Dolce & Gabbana opens first Australian store after five-year hunt: Why the right location is vital

At the opening of Dolce & Gabbana’s first Australian store last night, the Italian luxury fashion house revealed it had been looking for a site in Melbourne for the past five years.

The staggering wait was revealed last night to journalists at the launch. In keeping with company policy, no one from D&G was authorised to speak on the record.

The fashion house wanted nothing less than Melbourne’s iconic Collins Street for its two-storey flagship. The strip is already home to other high-end brands like Chanel, Prada, Hermes, Cartier and Gucci.

Leasing Information Services managing director Simon Fonteyn told SmartCompany he’s not surprised they had to wait so long to find the spot.

“They need to establish a flagship, and flagship locations in the CBD are difficult to obtain,” he says. “There’s a lot of competition from the larger international brands for these sorts of locations.”

For international brands looking to establish a foothold in Australia’s fashion market, flagship stores serve as a marketing and distribution hub in addition to making sales, he says.

“It’s a promotion strategy, particularly for a company like D&G. They’ll be a major supplier to other stores in things like sunglasses, so it’s important for them to showcase the brand like that. It’s a very typical strategy, and one also followed by retailers like Zara and Topshop.”

After the flagship comes the rollout to the other capital cities, or, depending on the brand, to the suburbs.

While not all businesses can wait five years for the right location, nor need a space the size of D&G’s new store, Fonteyn says putting solid effort in to getting the right location for your business is vital.

And he says if you’re not looking for a high-profile flagship CBD location, it’s a tenant’s market at the moment.

“For D&G, there’s an excess of demand for supply for these types of locations.

“But in shopping centres, the market is very soft.”

At its half-year corporate results briefing towards the end of last month, Westfield Group revealed its new tenancy contracts could be lowered by up to 10%.

It was the latest sign of a retail leasing sector under strain. Tough retail conditions are causing lower renewal rates, in turn putting pressure on the leasing sector. For retailers, this makes it a good time to upsize to a better location if you can afford it.

Fonteyn says it’s probably the last major announcement he would expect in the retail property space until the end of the year.

“Traditionally, retailers stop leasing permanent space around October as everyone gets ready for Christmas,” he says. “So, if they do deals after that, the stores won’t open until after February at least. It’s getting towards the end of the retail leasing season.”

Last week saw fast-fashion titan H&M announce it would soon be opening a store in Melbourne’s GPO building.