Esprit CEO on the Flagship Strategy for North America
Esprit, pivoting from its California roots to become New York-centric, is developing a “global flagship” that, if all goes well, would open on Fifth Avenue next year or 2024.
Additionally, “regional” flagships are seen opening next year in Los Angeles, Miami, Chicago, Toronto and Vancouver, which would be followed by smaller stores around the U.S.
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“I am actually personally choosing the best locations, with my team, because the best ambassadors for the brand will be our flagships,” William Pak, Esprit’s chief executive officer, told WWD, spelling out his vision for bringing Esprit stores back to the U.S.
“We are undergoing a total transformation,” he said. “Esprit has already undergone a restructuring. Now we are working on a rebranding and repositioning. The big reveal will be next year, roughly in the fall, which should coincide with our New York flagship store, which we call the ‘hybrid physical store.’ We haven’t signed anything yet but we are pretty close to a lease on Fifth Avenue,” around Midtown, Pak said.
On Wednesday, Esprit’s CEO was in New York City for meetings and to check out the Esprit pop-up opening Thursday at 123 Prince Street in SoHo. Esprit also has a pop-up operating in Los Angeles, where the brand’s permanent store (at 143 South Robertson Boulevard) will open. It’s the first since the brand shut all 93 of its U.S. stores 10 years ago.
With the Fifth Avenue flagship, seen occupying 12,000 square feet, “We’re targeting ideally for the fall, depending on permits, but I really think it’s going to be longer than that,” Pak said. “We are simultaneously looking at another spot in Manhattan perhaps in the Flatiron neighborhood, not a flagship there, more of a medium-sized store, between 3,000 and 5,000 square feet, just so we can open earlier. There is a lot of space available but not a lot of prime space.
“This is strategic. Our flagships are going to be different from traditional retail stores. It will be very omnichannel driven. The flagships are going to be intricately linked to the online channel. We will have interactive touchpoints, not just cashiers with salespeople.”
Pak said the flagships have these “loyalty desks,” about 15 to 20 feet long, for interacting digitally to learn about the brand’s story, its sustainable nature, colors and receive styling suggestions, and tap and go payment systems via cell phones. He also spoke of installing coffee bars or juice bars, where customers with their phones could interact digitally. “We may have sensors to scan your online app, which will activate your curated experience on your iPad or other digital medium. The intention is to make it personalized.”
After about a decade of brands seeing rapid online sales growth, “actually there’s been a reversal of that where customers are still wanting to interact with the brand physically,” Pak said. “I saw a study where in Singapore over 61 percent of consumers prefer a physical shopping experience now, versus online. The whole point was that with the pandemic everybody shifted to online but the pendulum is swinging back toward physical. I think it’s a readjustment and sustainable. Consumers now tend to trust their brands more than public figures. Currently, e-commerce shopping is purely shopping-based. Not a lot of two-way interaction between the brand and the consumer. By focusing on our brand strength, our heritage, we intend to basically give access to the brand itself, as a whole, to the consumer.
“Each flagship will have its own selection of merchandise, modern and with a localized assortment,” said Ana Andjelic, Esprit’s chief brand officer. “If it’s in London, we want more varsity style. In L.A., we would want to be more track suit, laid-back.” The stores, she added, won’t be heavily merchandised or suffocated with racks.
“Basically the creative brain of Esprit is moving to New York City,” said Pak, noting that in New York, Esprit is building up a hub on Varick Street, for design, branding, creative and photography, and where Andjelic, as well as Tom Cawsons, senior vice president of design, are based. “We are creating at least 100 jobs in New York City,” Pak said. Esprit’s headquarters moved from San Francisco to Ratingen, near Düsseldorf, Germany, years ago, while factory, sourcing and financial operations are situated in Hong Kong, where the company is listed on the stock exchange there.
“Originally the brand was California-cool from San Francisco,” Pak said. “We are taking that heritage and modernizing it, so it’s still a coastal brand but it’s a metropolitan, outdoor brand based in New York City, so from the perspective of designing in New York City, Esprit will resonate throughout the rest of the world.”
The permanent Los Angeles flagship is seen opening in the first quarter of 2023 while the Toronto and Vancouver stores will bow in a similar time frame to New York City, about a year from now.
As the one and only “global” flagship, New York will get “the best collection drops, the updates and any cool technology will be rolled out there first,” Pak said.
After the flagship openings, smaller stores are envisioned, but Pak isn’t putting any number on how many stores he envisions ultimately in the States.
“There was a time, maybe 20 years ago, when Esprit turned into sort of a mall brand, which is not really the brand we are going to reposition with next year. There may be mall stores in the future, but not like 20 years ago.” At its peak, Esprit had more than 200 U.S. stores.
In Europe, Pak said there are about 170 company-owned stores and 300 franchised. In Asia, there is just one store in Seoul, which opened last June, as well as a pop-up in Hong Kong. There used to be several hundred stores in Asia. After five years of losses totaling more than $1 billion, the company has returned to profitability. Last year, Esprit had a $48.5 million profit on about $1 billion in revenues. In 2019, it did about twice the volume. Pak said the business is tracking even with last year’s volume. The challenge will be for the brand to attract and familiarize itself with younger customers, and bring back the older loyalists from years ago.
“The restructuring helped us. We have no bank debt. We are well positioned to invest in the future when stores open, when other retailers might be retrenching. For the first time, management and shareholders are all aligned on the strategy and the mission.
“New York is a very global city, with a lot of global talent where design ideas, the collaborations, the ideas, the imagery can originate. The vendors are here. So are a lot of retail and creative partners and major landlords.”
Being New York-based, “the look of Esprit will evolve, but the intention is for the clothing to be timeless,” Pak said. “We have to make sure the brand still has the Esprit attitude, the color, being the life of the party. We are going back to good quality, good fit. ESG is a hot topic now, but we have already been sustainable for over 30 years. We met our 2030 greenhouse gas targets already. It’s in our DNA.”
The Prince Street pop-up, at 650 square feet and seen operating for three months like the L.A. pop-up, provides some cues to what is likely to be seen at the flagships, such as the terrazzo patterned walls, metallic wall grids for display and the classic burgundy and white Esprit flag. The windows display a mix of vintage and new looks, outfits with a clash of colors, unisex, layered outfits and oversize items like the vintage balloon pants, seen paired with a worker jacket with bright red silk lined cuffs. There are also spirited varsity-style jackets with a dolphin emblem, and the 68 insignia that recalls 1968, when Esprit was founded.
“Esprit always did things its own way,” Andjelic said. “It’s playful, cool, modern and mischievous, but not rebellious.”
