Extending from the banking district to Eaux Vives, the parallel streets of Rue du Rhone and Rue du Marche (becoming Rue du Rive further east) make up Geneva’s most famous shopping district. Designer retail stores and world famous watchmakers line the streets packed with window shoppers. Once there, it’s strictly a matter of willpower: there are boutiques to rival London or Paris; all the timeless watchmakers, Patek Philippe, Piaget, Raymond Weil, Omega, IWC et al; art and antiques, and chocolate – to your heart’s delight or perhaps to your eyes’ delectation – while window shopping.
Often resembling a fashion runway, the area is also great for people watching. Geneva remains impervious to the gargantuan agencies and major multinational companies based here and continues to reap the benefits of small-town living. It is a hub for global commerce, politics and diplomacy, and with its superb schools and healthcare it’s the perfect place to raise a family.
Geneva is also Switzerland’s second largest financial centre after Zurich and followed by Lugano. For a number of years, Zurich and Geneva have rivalled for the distinction of the world’s highest cost of living and highest quality of life cities. The greater Geneva area is home to some 780.000, 47% of whom are foreign residents.
With an extremely high retail sales to retail purchasing power ratio, the world’s highest after that of Zurich, and a large contingency of consumers from the Middle Eastern cultures, Geneva is an exceptionally appealing location for international jewellery, fashion houses and watch retailers who tend to cluster around the Rue du Rhône district.
Quality luxury products do not come cheap and, in this part of Geneva at least, setting up can also come with an impressive price tag. Annual rent goes as high as CHF 9,500 (some US$ 10,000) per square metre on the Rue du Rhône and Rue du Marché, while the Rues Basses feature some 80,000 footdrops daily and Rue du Rhône itself houses 108 retails stores, many of which are luxury brands.
Moves on the chess board
With consumer demand at relatively high levels and despite these high rental costs, the Rue du Rhône area continues to attract some of the most prominent brands. With limited space available, there is a lot of pushing and shoving among brands, provoking what real estate agents dream of: steep rates in tenancy change.
High tenant turnover underlines the importance many brands attribute to this thoroughfare in their strategic planning. To illustrate the battle ground setup and the ensuing domino effects, take the recent example of Chanel. The Wertheimer family, owners of the brand, decided to purchase the property where their boutique was under lease. In doing so, at an estimated price of CHF 50 million, they terminated the lease for the Hermès boutique, located at that same address. Promptly, the Dumas family, owners of the Hermès brand, put in an offer of a reported record CHF 75 million to purchase a building two doors to the left from an important Swiss insurance company. The Dumas’ in turn, wound down the lease of well-known watch and jewellery specialists – Les Ambassadeurs – located in that building so as to set up a new Hermès flagship boutique. Les Ambassadeurs were rewarded key-money in the upper 7-digit range for moving out before the end of their lease. This windfall came in handy as it was used to buy fashion label Francesco Smalto out of its 450 square metre lease across the street. As the dust of battle settled, Les Ambassdeurs found themselves straddled with a threefold increase of the rent at their new abode.
As far as real estate transactions go, these are close to record figures and have huge knock on effects to operational costs. And yet, virtual waiting lists are long.
New kids on the block
Turf wars aside, the past few years have seen a number of well-known brands being wooed to the area, adding to the opulence and glitter of Geneva’s luxury mile.
Jewellers and watch makers are major players in the Rue du Rhône district. In December 2011, Zenith – the watch brand founded in the mid 19th century in Le Locle, the historical cradle of Swiss watchmaking – opened a boutique exclusively dedicated to watches from the manufacture at 35, Rue du Rhône. It is the brand’s second boutique after Hong Kong to feature the new design Zenith has developed for its points of sale.
Other examples are the recent openings of Jimmy Choo, with a 112 square metre shop on 30, Rue du Rhône. This is the brand’s third location in Switzerland after Zurich and St Moritz.
Brunello Cucinelli, opened a 250 square metre boutique on Rue Céard, replacing the presence of Italian fashion house Gianfranco Ferré.
The Swiss luxury brand Bally opened a new 280 square metre boutique on 47, Rue du Rhône and in doing so, freed space for Hugo Boss at their previous address on Rue du Marché. Speaking of moving pawns on a chess board!
Anita Smaga has long been considered one of the most shrewd and astute fashion professionals in the vicinity, having owned and managed franchises and own-boutiques for decades. As she retires from the business, she seems to be liquidating some of her more prominent assets, such as the boutique that carried her name on 51, Rue du Rhône. Prada will be opening its new boutique shortly and it has been rumoured that Smaga negotiated key money in excess of CHF 20 million to make room for the Italians.
Although all of this may seem to be shop talk (in the literal sense) to the uninitiated, the prestige and importance of the Rue du Rhône luxury district will not go unnoticed. With real estate values and rents at stratospheric levels, one wonders how luxury brands make money. The fact of the matter is that in many brands’ marketing strategies, the presence of luxury brands in this type of area is paramount in both form and function, and supersedes any consideration of profitability. At almost any cost, such boutiques are relevant in that they reinforce and enhance the retailer’s luxury status while maintaining relationships not only with end-customers but also with distribution partners and the fashion media.
Article by Joy Corthesy