A masterclass on how to grow a luxury business provided stepping stones for 75 new companies starting out in the sector with lessons from a group of company experts.
The luxury journey
The concept of luxury is often associated with value-laden ideas of longevity, heritage, quality; of a hard-won prestige slowly grown over time and often over generations. Luxury brands tend to have a story that the customer buys into: like the charming origin story of Hermes’ Birken bag, the deeply rooted familial ties of cosmetics brand Chantecaille, or the Missoni brand which grew from a small knitwear shop in Varese into a global luxury label and is now run and by the younger generations and ambassadors of the clan. How, then, can new luxury operate in such a space? How can young bright things with innovative, luxurious products and services emerge authentically into the luxury sector, bypassing the perceived branding rules that demand a hard-won provenance story and an entitlement to be there?
Old versus new
London’s New Luxury Masterclass, an event sponsored by New York law firm Tarter Krinsky & Drogin and Pointer, a brand protection and research agency, gathered together a host of luxury gurus from the industry to share ideas about managing the tension between new and old, as well as covering pragmatic ways to grow a brand the right way from the start. Held in the elegant and historical surroundings of Mayfair’s Killik & Co, in a grand music room originally designed to host performances by Debussy and Strauss, the masterclass was a chance to engage experts on steps to raising finance, brand protection, IP and data issues, as well as ideas on growing a business, trade and distribution issues and sustainability.
What is luxury?
Luxury as an idea, according to co-chair Paul Sternberg, head of design innovation at Ravensbourne, has an elusive nature; rooted in a sinful, excessive self-indulgence which is relative to both time and culture. And time and culture for us now - post-global recession but in the midst of continued uncertainty regarding Brexit, uncomfortable US politicking and looming GDPR requirements - means that to survive, new luxury companies must focus on not only getting the product right, but also reading shifting value systems, adapting to globalisation, embracing tech, undertaking increasingly diverse customer bases and - the bottom line - understand the business concept and all that entails.
Co-chair Dr Catherine McGregor, editor in chief at MCCA, suggested that as much as the massive shift to globalisation has heralded opportunities for the sector, it also raises new issues, such as the potential for competition, IP protection and supply chain complexities. But new entrepreneurs have an advantage here - without the bulk of an established brand behind them, they have flexibility to move fast, to collaborate, to find new, innovative ways of building their brands responsively.
From millennials to silver surfers
Sally O’Rourke, co-founder of Brand Love, spoke to the crowd on the nature of the market globally as well as delving into the desires of the new luxury customer - from millennials to silver surfers and those in between. Highlighting new luxury rules, Sally looked at the shift towards value-based luxury. “People are beginning to challenge traditional aspects of luxury. The question they are asking (and that you should be asking) is: ‘How does it feel? How does it match up to my ethics and my moral code?’”. She cautioned against getting stuck on millennials as the only important demographic, and suggested that the move towards values was not a trend but really a seismic shift across society as a whole.
The desire to connect and make friendships, both on and off-line, was another new rule in the luxury market. Sally pointed out that the digital world is now being used to enable off-line connections, and used the term ‘freedom from loneliness’ as a covetable value, tapping into the burgeoning trend for mental health awareness. She also listed both the gift of time and the emergence of the self-love concept as covetable values that translate as luxury now.
The sense of nostalgia
Nostalgia is another current notable trend that brands can take advantage of. Sally noted that people, particularly in times of strain and austerity, become nostalgic - often for things they have not experienced themselves. “It might hark back to a time parents or grandparents lived through, because a sense of nostalgia for that period makes people feel cosseted and safe.” Having ‘one foot in the past and one in the future’, knowing how to tell a story, and tapping into this need for nostalgia with substance can really imbue a new brand with a sense of depth and heritage.
According to Sally, there has been a recent move from desiring a brand’s luxury products to an interest in a brand’s luxurious experience, as retail shifts from ‘a place where people spend into a kind of showroom’. Name checking Ralph Lauren’s London store which doubles as a beautiful cocktail bar for customers, Sally suggests that offering a fuller, rare experience that feels both special and exclusive is a short cut to luxury and will cement your brand in a positive way. Collaborations are also useful, combining the best of two brands in an often disruptive, surprising and sometimes ‘delightful’ way.
Lastly, Sally noted the trend for conscious consumption. “We are obese with consumption, and we feel guilt and shame over it. Be an agent of change for your market; it is no longer enough to be eco-friendly. Instead, navigate your way through provenance, authenticity, ethics and integrity.” Look to your future-based behaviours and be prepared to be held accountable, she suggested. “Some brands are born good, others have good thrust upon them”. In the rules of new luxury, pre-empt the fallout by getting things right at the start.
Managing a luxury business
Jo Rogers, CEO of Navistar, shifted the tone and took a masterclass on creating, financing and managing your business. She echoed the point on brand experience being ‘everything’, and used the example of first direct bank’s approach where, no matter what, the customer must leave an encounter feeling taken care of. She emphasised the importance of common sense when looking at financing a new venture, and cautioned the crowd to always ensure a match of values and minds between investor and founder to reduce risk. Clarity, she said, is always key. “Write down your terms, set boundaries, make sure you understand everything you are committing to and don’t give away too much control”, she advised.
Later, a panel of luxpreneurs a little further ahead on their luxury brand journeys discussed lessons learned along the way. Amelia Rope, founder of Amelia Rope Chocolates, explained how she launched her business ‘by mistake’. With no business training, she now considers setting up the business as the ‘equivalent to doing an MBA times 100%.’ “You just keep learning…although if I did it all again, I would have started off with a solid business plan”, she admitted.
Belinda Dickson, founder of her eponymous cashmere company, said that if she knew then what she did now, she wouldn’t have started the business at all. “There is always a risk of overanalysing, when really a business should be driven by your gut. Push through, even if you don't have the language or the training. You will learn if you work hard - listen to others and make your own luck.”
Hugo von Halle, OVH Sleepwear co-founder, took a different approach to setting up his business with his wife. “I invested in the business and both my wife and I have always known what we want from it - to sell it when the time is right. Have confidence in yourself, and don't be afraid to reject advice if it doesn’t fit your strategy. Meet with mentors, but remember that they have never run your business - no one has ever run your business.”
Joyce De Haas, from mixer and drinks company Double Dutch, reflected that while the company had managed to raise two investments, the first tranche had come from someone they didn’t really match well with. “Our initial investor was keen to become involved and had industry knowledge, but because we didn't really get along, it wasn’t a good experience. It is so important to have a good relationship with your investor - don’t underestimate it.”
Mark Tallowin, creator of luxury handbag company Tallowin, was keen to stress that his brand was intended to be a slow burner, and that he was committed to building the company according to his own way. “Don’t rush into investment - it’s easier to divorce your spouse than to get out of an investor relationship,” he counselled. He agreed with Belinda that the key was reliance on your own gut. “Backtrack if you need to, but you will only get it wrong a few times.”
Aldis Firman, creator of lifestyle and homeware brand Lilou et Loic, agreed with Mark that it is important not to rush things. “An opportunity will come…it is so easy to jump in without thinking things through properly. Have faith in your own decisions and remember you do not have to be everything to everyone.”
Going to the USA
On the globalisation note, Giuliano Iannacone, chair of the international and retail practice groups at law firm Tarter Krinsky & Drogin, talked the crowd through the issues surrounding US expansion. Mr Iannaccone, who is a member of the firm’s executive committee, a partner in the Corporate and Securities Practice and serves as chair of both the International and Retail Groups, also co-chairs the firm’s Italy Practice. He has advised US companies on doing business in Italy and US clients looking to establish or expand their operations in the United States. He discussed the difficulties facing clients setting up in the US and how these could be tackled. Having represented clients across the board spanning luxury, fashion, footwear, lingerie and legwear, beauty and cosmetics, furniture and lighting, houseware, art, jewellery, e-commerce and logistics services, real estate and technology, real estate and construction, alternative energy, industrial machinery, equipment and tools as well as not-for-profit organisations, he was able to give a real insight into how companies could circumvent many of the risks. He explained that he himself understood the difficulties involved in building up a business, having done so himself.
Brand protection in China
Fiona Gao from Pointer Brand Protection gave a masterclass on brand protection in China with key insights into a variety of e-commerce websites and how these operated. Again, the importance of local knowledge and technology to combat counterfeiting was emphasised with social media now opening up more opportunities for counterfeiters.
How to be sustainable
A key theme of the day related to sustainability in luxury. Tamsin Lejeune, CEO of Common Objective and founder of the Ethical Fashion Forum, took the group through the need for brands to focus on this issue. “The concept of ‘buy more, throw away more’ is not good enough any longer. Fashion is by nature short-lived, while luxury is imbued with the ideas of quality and sustainability. Sustainability is an opportunity for new luxury brands to differentiate themselves.” With 250 million children working in factories to quickly produce throw-away clothing, 83% of the planet’s water containing micro plastics (much of it originating from the fashion industry), and customers making the shift to conscious consumption, sustainability makes sense for many reasons. “You can build a business that addresses both environmental and social issues, making a positive impact. We have been told that fashion is less expensive than it actually is; and we have to change that narrative.” Common Objective seeks to match suppliers and producers with brands, creating demand for better goods which will lower prices and solving the issue of needing small quantities of materials by enabling companies to buy together. Tamsin said: “Engagement from smaller businesses like you as well as from suppliers will eventually impact upon economies of scale.”
From rags to riches
Harold Tillman CBE, respected British retail entrepreneur, former chair of the British Fashion Council and currently chair of Common Objective, finished the day’s events with an inspiring interview led by co-chair Paul Sternberg. He spoke about his start in the rag trade when Carnaby Street was in its heyday; before the high street broke the concept of the independent boutique. “Big is not always beautiful. Luxury is when you take it back to the individual; to newness, to sustainability. When you create something small and it is made beautifully, with better conditions and the right level of pay for everyone involved - this is luxury.”