores of 500 to 1000 square metres to effectively represent the heritage and story of the brand to showcase the entire lifestyle of the brand,” Ainsworth said.
“Increasingly,there are more examples of luxury retailers opening multiple stores in one CBD to establish themselves in the fabric of the city. Chanel,Paspaley and Burberry each have two stores in the Sydney CBD,with more luxury groups following in the same direction.”
A Pinctada Maxima shell chandelier,hand-crafted with a surface of gold leaf and etched glass at the Paspaley store in Sydney.Supplied
In Melbourne,Loewe,Breitling,FRED,Cartier,Berluti,Hermes and Off White have signed new leases in the CBD,either renewing leases,some with expanded space or new locations.
Perth and Brisbane are also getting more attention from luxury groups. Ainsworth said he anticipated more luxury groups securing significant flagship stores in Australia’s major CBDs,as the performance in this retail category grows.
Jeweller Paspaley has opened its new Sydney boutique on Castlereagh Street,a 115-square-metre home in the heart of Sydney’s CBD. It will feature a Pinctada Maxima shell chandelier hand-crafted with a surface of gold leaf,while the flooring denotes the brand’s connection to the sea,and focus on sustainability,with “hand-tufted rugs made from a mix of wool and recycled ocean plastics”.
James Paspaley,group executive director,said the brand was “in a season of change,expansion and growth with new boutique offerings,in both Sydney and Brisbane,and a wider vision for the brand in the lead-up to the reimagining of our historic Martin Place flagship boutique”.
Colliers head of retail leasing Michael Tuck said premium and luxury brands continued to seek new prime retail premises on long-term leases generally ranging 10 to 25 years. The scarcity of available tenancies will be exacerbated,enhancing the core precinct as a global destination.
“The luxury brands which remain in the market at this stage are assessing options in the core of Sydney’s CBD,and are confident regarding the return on investment for luxury and flagship fitouts,which can easily reach $20,000 per square metre. By comparison,fitouts for upmarket stores across Sydney’s CBD can average $5000 to $8000 per square metre.”
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