International Journal of Business and Management; Vol. 14, No. 9; 2019 ISSN 1833-3850 E-ISSN 1833-8119 Published by Canadian Center of Science and Education The Strategic Evolution of Fashion Flagship Stores Edoardo Sabbadin1 & Simone Aiolfi2 1 Professor of Marketing, Department of Economics, University of Parma, Italy 2 Adjunct Professor of Marketing, Department of Economics, University of Parma, Italy Correspondence: Prof. Simone Aiolfi, Department of Economics, University of Parma, Via J.F. Kennedy 6 – Parma - 43125, Italy. E-mail: [email protected] Received: May 14, 2019 Accepted: June 20, 2019 Online Published: August 5, 2019 doi:10.5539/ijbm.v14n9p123 URL: https://doi.org/10.5539/ijbm.v14n9p123 Abstract About thirty-five years ago the trend of investing in flagship stores in the fashion and luxury sectors started, and has not stopped even since the last economic crisis. Recently, flagship stores have expanded into new sectors. There is an increased interest in flagship stores; but until now, they have received little attention in academic research. Published papers are mainly related to the fields of luxury shopping and internationalization studies. Nowadays, the term “flagship store” is ambiguous; it has different meanings. A flagship brand store is, in general terms, the most important, expensive, and representative store of the brand. It has to show the full range of products and services offered. Usually it is the largest store, in the most prestigious location, and adopts original store design solutions; they offer new facilities, and a very high service level. Moreover, flagship designers are famous and prestigious architects; (“Signature” architects, or “Archistars”) and the aim is to create iconic buildings. The store design solutions are different from other mono-brand stores or franchisee outlets of the company. Academic research until recent years has overlooked studying the trend of the main luxury and fashion international companies opening flagship stores; which are the most expensive type of retail stores to own, nevertheless a number of questions remain. The purposes of this paper are (1) to consider the evolution of the role of the main types of flagship stores, (2) to establish whether flagship stores constitute a marketing innovation, (3) to discuss factors pushing firms to develop flagship stores and finally, (4) to assess implications for management. In order to answer to our research questions, the study adopts a qualitative approach, in the belief that this type of research is consistent with the research questions. Particularly, we adopted two research methods: interviews and cases studies. We collected interviews with store designers and entrepreneurs. Finally, some information was also collected from secondary sources such as web sites or company news. Our study provides relevant information for marketing managers considering the cost of investing in flagship stores. Vertical branding and new flagship brand stores are becoming increasingly widespread among different firms and sectors, and are bringing to the forefront a requirement for new skills. Particularly in the store design phase, where firms need to be able to take part in constructive dialogue with a wide variety of professional profiles like architects, internal designers, and visual merchandisers. They need a new approach to decoding and displaying the primary values of a brand through innovative store design solutions and sales points, which should be inspired by the communication and entertainment industries. Flagship brand stores should be designed and run to be unique unrepeatable places, able to enhance brand image and provide animation and entertainment value to the brand. Furthermore, flagship store success depends on the firm’s ability to integrate interdisciplinary issues and commercial and artistic-creative communication. Keywords: flagship stores, retail marketing innovation, Luxury and fashion branding 1. Objectives Nowadays, the term “flagship store” is ambiguous and it has different meanings. A flagship brand store is, in general, the most important, expensive, and representative store of the brand. It has to show the full range of products and services offered. Flagship stores are larger than single brand stores, usually on several floors and are located in important shopping locations. Flagship stores make a statement and demonstrate the strength of the brand with the aim of enhancing it. They offer new facilities and a very high service level. Moreover, flagship store designers are famous architects and the goal is to utilize “Signature” architects, or “Archistars” to create 123 ijbm.ccsenet.org International Journal of Business and Management Vol. 14, No. 9; 2019 iconic buildings (Webb, 2009). The store design solutions are different from other mono-brand stores or franchisee outlets of the brand company. They make the supply of goods into a spectacle, and by entertaining customers and providing a show of strength, flagship stores make shopping into a positive and unique experience. About 35 years ago the trend of investing in flagship stores in the fashion and luxury sectors started. This trend has continued even with the last economic crisis (after 2008). The literature on flagship brand stores is growing; but in different directions. One is internationalization. Some papers focused on luxury and fashion sectors analyzed flagship stores as an international market entry model (Moore, Doherty & Doyle, 2010). Recently, flagship stores have expanded from fashion and luxury retailing into new sectors. The management literature on innovation focuses on high-technology industries. Instead, innovation receives less attention in low technology industries, as retailing and service. Are flagship stores a marketing innovation? The answer is complex because a flagship store is a multidimensional concept: Is it a service innovation? Is it an innovation in service design? Is it an innovation in the brand communication? The flagship store is a real and physical incarnation of the brand. Flagship stores use location, store design, services, and facilities to build brand equity. Now is the strategy to open expensive flagship stores effective and efficient for brand power communication? The purposes of this paper is to study the evolution of the marketing roles of flagship stores, to identify the main types of flagship stores in order to establish whether flagship stores constitute a marketing innovation, to identify the main factors pushing firms to develop flagship stores. Furthermore, interesting implications for managers and retail management could emerge. According to the proposed theoretical background, we have identified the following research questions: Q1: What is a flagship store? Q2: What are the strategic marketing functions of a flagship brand store? Q3: Are flagship stores design different from other mono-brand stores? Q4: What are the specific characteristics of flagship stores? Q5: What is the source of the power of design in the flagship store environment? Q6: What is their marketing role in building brand equity? Q7: What are the main links in the brand equity building process? Q8: What leads firms to integrate downstream and develop through flagship store? Q9: Are flagship store the new main competitors of independent retailers or chain stores? Q10: What are the competitive advantages of the flagship marketing strategy? Q11: What are the main managerial implications? The purposes of this paper are: 1. To consider the evolution of the role of the main types of flagship stores; 2. To establish whether flagship stores constitute a marketing innovation; 3. To discuss factors pushing firms to develop flagship stores; 4. To assess implications for management. 2. Methodology In order to answer to our research questions, the study adopts a qualitative approach, because we believe that it is the one most consistent with the research questions. Particularly, we adopted two qualitative research methods used in previous studies: interviews and cases studies. We collected interviews with store designers and entrepreneurs of the fashion and luxury sector. Some information was also collected from secondary sources such as companies’ official web sites or company recent news. The research was carried out as follows: 1. Flagship and temporary stores were the primary sources of information. 50 stores were studied with field analysis. Data was collected and classified for multidisciplinary case studies. 2. 85 firms with downstream integration in single brand stores and franchising were invited to complete a questionnaire (20 firms from the fashion sector). 3. We started the research first featuring interviews with store designers that are constantly in touch with the 124 ijbm.ccsenet.org International Journal of Business and Management Vol. 14, No. 9; 2019 fashion and luxury leading groups. Then we analyzed case studies such as Freitag in Zurich, which opened in 2006, and the Gucci flagship store in the Brera district of Milan, which opened in 2013. 3. Findings What are the main characteristics of flagship stores? What are the main differences between flagship stores and mono-brand stores? (see Table 1) Kozinets et al. (2002) “identify several types of brand-related stores. Flagship brand stores can be distinguished by three characteristics. First, they carry a single (usually established) brand of product. Second, that brand’s manufacturer owns them. Finally, they are operated, at least in part, with the intention of building