DANA POINT, Calif. — Hurry up, but slow down.
That seems to be the oxymoronic message in luxury today, at least coming from Domenico De Sole, Sir Richard Branson, Jane Lauder, Robert Chavez, Chris Anderson and Alexis Babeau, who were among the speakers discussing “Luxury: The Remix 2013” at American Express Publishing’s Luxury Summit, which wrapped its three-day run at the St. Regis Monarch Beach here on Tuesday.
Selected by Departures editor in chief Richard Story, the diverse stable of speakers addressed globalization, lifestyle, travel and new technology, often vis-à-vis retail, where, according to CNBC’s wealth editor Robert Frank, cycles of wealth are shorter, the population is changing more rapidly and money is crisscrossing the globe at a dizzying pace.
Kicking off the summit on Sunday was Story’s post-dinner conversation with Chavez, in which he put the president and chief executive officer of Hermès USA in the hot seat over the contested LVMH Moët Hennessy Louis Vuitton acquisition of 22 percent of its stock.
“Is it true that the devil wears LVMH?” asked Story.
“I would say that irreconcilable differences and philosophies are the best way to sum that up,” said Chavez, adding that “if anything, it has brought the 200 members of the family closer.”
He noted that the Hermès family members have secured about 50 percent of the shares in a special trust, which should prevent any takeovers “for at least 20 years.” Later, he said, “We’ve been here for 176 years so 20 years is but a blip on the history of Hermès. I don’t see really any changes that would happen.”
Chavez recounted his retail roots, which began at the cosmetics counter at Bloomingdale’s, continued into home furnishings and led to executive posts at Macy’s. “If I were looking at your résumé, it’s not the most natural progression to Hermès,” said Story.
“I never thought they would hire me either,” replied Chavez, “but I found out later that Jean Louis Dumas was looking for someone who knew retail because first and foremost they are merchants.”
Chavez said he still makes sales on the floor and answers the phone in his stores. “I also get a sales goal and I get very competitive,” he said. Last week, he made visits to San Francisco, Beverly Hills and South Coast Plaza, in Costa Mesa, Calif., where he helped customers without revealing his job title. “I have had customers get upset and ask to see my supervisor, so I just walk them over to the store manager,” he said.
He also stressed cracking down on counterfeiters, the Internet’s importance in educating customers and bringing new clients into stores (he admitted the company’s Web site can be “difficult” to use due its “whimsical” style), and hinted at upcoming product innovations to forward the brand.
Chavez also noted that rather than regaining aspirational shoppers post-Great Recession, they became a new post-recession category for the house. “In 2008, we didn’t have a one-time-a-year customer, and nobody would ask prices in our stores. But in 2009, every third person would ask how much was a scarf. These are the things you learn in stores. Being on the floor is important to get in touch with your staff, your stores, your customer.”
With a Greenwich, Conn., store set to open May 4 (the brand’s 27th U.S. location), a Beverly Hills expansion in September that will add a home-focused floor to the two existing floors of selling space, and a Miami store set to open in late 2014 or early 2015, Chavez has his hands full, noting, “Some of our biggest growth is happening in the Western region.”
De Sole shared what it takes to build an iconic brand both from the perspective of having revitalized Gucci with Tom Ford, and the pair’s current venture with Ford’s namesake collection.
“It is a painful, long and expensive road, but it can be done. You need the talent first and great product second, but it can be done,” said De Sole of the challenge to launch a new brand and retail stores at the same time. “With Gucci, we had 70 existing stores when Tom came on board, so we didn’t have to change too much at retail, we could focus on the product. But the reality for a small young company is you need financing for your stores,” he said by way of explaining the decision to first enter into licensing deals with the Estée Lauder Cos. Inc. and Marcolin for fragrance and eyewear, respectively.
The company is looking to add to its 60-some stores with locations in Dallas, Chicago, Miami’s Art District and Houston. “We’ll go one by one,” said De Sole. “We want to be the number-one luxury brand in the world, but we have to be careful.” That being said, “I’m always telling Tom to hurry up because I’m getting grotesquely old,” he laughed.
Branson spoke about building a consumer experience in everything from social issues to space travel and lauded passion projects as a secret to success. He also stressed the importance of both fast-paced technology (“People would be foolish not to take social media very seriously. You can suddenly have an army of people to get behind a cause and it also allows you to jump on issues quickly,” he said) and good old-fashioned person-to-person contact. “You must always have a notebook in your pocket and you should never meet a customer without getting their feedback. By getting out and about and writing everything down you can make sure you get every detail right,” he said.
Former Wired editor Chris Anderson demonstrated on stage what his new company, 3DRobotics, can do using a desktop 3-D printer, which in minutes spits out a resin rocket ship that one of his children designed with a CAD program. “Anyone can upload their designs and have them made, factories are a click away. The desktop democratization allows everyone to innovate, so it’s doing for manufacturing what the Web did for media, ending the company monopoly,” he said.
He noted that while for mass production China is still king, for small and midrange production, the essence of luxury, the new manufacturing model has the potential to spawn tons of innovations. “The directive of globalization used to be about finding cheaper labor costs but now there are none. It’s not about money anymore, it’s about time, because speed is what’s driving innovation.”
He also noted that the handcrafted item, a hallmark of luxury, can now be created by anyone. “We’ve gone from consumption to creation; it changes our relationship to [mass produced] stuff.”
In that vein, he said the future of print is still very much alive because there is value in physical things in a virtual world. “As print is challenged by digital, it is forced to become better, an exquisite artifact,” he said. “A print ad is a better experience than a Web site. If you are trying to reach people in an emotional way, a luxury ad should be a luxury. The physicality of atoms will matter and the media products that follow that path will continue to be good advertising platforms.”
Addressing the importance of China in the global market, Jane Lauder shared the lessons she learned while bringing Origins, the brand of which she is global president and general manager, to China in 2010. “China will be our number-one source of luxury consumers by 2015, so in order to win there, we have to understand them,” she said.
For Origins, that meant knowing that the Chinese customer is skin-care focused, making the category 60 percent of Origins’ business there, versus 20 percent in the U.S. The notion of preservation rather than repair is a status symbol in China for both women and men, showing that women have time and money to take care of their appearance and helping the country’s surplus of bachelors attract wives.
In terms of cross-cultural communication, the company’s slogan “powered by nature, proven by science” had a negative connotation in China because the image of a test tube in a lab evoked images of unnatural chemicals, so the message was changed to “from plant to formula” emphasizing the discovery and craftsmanship experience that young Chinese consumers crave.
Online is on fire, as evidenced in the country’s top two e-commerce platforms, Taobao.com and Tmall.com, which combined can have sales of $3.1 billion in a single day, twice that of Cyber Monday in the U.S. Finally, the importance of the traveling luxury consumer means investing in its stores around the world, not just in China. “For every dollar that we invest in the Chinese customer, we get back two to three dollars in sales,” she said. “Invest in China, it will come back twofold.”
Wrapping up the final day of the summit, Kering’s managing director Alexis Babeau stressed the opportunity in investing in small-to-medium sized brands like Christopher Kane, but declined to specify what other young talents or companies could be potential acquisitions. “We are always sourcing the market for new talents, and at the moment there are plenty, especially in Southeast Asia. But I can only reveal our criteria, which is small and midsize companies that are easier to grow quickly, that have clear identities, and that we can help,” said Babeau.
Laurent Claquin, head of Kering Americas, said, “We of course are ready to react if we recognize a brand of interest to us, but we are more focused on organic growth, which we see as 80 percent of our business. We can grow our brands with new products, new markets, new retail stores and new distribution.”