To be fair, that specifically is not a US phenomena. Flagship stores that operate as a loss purely for the prestige of a location have existed basically since the dawn of modern retail. Operating in Manhattan or on the Champs Elysees is a sign you are a serious grownup store.

The flagship stores yes, but that was the special case (which is universal) of the more US-specific case of e.g. "why the fuck are there Chipotles everywhere"