PUMA’s Fifth Avenue, New York City Flagship is an Intelligent Loss Leader

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Source: Find us on 609 Fifth Avenue, New York City! – PUMA CATch up

This space won’t make any money. I wanted to get this out of the way. With the costs of commercial leasing in New York, PUMA probably can’t generate enough in sales to turn a profit, but this space isn’t about profit. The PUMA Flagship is an experience that takes place in the most diverse city in North America. I’ve stated continuously as each brand opened their flagship in NYC that these were marketing expenses. According to Statista PUMA spent 931 Million Euros in 2018 on marketing, an increase of almost 100 Million, more than they had in the previous year. That extra amount has made an incredible difference in the perceptions of the brand. As PUMA builds out doors they understand that some spaces have to be revolutionary. The cost of this space will be one of the smartest marketing and research investments the brand can make.

What Should You Know About the Space?

I’ve followed the growth of PUMA. A recent store opening signaled that the brand was getting ready to make a push in DTC that would be rooted in an experienced based store that catered to an exciting form of consumer engagement.

Performance Isn’t Dead | How DTC Helps Brands Control the Narrative & PUMA’s New Retail

In the article above, I stated:

The direct-to-consumer model improves the consumer connection. Puma has developed on a small level what Nike has done in large formats with their Jumpan LA store. The Sydney shop explains perfectly what I recently wrote about how Perch could help to create a better in store experience for sneaker shopping. You have to take a moment to check out the work Puma is doing, but more important you have to consider the fact that stores the way they are currently set up can’t implement and give this sort of space to brands not named Nike. The small store format is better suited for brands and this will continue to create the disruption of sneaker retail.

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The very smart play by PUMA to open a smaller shop to test the concept in Sydney and then transition the concept to a larger shop is a genius play by the brand. I really like to see when a company cares enough to implement their strategy in a transparent manner allowing us to see where they are headed. This bodes well for a brand that I’ve long said that their growth is rooted in fashion which wouldn’t and can’t sustain. This small to big transition is also a strategic move that signals PUMA will be expanding their reach in the U.S. by creating brand experience shops.

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A lot like adidas and their flagship in Chicago where they worked with artists in a rotating gallery experience for the store, PUMA is doing something very similar. They have curated work from local artists. These art installations create a new store every few weeks and this invites consumers to visit. Brick and mortar Chain stores can only shift product and rollout new window displays to attract the consumer. There really isn’t the opportunity to provide the consumer with a real experience. When you consider that the stores have to become IG moments or learning experiences, Just For Feet was really ahead of its time.

PUMA is Innovating Instead of Resting on Lifestyle Growth

I expect PUMA over the next year to heed my constant cries for small in strategic cities by brands. With the launch of the larger PUMA store where experiences can be IG’d and shared via social, people in cities not named New York will look for PUMA shops. Think about this, If PUMA begins to post more online Flash sales it will capture more digital users. At this point they can see the locations where consumers are looking at PUMA as an option. The brand has a proven concept in Sydney that will inform design in NYC and I predict this will inform small shops in: Nashville, Orlando, Austin, Indianapolis, and San Diego. Notice I didn’t put traditional big cities? PUMA has the chance to roll out store experiences in cities that are diverse and who also have professional sports. I’m guessing that the brand will have success in those cities. The Flash sales or strategic marketing campaigns will help to give the brand a 3-5 year plan of action that could be exciting to watch.

Notes:

The PUMA Flagship was introduced over a year ago. The idea that the Sydney Store informed the company is my own opinion.

Source for stats: https://www.statista.com/statistics/956034/puma-marketing-expenses/

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