So Exactly What is Going to Be At Buckhead Atlanta? (Lenox: neighborhoods, luxury)

[fzx]

Originally Posted by ATLTJL

I stand by my prediction. Check back in 2019.

There's a reason one of the most steady fixtures at Phipps has been the movie theater and the food court at Lenox.

The development will be able to support a few high-end stores, but it's going to have to include a mix of "normal" stores too. Over time, they will be the ones that prove to be survivors as all but the best high-end stores turnover multiple times.

ATLTJL,

I will take the opposite bet of yours. US high end luxury market is well underpenetrated compared to other developed countries or even developing countries in Eastern Asia. Ask around to see how many Birkin bags are owned among your friends.

Part of the reason is that Americans have so many other things to spend on: housing, cars, healthcare, education, expensive hobbies, etc. However, urbanization will create peer pressure for people to spend more on face polishing objects. And irrational shopping behavior will also help.

A not so appropriate example: when iphone first hit the market, some analysts doubted why people wanted to spend 500 on phone all in while they could get free phone.

[ATLTJL]

some analysts doubted why people wanted to spend 500 on phone

Those analysts were 100% correct.

The only reason iPhones because so ubiquitous is because the cell companies got on board and began subsidizing them so people could get a contract and an iPhone. So you had a lot of people who were willing to get into a contract and drop $99 or $199 to have the cool gadget. But if the iPhone only existed as something that you had to spend $500 on, you'd see a lot less of them than you do.

I think the luxury market is limited in a city like Atlanta because first of all, we don't have the wealth that centers like New York and Los Angeles do. Second, when you make something readily available, it inherently loses some exclusivity. Like remember when Hard Rock Cafe t-shirts were popular? They all said New York or San Diego on Honolulu on them. But once you could get a Hard Rock Cafe t-shirt from Omaha, Birmingham, and Little Rock, they lost appeal.

True, there's room for the high end like Cartier, Tiffany, etc. the things we have at Phipps. But once you get into super high end ridiculously priced items (which to be honest, I don't know exactly how high end the brands at BA are), the people who can afford them aren't as interested in them anymore when they didn't have to come from Paris or New York, but they came from down the street.

Some of this may depend on how high end the stores are, which I don't know. I mean, if some of theses stores I've never heard of sell jeans for $139 instead of $129 at Nordstrom, maybe they are sustainable. But if they are $279 instead of $129, they don't stand a chance.

[arjay57]

Originally Posted by ATLTJL

...which to be honest, I don't know exactly how high end the brands at BA are...

I read that they weren't going after the super high end anymore.

I believe you are right that on the whole Atlanta just isn't that kind of market. We are more of a working town than a place for the idle rich.

[Nanosolar]

Avalon will be a flop hopefully

[flamadiddle]

Originally Posted by Nanosolar

Avalon will be a flop hopefully

why do you say that? just an OTP thing?

So far it looks like they're doing a decent job of creating something unique. They've mostly steered clear of all the usual "chains", which is good IMO.

[gerrythesnake]

Originally Posted by Nanosolar

Avalon will be a flop hopefully

Why would you say such a hateful thing

[arjay57]

Originally Posted by Nanosolar

Avalon will be a flop hopefully

Avalon is going to be dynamite.

Why do you hope it will be a flop?

[LovelySummer]

For all the naysayers, I have to believe that each company has a very well-developed marketing and business department that has done all the analysis. It is an expensive investment for the store. It would be hard for me to believe that ALL of these companies are wrong about the Atlanta market. I would defer to their expertise and research on this one. I imagine they know their markets and business models better than we do.

Besides, the reality is that Buckhead is the #2 Mercedes Benz dealership in the country - only behind Beverly Hills. There's obviously money somewhere.... Also, Atlanta is very much about keeping up with the Joneses. High-end stores play off of this type of mentality. Finally, the relatively low cost of real estate in Atlanta leaves a lot more discretionary income than many other places around the country. NY and LA are probably 3-4 times as expensive for the same piece of property in Atlanta, if not more. Check the number of Benzes, BMWs, Audis rolling around Atlanta and I challenge anyone to find the same numbers in any city around the country. I have live in the NY area, the Chicago area, the LA area and it does not exist. We are all about LOOKS in Atlanta. The high-end stores will clean up.

[AnsleyPark]

Originally Posted by arjay57

Avalon is going to be dynamite.

Why do you hope it will be a flop?

Nano appears to disdain all things suburban. He'll/she'll grow up one of these days.

[nature's message]

Originally Posted by ATLTJL

I think the luxury market is limited in a city like Atlanta because first of all, we don't have the wealth that centers like New York and Los Angeles do.

Fail to see why you brought up New York or Los Angeles as examples to support your argument. Are you suggesting that the luxury market is nonexistent?

These luxury stores draw traffic from hundreds of miles, not just in the region itself. It would be foolish to suggest that renowned shopping centers and streets such as Rodeo Avenue, Bal Harbour Shops, Houston Galleria, or Fifth Avenue rely solely on their local clientele. Being the central economic hub of a large trade market, micro-brands recognize the demand for luxury goods in Atlanta and the return-to-investment their shops could produce.

A good example would be Westside Provisions, which apparently produces some of the highest sales per-square-foot in the entire region. It would be common sense to conclude that Jamestown is expanding the development to include 14,000 sqft to accomadate the growing demand. You can also looks at sales at the tenants and anchors at Lenox/Phipps. Saks Fifth Avenue's Phipps outpost is one of their top-performing stores; this is also true for Neiman Marcus' Lenox location, Louis Vuitton (who doubled the size of their store to include ready-to-wear for both men and women), Salvatore Ferragamo (also significantly expanded their store recently), Tory Burch (also significantly expanded their store), Tiffany's, and Gucci to name a few. To have a multitude of stores that do well gives an incentive of new micro-brands to invest in the market and obviously indicates a growing demand in the luxury market.

Obviously Atlanta is nothing like New York or Los Angeles, and these companies realize that.