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Holt Renfrew to bring luxury shopping 'apartments' to its stores

July 17, 2014

Through a special arrangement, presented here for discussion is a summary of a current article from Retail Insider, an e-publication showcasing Canadian retail news, opinions and analysis.

In an effort to become even more exclusive, high-end department store retailer Holt Renfrew will create luxury shopping "apartments" in its Canadian stores. Referred to simply as The Apartment, the spaces will be accessible only to a handful of Holt's top customers, pending management approval. According to Holt Renfrew president Mark Derbyshire, the concept will provide "unparalleled luxury" that will eventually roll out in all its markets.

Holt Renfrew's first "apartment" opened in January at the renovated and expanded Yorkdale Shopping Centre Holt Renfrew. The 1,000 square foot space, designed by New York City-based architectural firm Janson Goldstein, features a living room, spacious dressing room with a larger private dressing area, kitchen, and an en suite bathroom. For each client's booking, fresh flowers and food of the client's choice are provided. The space can be used for a variety of purposes including wardrobing, personal styling, trunk shows and small parties.

Mr. Derbyshire recently told Women's Wear Daily, "Everything is completely tailored to meet the needs and tastes of our customer. It's an escape where you can take a friend or 10 friends. But we are very discreet as to who has access to this apartment."

Mr. Derbyshire went on to say future stores "may be bigger, some smaller," estimating its Bloor Street apartment might run 1,500 square feet.

According to the Globe & Mail, The Apartment will be available on a complimentary basis to Holt Renfrew's "high-value client" — that is, the store's big spenders and longstanding customers. New York City-based retail consultant Robert Burke told the Globe & Mail, "Department stores have realized for quite some time that a small percentage of customers can make up 65 to 70 percent of the luxury business. The department stores have become very focused on marketing and appealing to that high-net-worth spender."

Holt Renfrew's Apartments address Canada's luxury consumers at a time of unparalleled competition. Saks Fifth Avenue will open as many as seven Canadian stores within the next several years, and Nordstrom will open several stores here, as well. Harry Rosen will expand and/or renovate many of its stores within the next couple of years, while smaller independent luxury retailers are also looking to up their game.

Discussion Questions:

What do you think of "The Apartment" concept being developed by Holt Renfrew? Will such exclusive experiences engender loyalty with high-end shoppers?

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Instant Poll:

How likely is "The Apartment" concept being developed by Holt Renfrew to succeed?

Comments:

I'm happy to see someone adopt the "hospitality retailing" concept that was floated around for quite some time. In this concept, elements from luxury airport and hotel lounges would be incorporated into modern retailing.

One concept is the creation of a luxury space available for rental to accommodate baby showers and girls weekend out shopping. These are formal settings, and items can be bought on the retail floor as gifts for the guest.

Another concept under "hospitality retailing" is the creation of a separate hospitable area for transactions/fulfillment, to separate the buyers from the browsers and to help convince browsers to enjoy the experience of a buyer.

If you look at stores such as Macy's in New York and the old Marshall Field's building in Chicago with multi-level floors, many of their top floors can be refitted for this purpose.

Ed Dunn, Founder, (Stealth Operation)

Retailers need to provide consumer experiences. If a retailer can identify the small percent of consumers who provide a high percent of sales/profits and provide an appropriate experience for them, they are likely to increase loyalty and sales. The "apartment" concept sounds like a reasonable solution for this group of consumers to be sociable if they like, to have a private place for trying on clothes, and for making their shopping trip relaxing. This will not work for everyone, but is a creative approach for this retailer and these consumers.

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Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

This looks like something out of the '50s. Do the 1 Percent want to be waited on hand-and-foot? Maybe. I'm sure they must have run the numbers, but I wonder how what the ROI is on those 1000 square feet.

How many of those luxury 1 Percenters are buying full price, with a reservation?

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Bob Phibbs, President/CEO, The Retail Doctor

The approach is headed the right direction. With select retailers, I have always leveraged their private shopping operations. It helps to have someone who knows how to make you look better than you are—wait—is that an self-insult? Back to topic, The Apartment maps in very well with lifting the marketing focus on the luxury shopper; the group willing to support much-needed high margins and fast-moving fashions.

So a good move and a shot across some competitors bows. Holt knows their best shoppers—do you?

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Tom Redd, Vice President, Strategic Communications, SAP Global Retail Business Unit

Camille's got it right—it's about the experience. the "high-end" world isn't simply about putting higher priced stuff out on the rack; it's about using time and space in a way that takes the wealthy shopper to a place even she/he hasn't been before.

Fortunately, as we all know, the margins in high-end goods are enormous so the economy of this "Apartment," indulgent, coddling model works financially. The risk is more on a metaphysical level. People get accustomed to these experiences very quickly and there's always someone trying to up the "experience" game. I once belonged to a "high-end" philanthropy group where one incentive was monthly events at very wealthy peoples' homes. The first time I went, the home took my breath away. The second time, the home made the first one look like a double-wide. The third time, the home literally took up blocks of the city and was lavish to the point of discomfort.

Don't get me wrong here—the truly blessed people who owned these homes were amazing, kind, gracious, unassuming and generous beyond belief. My point is that the "experience economy" can be a very superficial and tenuous thing. Enter it with care.

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Ian Percy, President, The Ian Percy Corporation

I read this and my first thought was, "you must be kidding." But then I realized I am not one of the elitists "The Apartment" would be made available to. I can't imagine how wealthy one would need to be to qualify since there is an "approval" process to go through.

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

The words "high-end" and "exclusivity" belong with each other. "The Apartment" can elevate a shopping experience to an event. The customer in the luxury market demands and expects a special shopping experience. This is an interesting concept that, for Holt Renfrew, will hopefully resonate with the high-end shopper.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

Holt Renfrew's luxury selling suite reminds me of how some big city department stores have catered to some top-end clientele (maybe some still do) in past decades. Big wallet guests were led discretely to a private dressing room/salon where clothes were brought to them (or even modeled) between sips of champagne.

This facility may be a step up in size and lavishness, but there has always been special coddling for the carriage trade (what we used to call the one per-centers in the previous millennium).

Loyalty is a lot to ask from that rare group of customers, since they have the most choices of where to spend. But "The Apartment" reflects a commitment to ask for and pursue a share of their wallets. The luxury mindset is amazing to me, but I suppose there are some folks who need a more convenient, comfortable way to spend large sums of money.

As far as return on retail square footage goes, I suspect it's almost a negligible consideration here. Most department stores are over-spaced these days anyway. The space is "free." It's the service costs that have to be managed with some care.

(Fun fact: "The Apartment" sounded like the title of an existential stage play to me. I checked—it was actually a 1960 satirical film starring Jack Lemmon, Shirley MacLaine and Fred McMurray. Not about retail, but very successful in its day.)

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James Tenser, Principal, VSN Strategies

There's definitely two sides to this coin, so I can see value in this if it's handled really well and I can see what the Retail Doctor is saying too. By really well, I mean leveraging "The Apartment" to create a level of exclusivity for invitees so as to engage them and their spending, while not creating an air of exclusion and snobbery amongst the throngs of regular shoppers. It sounds like it could be a very tight rope to walk over a very deep chasm.

It will be interesting to see how this plays out over time.

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Ken Lonyai, Digital Innovation Strategist, co-founder, ScreenPlay InterActive

For Holt-Renfrew, this could be a good move. Separating the high dollar loyal customers from the sale shoppers and browsers can work. The associates at this store do a great job of handling all shoppers, but this provides an enhanced level of service. This concept extends the personal shopper experience, providing exclusive showings based on shopper history and and interviews. This is a customized, very high end, personalized experience that will appeal to this Canadian consumer.

Anne Bieler, Sr. Associate, Packaging and Technology Integrated Solutions

Smart retailes are all engaged in efforts to differentiate themselves from the competition. Holt Renfrew will definitely make some noise doing this, just as Chico's has by letting customers set up appointments outside of business hours. Watch for more innovations like this.

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Cathy Hotka, Principal, Cathy Hotka & Associates

Kudos to HR, this is a GREAT idea. Bet we see similar perks in US Neiman Marcus stores in the near future!

William Passodelis, associate, ML Co.

Um, okay. I am clearly not a high-end, luxury shopper with oodles of time on my hands, because I personally would not see myself using this kind of facility. That said, the people at Holt Renfrew are smart, and they must have tested out the concept with their most valuable customers. I imagine the notion is to give their most valuable shoppers an oasis away from the maddening crowd, in which they can recline on a comfy divan, and hopefully scroll through the store's offerings on an iPad, selecting choice items to be brought up to them. It all sounds like a decadent shopping experience, but if that is what the big spenders are looking for, and it will help retain them and increase their purchases, then good on Holt Renfrew for identifying the opportunity to better serve their customers.

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Alexander Rink, CEO, 360pi

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