Celebrity-driven retail was once a relatively minor trend that has now turned mainstream, with nearly 60% of all celebrity retail brands being founded in the last six years, according to recent research. Even Bloomberg is keeping track of the trend, highlighting the top celebrity brands to watch in 2024.
The leader is Kim Kardashian’s SKIMS, a $4 billion shapewear and clothing brand that was originally launched online. SKIMS is scheduled to open a 5,000-square-foot flagship store in Los Angeles in the first half of 2024 and has plans to open a second store in New York City soon thereafter.
SKIMS now belongs to an exclusive club, as surprisingly only 11% of celebrity brands have opened brick-and-mortar stores. But that rarity is waning as more celebrities disrupt the traditional retail cycle and opt for standalone stores rather than brand deals or pop-ups.
Getting the clicks
The rapid evolution of social media has contributed to a greater fascination with the lives of celebrities, as many often share their every waking moment with their followers. This has resulted in massive marketing potential, as celebrities who have started retail brands account for a combined 7 billion followers on Instagram alone.
Given their reliance on social media and influencer marketing, celebrity brands can seamlessly develop alongside an e-commerce platform, marketing and selling directly to their sizable fan bases.
The digital sales are supported by Gen Z’s purchasing power, which according to Bain and Company, will grow three times faster than that of other generations. The Generation will account for one-third of the market by as soon as 2030.
But relying solely on e-commerce comes with a risk. Celebrity brands must contend with rising marketing and customer acquisition costs in their efforts to scale. The brands also tend to be in the more expensive categories like apparel and jewelry, which often require an in-person “touch and feel” experience.
Rolling out the storefronts
To further increase brand awareness and gain new customers in person, celebrity brands traditionally followed one or two tracks:
- Partner with well-established retailers to sell their products in physical stores. Exclusive partnerships with celebrity brands include Ariana Grande’s REM Beauty and Tracee Ellis Ross’ Pattern Beauty (Ulta) as well as Selena Gomez’s Rare Beauty and Haus Labs by Lady Gaga (Sephora).
- Open independent pop-up locations in target markets, where short term leases enable the celebrity brands to test the market, while providing landlords with additional income on space they would not typically rent out. For example, model Gigi Hadid opened holiday pop-ups in New York City and Aspen for her cashmere brand Guest in Residence, just months after debuting the brand in 2022.
But more recently, celebrities have chosen to open standalone brick-and-mortar stores to test the longevity of their brands. They also hope that the stores increase the brand’s halo effect, which is when a brand’s online traffic increases in a market due to a new physical store opening in the region.
Celebrity-backed retail brands have opened more than 300,000 square feet of space in the U.S. in the last decade—with Los Angeles being the most popular city for the first permanent location. Surprisingly though, 75% of the storefronts opened in the last decade were in a mall.
Given declining foot traffic, traditional retail brands have shown decreasing interest in extending their mall leases. This creates opportunities for digitally native retailers like Warby Parker, Allbirds, as well as celebrity brands to secure favorable leasing deals—and for the malls to fill vacant space. Celebrity brands can pursue shorter-term leases, which reduces their overall risk versus conventional 10-year leases and gives them a similar opportunity to experiment as they might in pop-ups, but with more control.
Through physical stores, celebrities get to apply their creative vision to the physical environment—resulting in immersive experiences, thematic arrangements, and captivating aesthetics that customers cannot get online. These elements lengthen the customer experience and encourage repeat visits.
Today’s celebrities are incentivized to share their lives, acquiring consumer interest in the clothing, jewelry, and other products they’re wearing. Meanwhile, Gen Z continues to increase its purchasing power and fascination with actors, musicians, athletes, and influencers. As we have witnessed in the past decade, the physical retail landscape will continue to evolve, maybe even serving as a new frontier for celebrities to continue to connect with their followers in a real-world retail environment.
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