Lexus: A driving force for the ‘experiential’ store?

by Hannah Elliott

Bloomberg

This month, Lexus held an launch party for a gleaming, expensive new building in New York that is … a bit ironic.

Intersect By Lexus is a 1,535-square-meter boutique in Manhattan’s Meatpacking District, is meant to allow people to “experience” the carmaker’s brand without setting foot inside a car.

This is, in theory, a good idea, considering the lackluster cars the Toyota Motor Co. division has been making. If only the space were better put together.

The launch was delayed for a year after the boutique’s planned opening in 2017, and was pushed back yet again from this month to September — notwithstanding a celebrity-studded event in the unfinished space on Aug. 14. Frankly, the overall impression given by Lexus’ multimillion-dollar compound is one of confusion and disarray.

Lexus is far from the first big brand to try to arrange public “hangouts” with a younger, affluent audience. In 2016, Samsung opened a 5110-square-meter, three-floor location on Washington Street in Manhattan’s Meatpacking District as a “cultural playground” for downtown kids to see such bands as The xx perform on its underground stage. That year, PepsiCo Inc. opened the Kola House, its “experimental” bar and workspace in the same neighborhood.

So did Cadillac: Cadillac House, a coffee shop and showroom for art installations from the likes of Visionaire and Daniel Arsham, is located just north of Tribeca.

The goal behind such ventures is to attract people who wouldn’t ordinarily spend their free time at a car dealership — or in an ordinary cell-phone store. They’re meant to show off brand values in a non-threatening atmosphere that is as close as possible to actually being “cool.” It’s an arguably impossible feat for any corporation when “cool,” by casual definition, is the opposite of corporate. But the automakers are trying: They typically don’t show a single new car in these spaces, except during special events. The implication is that trying to sell you something would be decidedly uncool.

“We have tried to tell people what you’re supposed to feel from the Cadillac brand, but what we hadn’t quite fully established was an environment that you could walk into,” Melody Lee, then-Cadillac brand director, said when Cadillac House launched. “That’s why we opened it.”

Both Cadillac and Lexus have declined to specify how much they spent on their conceptual event spaces. And success in this case is a difficult thing to measure. Sometimes such creative projects cost a lot of money but bring intangible benefits such as increasing brand awareness among the golden goose target: millennials.

Kevin Bethune, a member of the board of directors at the Design Management Institute, says the value of such spaces is often less about social media impressions and press hits — though those can be “helpful indicators” of success — and more about “the quality and insightfulness of the type of network” they attract.

“I could see future brands and experiences being birthed from the Kola House’s learnings,” says Bethune, who is also the founder and chief creative officer of the design firm, Dreams Design + Life. “If [creative people] keep returning to Kola House to engage in different experiences, entertainment and special events — and I feel that networking (group) standing by the Kola House over the long run — then that’s a success to me.”

There’s also an aspect of design experimentalism here that can prove valuable for a brand. A spokesperson for Pepsi described Kola House as a successful testing ground for exploring the company’s heritage and future goals. For example, mixologists experimented with recipes around the kola nut (an original ingredient in cola beverages) that may be used in future products.

Other brands show varied results.

On one hand, Cadillac House draws more than 500 visitors daily, half of whom stay longer than 20 minutes, and it hosts many private events and fashion shows. What’s more, Cadillac is probably the only luxury automaker whose most expensive car — the Escalade — is owned by its youngest demographic. The average age of an Escalade buyer is under 50, significantly below the age of the average Cadillac customer, which is 60. That’s not quite millennial, but it’s a start. The brand sees much more opportunity in youth.

On the other hand, Cadillac recently underwent a C-suite shake-up as longtime automotive executive Johan de Nysschen left due to “philosophical differences” over a $12-billion turnaround plan. That’s never a good sign. What’s more, apart from the Escalade and the unsexy CTS-V, Cadillac’s other products fall short against competitors in their segments when it comes to both design and performance.

Lexus is hoping for rather more tangible, and concrete, effects. The space it opened in New York is the third of the series Lexus first introduced in 2015 in Tokyo and then repeated in Dubai. According to company spokesman Corey Proffitt, the New York version will feature a rotating cast of chefs, artists and, potentially, a concept car or two, but no production models.

On Aug. 14, roughly 200 guests viewed a three-story showroom, a still-under-construction coffee shop, an LED-light gallery, a Star Trek-esque round bar and lounge, and what will eventually become a restaurant conducted by Danny Meyer’s Union Square Hospitality Group. Actor Justin Theroux attended the opening party, as did model Rosie Huntington-Whiteley and “Mr. Robot” star Rami Malek. LCD Soundsystem’s Nancy Whang DJed.

There was some confusion about whether Theroux danced.

These are lovely people and good for branding. But ultimately, being a successful automaker requires making good cars. Do that, and you don’t have to do a whole lot else.