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Max Azria Talks Retail and Luxury at Harvard

The BCBG Max Azria Group founder and executive chairman talked with unabashed swagger about wanting to build the biggest U.S. apparel brand.

BOSTON — Ambition? Max Azria’s knows no limits. In a brief keynote address at the eighth annual Retail & Luxury Goods Conference at Harvard Business School, the BCBG Max Azria Group founder and executive chairman talked with unabashed swagger about wanting to build the biggest U.S. apparel brand.

“I want to be the biggest and the best in the field,” he said of his company, which has been in the headlines a lot lately both because of Azria’s legal battles and reports his firm is struggling financially. “If today I am the 20th-best in America, I want to be the first.”

BCBG generates $1.2 billion in annual revenues; Azria has his sights set on $1.5 billion. Revenues are 65 percent domestic and 35 percent international, but he’d like to see a 50-50 split in time. Asked about the possibility of an eventual initial public offering for BCBG, Azria initially said no but seemed to reconsider.
“Yes, we’d like to do it,” he said. “We’d need the right conditions, the right people.”

Although past keynote presentations have been formal, Azria winged a brief speech and spent the rest of the time fielding questions. Asked who on his team has provided key assistance over the years, Azria responded in typical fashion: “The best help of my life was always myself.”

Council of Fashion Designers of America chief executive officer Steven Kolb, who hosted a networking evening for the conference, asked Azria whether traditional runway presentations were still important, given their increasingly tenuous links to purchasing cycles.

Azria said yes. “In 15 minutes, you reach the world,” he noted. “Everyone knows where you are going. Whether they approve or disapprove, you know the message went out.”

He dropped out of school at age 15 and studied theater for three years, an experience, he said, which he gave him business acumen.

“In the theater you learn to talk when you have to talk, to keep silent when you need to keep silent,” Azria said.

He works five hours a day, from 8 a.m. until 1 p.m. He believes 25 percent annual growth is an ideal, controlled pace, although many would consider that aggressive. Much of his recent activity has focused on international acquisition (German chain Karstadt in 2010, Spanish chain Don Algodon in 2005 and French retailer Manoukian in 2006), yet he doesn’t believe in designing for different markets.

“There is one type of human,” he said. “One fashion for the women of the entire world.”

Another French entrepreneur, Frédéric Fekkai, struck a more modest note in his closing keynote at the April 15 event. He talked about reimagining a hair salon as a place that was soothing and elegant, without funky smells or any hair on the floor (still a point of pride, as he challenged the audience to find the floor of any of his eight salons anything but mirror clean). He outfitted salon staff in outfits designed by pals Calvin Klein, Azzedine Alaïa and Ralph Lauren. He launched a hair care line in 1995 after seeing a huge discrepancy for women who wore Prada clothes and anointed their faces with $300 Crème de la Mer, yet lathered their hair with an $8.99 shampoo. He credited Rose Marie Bravo, then ceo of Saks Fifth Avenue, with helping him develop a shop-in-shop positioned near the elevator so customers would discover “prestige” hair care. Yet he said there are many things he wished he’d done faster, including creating a more accessible version of his signature experience (“so customers could catch a glimpse of what we do”) and expanding overseas.
“I was really late on that,” he said. “I regret I didn’t move faster.”

Fekkai, a native of Aix-en-Provence, France, who attended law school but became consumed by the styling and modeling jobs he did to earn cash, said one of the smartest things he’s done is to recognize his limitations and hire complementary talent. “I’ve always been an artist and a visual kind of guy,” he said. “I knew very soon to surround myself with good, smart people. Early on I had a [chief financial officer] who was making more than I was.”

The conference drew students from HBS and other elite business schools, including Yale, Dartmouth and the University of Pennsylvania, as well as a handful of aspiring designers. Former Barneys New York buyer Jason Glover pitched Jegman, his new line of ties, to Tony Campbell, executive vice president of administration for Perry Ellis International over lunch.

The day’s other noteworthy items included:

• Mark Bonchek, senior vice president of communities and networks for Sears Holdings Corp., talked about the furor some longtime Sears customers have raised over the Kardashian Kollection. To defuse complaints, “We’ve found it helps to let people voice their concerns [over Facebook] and to respond to them authentically,” he said. The problem, he noted, is that you can’t control where the message goes or how it changes as it spreads. “Everything in the media bleeds together now,” he said. “You can’t just run certain ads on certain channels.”

• Julie Bull, director of investor relations for Dillard’s Inc., said the company is investing heavily in its Web site, by far its biggest store. The company recently opened an 850,000-square-foot distribution center, serviced by 120 Kiva fulfillment robots (which Amazon.com also uses). She discussed Dillard’s reinvention in the past two years, which meant moving upmarket, shedding midtier brands duplicated at many department stores and bringing in Joe’s Jeans, Kiehl’s and others.

• Perry Ellis’ Campbell addressed efforts to incubate Original Penguin and keep its “indie” cachet in a corporate home. They’ve created a brand-specific “board of directors,” and established separate offices with a distinctive culture. Grand Slam, the Perry Ellis-owned golfwear brand that once sported the penguin, has flourished in the moderate tier. It’s now the top men’s wear brand at Kohl’s, Campbell said.

 

• Tikka Karpurthala, chief representative in Asia for LVMH Moët Hennessy Louis Vuitton, discussed how luxury brands should approach India as a proposition that needs 15 to 20 years to reach full potential. “It takes deep pockets, patience and perseverance,” he said. When Karpurthala started lobbying ministry friends in the mid-Nineties, he recalled, regulations prohibited the importing of luxury goods and leather. Now Louis Vuitton operates four stores in the country and will open a fifth in Chennai in September. The stores carry only accessories, jewelry and watches, but are realizing high-double-digit sales growth.

“India is not ready for Western ready-to-wear,” he said. “We don’t have the scale or store size to correctly present it.” He said wealthy Indians, however, are hungry to accessorize traditional apparel with luxury Western items.

He was candid about the challenges that remain: Foreigners can only own 51 percent of their companies and infrastructure isn’t good. Dubai and Singapore siphon off a significant amount of business through “shopping festivals,” which they advertise in splashy, full-page newspaper ads to lure wealthy Indians with what’s essentially duty free shopping. (Import tariffs in India are steep. The tax on imported alcohol, for instance, is 150 percent.)

Karpurthala opened his presentation by quoting from a July 1893 entry in his great grandfather’s journal, where he details a visit to Harvard. The historical reference was followed by another “history lesson” Karpurthala wanted to make: During the Depression, Europe and American luxury brands survived in part because of a “new market” of making custom pieces for the maharajas. He hinted that India could again play such a role: “Once China has started to peak out, India will step in to pick up the slack.”