Large and In-Charge: Why Flagships Aren't Flagging in the Digital Age

A recent Retail Wire article asked the burning question: Are flagship stores necessary for retail brands? In my Retail Wire response, I pointed out that flagships aren't a must-have for every brand, but they are absolutely a nice-to-have for many. Multi-format retail has quickly become the new normal, and flagships are a fantastic way for brands to take control of the customer experience, own the brand story, and show off the latest and greatest in-store tech. 

I love a trip to the Rhinelander mansion as much as anyone, yet the argument that flagship formats should be reserved for luxury brands is over-hyped. The reality is they can be a game-changer for a wide range of brands and, in fact, they already are. LEGO's flagship store on 5th Avenue in New York isn’t just a place that sells brick sets, it’s an immersive destination that brings in customers from all walks of life. Uniqlo, known for its value-priced, innovative basics, is taking its flagship store strategy a step further with a spin-off “sister” brand called GU that targets younger shoppers at even sharper prices. GU is gearing up to make a big splash with its first flagship store outside of Japan, set to open in New York’s SoHo neighborhood this fall. For those who can’t make it to the Big Apple, an online storefront will launch at the same time. 

One of my enduring Retail Trajectories, "flagships are still flying" has remained a steadfast truth, even as the Covid crisis put the brakes on brick-and-mortar expansion and the rise of small-format retail took off.

The Case for Flagship Stores in the Digital Age

Despite the hefty investment needed to get a flagship store up and running, these retail marvels arguably make more sense now than ever for direct-to-consumer brands. More and more, these brands are realizing the truth behind my mantra, "true scale is no longer achieved in a single channel." In fact the online advantages that digital-native brands naturally enjoy give these brands a head start when opening physical stores. Here's why:

1. Direct Customer Relationships

As the name "direct-to-consumer" suggests, digital-native brands have a direct line to their customers, which allows them to gather priceless first-party data, dive deep into customer preferences and behavior, and use all that juicy intel to create loyal fans through personalized experiences and laser-focused marketing. These brands already have a built-in fan base that's ready to storm the doors on opening day (at least that’s the aspiration).

2. Agility and Adaptability

Digital-native brands tend to be nimble and quick, always ready to pivot based on changing market trends, customer whims, and shiny new tech. These brands embody the "test, learn, and fail fast" philosophy that traditional retailers are attempting to mimic (even as some lurch toward launch and learn). Flagships are a natural habitat for direct-to-consumer brands because they are the ultimate laboratories. These days, most flagships are teeming with all sorts of retail experiments, whether shoppers know it or not. This presents a terrific opportunity for retail tech and solution providers to showcase their offerings and get in on the ground floor of retailers' and brands' pet projects before they scale.

3. Lower Overhead Costs

Digital-native brands can sidestep many of the costs associated with physical stores, like rent, utilities, and staffing. This frees up cash that can be poured into product development, marketing, customer experience, and, you guessed it, a big, beautiful flagship store (or two, or three…).

The Universal Benefit: Brand Awareness and Control

As compelling as flagship stores can be for direct-to-consumer brands, there's one benefit that's pretty much universal, no matter the core business model: flagships crank up brand awareness and give companies greater control over their brand stories. That's a big deal, especially as two shifts in the retail landscape threaten to push some brands into the shadows.

1. Shifting Store Strategy

I'm not a big fan of using total store opening and closure stats to gauge the health of the retail industry. The wild swings in the final numbers don't tell the whole story. Sure, Macy's might be shutting down 150 or so stores this year, but Dollar General is more than making up for that by launching 800+ new locations. When Walmart announced it would open 150 stores in the US over the next five years, people cheered, if only because the world's biggest retailer has been holding back for years. But here's the thing: brands that rely heavily on wholesale partnerships are at the mercy of their retail partners' decisions. When a retailer decides to scale back on expansion or close up shop, brands take a hit in exposure and sales. Suppliers are left watching from the sidelines as their partners make decisions that directly impact their business, with no real control over the outcome.

2. Distractions and Diversions

Some retailers are pumping the brakes on brick-and-mortar growth simply because they can. Take Walmart. The retail giant has more growth-driving tricks up its sleeve than ever before. Its e-commerce biz might be entering its golden years, but you'd never know it. Sales shot up 22% in the first quarter of fiscal 2025. Walmart's insanely profitable global advertising business? Up an impressive 24%. Walmart may be second only to Amazon in the advertising game, but most retailers are trying to get in on the ad-slinging action. Product sales aren't an afterthought (yet), but non-product ventures are rapidly gaining ground as a profitable alternative business model. That means some brands will get pushed to the back burner, while others (the ones with deep pockets and a willingness to throw ad dollars at retailers) will bask in the limelight.

3. If You Want Something Done Right…

Flagship stores are a powerful tool for brands looking to boost awareness, control the narrative, and deliver standout customer experiences. For direct-to-consumer brands, the online advantages they already enjoy give them a serious leg up in the physical realm. As traditional retailers juggle shrinking fleets, a slew of new priorities and opportunities, flagship stores give brands a chance to stay front and center in consumers’ minds and leave a lasting impression. Flagships aren't losing steam—they're soaring to new heights.

Key Takeaways

For direct-to-consumer brands, the online advantages they've already got in their back pocket give them a serious leg up when it comes to conquering the physical retail world. While traditional retailers are juggling brick-and-mortar optimization and a million other priorities, flagship stores give brands a chance to stay front and center in consumers' minds and leave a lasting impression, regardless of the price points. Flagships might not be everyone’s cup of tea, but they’re a smart play for more brands than you might expect.