Don’t try looking for Edgar Huber tucked away in some private corner office. The Coty Luxury president has long been an advocate of open workspaces, since his days at school studying in Austria and at Mars Inc. early on in his career—decades before the term “start-up” had any link whatsoever with business.
His Paris-based headquarters, a former theater on the Right Bank, reflects this. “I decided that my leadership team and myself will sit in one room at one table. It’s like at Pret a Manger,” he said with a laugh, referring to the British restaurant chain. “We all talk to each other, we all exchange things.”
Such a set-up leads to speed and smarter decision-making. “It creates a common culture,” he said. “It also gives a very clear sign to the company that we are not based on formalities, hierarchy or complicated ego attitudes, but that we are really based on simplicity, that we’re results-focused and we work together as a team.”
That cohesion has paid off, especially as Coty continues to grapple with the complexities of integrating the 41 Procter & Gamble beauty brands it acquired in late 2016. While the company has struggled to absorb the businesses in some areas, the luxury sector has been a bright spot. Coty Luxury, which includes brands such as Gucci, Tiffany, Miu Miu, Burberry and Chloé, registered a 3.7 percent sales gain to $792.9 million, in its fiscal first quarter ended Sept. 30. For the fiscal year 2018, the division grew six percent to $3.2 billion in revenue.
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Gucci Bloom, which launched in May 2017, and was the first fragrance under Gucci creative director Alessandro Michele, has been a huge hit. A top three performer at launch in both the U.S. and China, the scent is the biggest in the brand’s history. Tiffany, which launched this fall, has been another win, posting top 10 sales in the U.S., China and Italy.
Huber is one of the rare executives who has successfully slalomed between the beauty and fashion worlds. He joined Coty Luxury in November 2015, nine months after exiting as president and chief executive officer at Lands’ End, where he spent four years and was credited with spinning off the $1.7 billion brand from Sears Holding Corp. into a freestanding public company listed on the Nasdaq exchange. At Lands’ End, he made digital growth a priority, elevated the quality of the collection and expanded the product range.
Prior to that, Huber headed up Juicy Couture at Liz Claiborne for three years. Under him, Juicy Couture opened 46 stores and entered numerous international partnerships, among other major developments.
A huge chunk of Huber’s career—16 years—was spent at L’Oréal, where he was president of the Luxury Products Division and before that of Kiehl’s Since 1851.
Here, Huber talks about the evolution of the global fragrance market, where Coty sees the most opportunity and how recent leadership changes—in November, Camillo Pane resigned as ceo after fiscal first-quarter numbers plummeted almost 10 percent, replaced by Pierre Laubies—are impacting operations.
WWD: Do you anticipate any changes in strategic direction for the luxury division under new ceo, Pierre Laubies?
Edgar Huber: A tremendous amount of progress has been made under Camillo’s leadership in establishing the new Coty. During this time, we greatly accelerated the growth of the Luxury division. Now, Pierre is uniquely suited to lead Coty during this next phase of our strategic journey and I’m looking forward to working with him to grow Coty Luxury to new heights.
WWD: How is the global fragrance market evolving and changing?
E.H.: The global fragrance market is growing—not only in emerging markets, but also in very mature markets. We have a very dynamic market in the U.K. and the U.S., and very dynamic category development in travel retail, China and other parts of the world, like the Middle East.
The two main elements that are changing are premiumization and distribution. The premium-plus category and the high-end category are growing faster than the opening-price positionings. Artisanal, sophisticated, high-end, luxury collections are also very successful.
You also have a real bifurcation of the distribution—the high-end part, which is very much based on experience, service, choice, giving a discovery [of] new brands and new products, [which] is growing very fast. These high-end stores are growing in the high double-digits.
On the other side, you have a more transactionally focused distribution, which is now evolving to e-commerce and to e-commerce pure players, who are also growing but on a very different level because they are really focusing on price, transaction and convenience.
So you have these two real opposites where you have the high-end experience, the service, the discovery, and then you have the price-, discount-, convenience- and transactional-based distribution, which are evolving at a pretty high speed. Everything in the middle is pretty much stuck.
WWD: What are the most important drivers of the global fragrance market today?
E.H.: Innovation is key. Quality—especially the quality of the juice and the pure fragrance developments, which are very high-end and sophisticated. Then, the availability, which is through e-commerce. The penetration of the category is increasing.
WWD: The success for powerful brands isn’t guaranteed. What does it take for big brands like Gucci and Tiffany to have a meaningful and long-term impact?
E.H.: The brands have to have a strong personality. There has to be a lot of authenticity. You have to have total and absolute coherence of the concept—the concept of the product, the execution, all the elements of the marketing mix have to be in total coherence with the brand image and in line with what the fashion houses or the jewelry houses do. There has to be total coherence and integrity.
Customer engagement also has to be thought through, between the traditional media space and social engagement through influencers, social media and digital content. If this is not fine-tuned and really coordinated in all elements, you will have problems succeeding.
WWD: Designers such as Raf Simons and Alessandro Michele have become much more involved in fragrance creation. How much control do you give them, and how is that model changing?
E.H.: It’s not so much about control. They have the creative vision and often a very clear opinion about what they want from a fragrance, and we are here to complement them with our know-how. Between what they want and what we know works, we find the best compromise in order to adapt it to the beauty market and make the best out of it.
WWD: How are you using e-commerce and content to drive sales?
E.H.: The creation of digital content is totally done together with the fashion houses. We have joint teams working on this. The social engagement is also done with the fashion houses—you cannot separate this. It has to be integrated.
WWD: What does digital look like in one country, like China, versus another country?
E.H.: To develop a business in China [you must be] highly digitally engaged in terms of content creation and customer engagement on one side and, on the other, leverage all the different e-commerce pure players. For Philosophy, for example, we have some freestanding stores, and we are also slowly opening counters in department stores and malls. The first thing we did was open a shop on Tmall and develop a business through [that].
The digital strategy is a little bit more limited in Europe—not so much from a customer engagement and content creation point of view, but more from an e-commerce point of view because of the selective distribution agreement. We cannot work with pure players that are not part of the selective distribution agreement universe, and that makes it more difficult.
WWD: China is increasingly becoming an important fragrance market. How are you harnessing that opportunity?
E.H.: We made some very fundamental decisions to change our business model in China over two years ago. Historically, Coty was working in a joint venture and with distributors in China, but two years ago we decided to stop this, clean up the market, create our own subsidiary and rebuild our business from scratch.
We wanted to have full control of our business, so the products stay where they should stay. Secondly, we wanted to have a local team who can interact in the best possible way with the local customers and understand the way to develop a business in China.
A little bit over two years later, we have a business that is bigger than what we had before, but it is 100 percent our own. It has allowed us not only to build strong brand equity, but also to engage from an e-commerce point of view with several different players. We don’t work only with Tmall, we also work with certain brands with JD.com and Tencent. Last year, Coty Luxury brought the biggest contribution to growth of the prestige fragrance market in China.
WWD: In terms of the mix that it takes to launch a blockbuster today—money, marketing, olfactive design, etcetera—what’s the magic formula?
E.H.: If I knew that…(he laughs). This is very difficult, because it depends on each brand and on each target group. It also depends a little bit on the different regions where you operate, therefore the mix will be different. The fact that all these ingredients have to be in total coherent symbiosis is the key to being successful.
The beauty today is that you can adapt it and have a tailor-made mix by region. Content creation, for example, in the social media space in many areas is really regional. [In the past] there was one ad campaign, and it was the same everywhere. Now, you can micro-target and engage with each individual customer. It’s a very different world, where you can fine-tune your marketing mix dramatically.
WWD: What’s the strategy behind where, how and why you opt to focus on various brands within Coty Luxury’s portfolio?
E.H.: There are brands that are already big and global, like Calvin Klein, Gucci, Hugo Boss and Burberry. These will get full focus, allocation and support across all regions.
Then you have another category of brands, which have a very high future potential. They are already very relevant for us, but they have a bigger potential to be developed. Here you have Tiffany, Chloé, Marc Jacobs, Bottega Veneta and Lacoste. These brands also get focus, but in a more targeted way in order to develop their high potential.
Then you have brands which for us [are] regional heroes—Cavalli, Jil Sander, Joop, Escada and Davidoff. These have real potential, but in certain parts of the world, because they are not known everywhere.
Lancaster, which is very strong in Europe and in Asia, is not so strong in the U.S. On the other side, we have Philosophy, which is strong in the U.S. and developing in Asia, particularly in China travel retail. But the brand is not strong in Europe yet.
There are specific reasons why we have all these brands. There is a specific reason why we keep them, and why we continue to invest and develop them in the future—because they have the opportunity to grow.
WWD: What’s the most challenging aspect of your business today?
E.H.: Increasing penetration of the category, and convincing Millennials to buy fragrances. They do, but to do it even more. And finding the best mix between the different distribution channels, optimizing e-commerce, but at the same time continuing to grow in brick-and-mortar. These omnichannel decisions are very challenging, but the fundamental challenge is that we continue to increase penetration of prestige fragrances.
WWD: With offices in New York and Paris, how do you align the team around a common goal?
E.H.: It is definitely one of the key challenges of the post-merger period, because we have three company cultures: Coty, P&G, and the people who come from the outside, like me. The first focus is to create a common culture. We do a lot of internal communication in order to keep everyone informed at the same level. We also do a lot of team-building, which is based on performance culture so that we start learning to work with each other, using the same language, having the same value system, the same targets.
WWD: How would you describe your leadership style?
E.H.: I’m very performance- and results-focused. I am also very much team-focused. There is no single achievement. There are only achievements as a team. I really want to have people who take ownership of projects and problems, and drive them themselves—so that you don’t have to push them all the time. Another very important quality is to push the boundaries [perpetually]. I consider my job as done when I have to hold back my teams. My job isn’t done when I have to push them.