Celebrity-backed brands are headed to the mall

Celebrities with retail ventures increasingly embrace physical spaces, following the footsteps of successful digitally native brands like Warby Parker, Lululemon, and Allbirds.

Kim Kardashian’s SKIMS, a direct-to-consumer powerhouse valued at $4 billion, is making its bricks-and-mortar debut in the first half of 2024 with a 5,000-square-foot flagship store on Sunset Boulevard in West Hollywood. Plans for a second store in New York City are in the works. 

Other notable success stories in the clicks-to-bricks realm include Savage X Fenty by Rihanna, Goop by Gwyneth Paltrow, Fabletics by Kate Hudson, The Honest Company by Jessica Alba, Uncommon James by Kristin Cavallari, and Billionaire Boys Club by Pharrell Williams.

Transitioning from cyberspace to physical locations carries risks, considering the prevalence of online shopping. However, the strategy has a track record of paying off.

“Digitally native brands have long influenced real estate dynamics,” says C. Ebere Anokute, JLL National Retail Research Manager. “With the rise of experiential retail, celebrity-endorsed brands are perfectly positioned to script the next chapter in the clicks-to-bricks success story.”

Unleashing the Power of Clicks-to-Bricks

In the past decade, a wave of online brands emerged, but rising online acquisition costs have prompted them to seek new avenues for capturing audiences.

Opening physical stores has proven to amplify online sales through the “halo effect,” as brands discovered. For instance, Warby Parker began as an online eyeglasses retailer but now operates 200 stores in the U.S. and Canada, generating 60% of total sales. Each new physical location approximately triples online sales in the surrounding area. Allbirds also experienced a similar trend, with their Boston Back Bay store opening resulting in a 15% increase in web traffic from that region alone.

Interestingly, digitally-native brands tend to gravitate towards malls rather than main streets, as revealed in JLL’s The Rise of Celebrity Retail report. Over the last decade, celebrity brands have taken over more than 300,000 square feet of U.S. retail space (75% of which was in a mall), signifying significant growth within this niche market, Anokute says.

Prominent shopping destinations like Westfield London, The Grove in Los Angeles, and DLF Mall of India exemplify the digital-to-physical expansion narrative. A major mall investor, Simon Property Group actively seeks to infuse its international portfolio with digitally native brands.

Why Celebrities Choose Malls

The preference for malls stems from economic factors. With declining foot traffic, traditional brands have shown decreasing interest in malls, creating opportunities for digitally native retailers to secure favorable deals. This trend benefits both brands and malls alike.

Celebrities contribute their creative vision to the design of their physical stores, resulting in immersive experiences, thematic arrangements, and captivating aesthetics. These elements lengthen customer visits and encourage repeat footfall. The experiential retail landscape physical stores offer cannot be replicated in virtual realms.

Malls also benefit from the allure of celebrities. Fans are enticed to visit brick-and-mortar locations to witness firsthand the embodiment of their favorite celebrities’ visions. This curiosity drives increased foot traffic as enthusiasts flock to the mall to engage with their preferred star’s brand.

“By leveraging their influential status, these brands bring an element of star power, create engaging shopping experiences, and build a loyal customer base,” says Anokute. “The success of these ventures showcases the enormous potential of the physical retail landscape.”