American Eagle’s decision not to open a store on Regent or Oxford Street is testimony to the fine balance between brand recognition and profit.

Yesterday was the last day of trading for US fashion retailer American Eagle’s pop-up store in London’s Old Street station. It has been there since July and was an eye-catcher for the programming and design mob that forms much of the demographic passing through this large overland/underground interchange.

Now it has gone, but its three stores, in Westfield’s London shopping centres and Bluewater, remain. And it has just announced that it does not intend to open a store on either Oxford Street or Regent Street.

Common sense, some might think. Consider the number of retailers that have opted to touch down on these thoroughfares and then either disappeared or spent much time bemoaning the challenges represented by the high rent rates in the area.

And then think about Uniqlo. Currently, the doors of its flagship, opposite John Lewis on Oxford Street, remain hermetically sealed as it undergoes a multimillion revamp and sacrifices trade that must be worth multimillions as well. Is it worth it?

The answer is very possibly, but with reservations.

Location, location, location

Niketown at Oxford Circus is a case in point. This is a flagship store for a brand and it has been in place for a decade and a half. During that time it has moved with changing taste, reinventing its interior and evolving its offer to reflect what shoppers are looking for.

It is also a standard bearer for Nike – this remains its biggest store anywhere. The much-vaunted halo effect that enables the brand to sell more of its products across the world must surely follow from what has been done.

Yet would it have done just as well if it had opted to trade from a less high-rent location and reaped the in-situ profits to be had (owing to lower rents), as well as those from the brand’s many other locations and channels to market?

Once more, the answer might be possibly, but it is hard to argue with success and Nike’s marketing strategy is an example of what can be done if marketing and sales outlets are truly aligned and the product is of the moment.

All of which leaves the American Eagle decision. This retailer is certainly well-known on its home turf, but much less so in Europe. And there are few places on this continent where a more diverse, multinational shopper mix can be found than on Oxford and Regent Streets.

The outcome? American Eagle will certainly save money by looking at alternative, cheaper locations, but it may not enjoy the recognition that it craves – or the profits it seeks.