Identifying the Emergence and Strategic Significance of Third Space within Fashion Retail

1. Identifying the Emergence and Strategic Significance of Third Space within Fashion Retail THIRD SPACE CONCEPT Karinna Nobbs & Veronica Manlow

2. Contents • Introduction • Definition & Background • Form & Function of 3rd Space • Methodology • Results • Summary • References • Case Study • Discussion Points

3. 1. Introduction • Evolution of the primary motivation of fashion consumption • Postmodern consumer society • New points of differentiation required • Experience Economy (Pine & Gilmore 1999, Holbrook and Hirschman 1982, Schmitt, 1999) • Down-sizing due to growth of e-commerce (WWD 2012) • Impact of ‘showrooming’ • Merging of retail and leisure

4. “All department stores will become museums, and all museums will become department stores” Andy Warhol

5. 2. Third Space – What is it? • “Somewhere which is not work or home but a comfortable space to browse, relax and meet people, even enjoy a meal” (Mikunda 2004:11) • “A space which is only partly about shopping” (WPP 2010) • Also known as “Third Place” • Emphasis on socialisation, interaction and community • Concept requires further clarification • Aim to explore the form and function of 3rd Space within the Luxury fashion flagship Stores

6. 2. Third Space - Background • 3rd Space is not new but within fashion it has been growing since 2008 • Oldenburg (1989) spoke of the traditional presence of neutral third places in communities • Places where individuals could gather, exchange ideas and socialize • Gap for commercial spaces which fill the void created by the erosion of these social spaces • Shops and shopping centers now take the place of traditional communal meeting points (town squares, churches, barber shops, bars, grocery stores, restaurants)

7. 3. Third Space – Characteristics of Form • Socialisation, entertainment and the enactment of self takes place in new branded spaces • Supermarkets featuring cooking classes and wine tastings to “stitch and bitch” sessions and customisation services in clothing stores (WGSN 2013) • Oldenburg (1989) suggests that they should be: free/inexpensive, involve food/drink, be highly accessible, involve regular community and are welcoming/comfortable • Trend is particularly evident within the luxury fashion sector

8. 3. Third Space – Characteristics of Form • Consumers are increasingly interested in experiences which are: • Unique • Personalised • Entertaining • Relevant • Authentic • Not large spaces • Form of added value often promoted via social media and word of mouth (The Future Lab 2013)

9. 3. Forms of Third Space • Open space – lounge/rest areas, gardens • Closed Spaces – VIP Rooms, private suites • Space for games/sport • Space for art & culture • Space for company artefacts – heritage/museum • Cafes and Restaurants • Spa/Grooming services • Space for education • Space for technology • Adaptable space • Temporary Space • Mobile space disembodied from store (i.e. pop ups)

11. 3. Function of Third Spaces • Third spaces are “being spaces” that offer a refuge from conventional commerciality • Increase dwell time and create an emotional connection • Non traditional retail space – strategic purpose • Branded places that transcend the static commercial experience with hybrid spaces that speak to a deeper commitment to a more flexible, adaptable and experiential business model (WWD 2013) • i.e. art moves from occupying a space on the wall to up front and center stage

12. 3. Function of Third Space • Diffusion of point of attention and intention • Focus is shifted from brand as icon to brand as omnipresent • Co-creation of value • Total branded experience allows brand to be decentered • Attention shifts to self, others, screens, installations, performance art, activities • However all points should lead indirectly back to the brand

13. 3. Functions of third space • Emotionally engaging place • Competes against e-commerce • Creates deeper dialogue with brand through emotional, sensory connection • Destination location for an international audience • Attract stakeholders attention • PR exercise • Integrates the brand values • Communicates brand personality and positioning

14. Carnegie Trust Research Grant Exploratory, Inductive, Qualitative Observation (Quota/Purposive) Key Informant Interviews (Convenience) 2 Phases: Phase 1 – National, (2 key locations, 87 in total, 12 in-depth elite interviews) Phase 2 - International Paris, New York, Tokyo, Milan, Hong Kong, Moscow, Seoul, (2 key locations, 527 in total) Flagship Store Managers/Brand Representatives (3 interviews per city, 22 in total Thematic/Content Analysis 4. Methodology THIRD SPACE CONCEPT

15. 5. Results: Form OBSERVATION: • Around 57% of the stores utilised an aspect of third space/place (Tokyo, Milan, New York) • Lounging/rest area • A space for art/Culture • An area displaying/curating the brand’s heritage • Private area/VIP Suite • A Cafe/Bar

16. 5. Results: Form – Conceptual Model

17. 5. Results: Form INTERVIEWS • Very few brand representatives were familiar with the term • However they understood the concept very well and said it was an area of investment going forward despite difficult trading conditions • “This concept is not new but it certainly reflects some of the marketing strategies we are about to introduce” (Italian Luxury Brand) • The manipulation of technology within 3rd space will increase

18. 5. Results: Function • “To stand out from competitors” (American Luxury Brand) • “To excite customers and get them to stay longer...and hopefully buy more” (British Luxury Brand) • “To build an emotional connection with the brand” (French Luxury Brand)

19. 5. Results: Function • “As a signifier of lifestyle” (Italian Luxury Brand) • “To act as a further point of communication for the designer’s values and philosophy” (American Luxury Brand) • “To showcase how flexible the brand can be” (British Luxury Brand)

20. 6. Summary • Emerging research area within the business and management academic discipline • The forms of 3rd Space relate to access, time, culture, leisure and education • The function of 3rd Space is linked to the notion of community and emotional engagement, co-creation of value, differentiation and positioning • Future research aims to quantitatively test the model of third space THIRD SPACE CONCEPT

21. 7. References • Anderson, S, Nobbs, K, Wigley, S and Larson, E (2010) ‘The Motives and Methods of Fashion Designer and Architect Collaborations’ Journal of Media Arts Culture, Vol 8. No.2 pp 1-11. • Allegra Strategies (2005) ‘Project Flagship: Flagship Stores in the UK’ January 2005, Allegra Strategies Limited: London • Barreneche, R, A. (2005) ‘New Retail’. Phaidon Press: London • Kozients, R.V.,Sherry, J, F, DeBerry-Spence, Duhachek, A, Nuttavuthisit, K, Storm, D. (2002) ’Themedflagship brand stores in the new millenium’. Journal of Retailing, Vol. 78.,pp17-29. • Moore, C & Docherty, A (2007) ‘The International flagship stores of luxury fashion retailers’ Fashion Marketing: Contemporary Issues (Hines & Bruce) • Oldenburg, Ray (1989). The Great Good Place: Cafes, Coffee Shops, Community Centers, Beauty Parlors, General Stores, Bars, Hangouts, and How They Get You Through the Day. New York: Paragon House • Reynolds, J. Howard, E, Cuthbertson, C, Hristov, L (2007) ‘ Perspectives on retail format innovation: relating theory and practice’. International Journal of Retail & Distribution Management; Volume: 35 Issue: 8. pp 647-660. • Tungate, M (2009) ‘Luxury World: The past, Present, and Future of Luxury Brands’ Kogan page: London.

22. 8. Case Study: Hermes • Hermés’ three level deep flagship is built in the former Lutetia Hotel’s indoor swimming pool in Paris’s left bank • The first level features a florist, book store and tea salon • Tall lattice wood huts separate space which are multi purpose • The ‘Festival des Mètiers’ is an event where customers can engage with artisans at work

25. 9. Future Research & Discussion • How does this concept transfer within an online environment? • Is it relevant for all sectors of the fashion industry (Mid-market and Value)? • Is the concept culturally sensitive? • How can the strategic impact and effectiveness of 3rd Space be measured? • How should the commitment of 3rd Space and commercial space be planned?