LA’s Fred Segal Bets on Luxury Recovery Abroad With New Shops

LOS ANGELES, United States — Demand for high-end apparel has collapsed since the coronavirus pandemic upended the economy and halted most leisure travel. So Fred Segal is ... expanding?

The famed West Hollywood boutique will open a flagship in Seoul as part of a plan to add as many as 15 new locations in the world’s major urban centres. The ambitious expansion — executives say they’re eyeing stores in United Arab Emirates and Japan, among other places — is a bet that the luxury market slump will be short-lived.

“Retail will inherently come back,” said Chief Executive Officer Allison Samek. “Whether it’s six months or 12 months or 2 years, this too shall pass.”

The optimism contrasts with a retail industry that is laying off workers, shuttering stores and broadly retrenching amid a sharp decline in sales. Management said any market-entry decisions made today would take about 18 months to bring to fruition, giving the market time to stabilize.

Luxury goods from handbags to high heels have been squeezed by the economic fallout from the pandemic. The global market for luxury products could fall as much as 35% in 2020, according to a May report from Bain & Company. The firm said high-end goods may not recover to pre-outbreak numbers until 2023.

Businesses in urban centres and tourist hubs have been particularly pressured by the virus. International tourism, which fuels a significant chunk of luxury spending worldwide, could fall as much as 80 percent this year due to Covid-19, according to the U.N. World Tourism Organization.

Expansion is essential to the strategy laid out by licensing firm Global Icons, which acquired Fred Segal for an undisclosed sum last year and outlined a plan to export the brand’s California lifestyle vibe to international markets. The L.A. store has enjoyed a spot in U.S. pop culture for decades with appearances in shows like “Beverly Hills 90210” and “The O.C.”

The Seoul location will open in early 2021 within the Galleria Luxury Hall, an upscale shopping centre and department store owned by Hanwha Group. Executives are considering additional locations in countries including Argentina, Mexico and Australia.

Jeff Lotman, Fred Segal’s chairman, acknowledged the obstacles retailers will have to overcome, but said he’s hopeful a rebound will come soon. “It’s just going to take some time.”

By Kim Bhasin.