London/Paris: Unique Challenges & Trends Faced by Luxury Industry

During the past week, our study tour has visited 10 companies in the retail sector. They are mostly in the luxury industry but ranging from very different categories. I have noticed a few key trends and challenges they are facing as retailers and thought it would be interesting to share with you.

First of all, branding is the key to success for luxury retailers. Customers are looking for a story and special heritage from them. The Director of Savoir Beds called it “a touch of magic”. There must to be some kind of exclusivity and bespoke aspects to make products luxurious. A good example of this would be the fine jewelry collection at Vancleef. Every piece of jewelry is unique and only available to its VIPs. Pricing is not even allowed to be disclosed at the boutiques, making it the ultimate luxury for its clients. 

Another trend in the luxury industry is to go online. In 2017, e-tail accounted for 10% of global luxury goods consumption, and it is forecast to continue to grow. Luxury brands are slow to the game because it is difficult to replicate the luxury shopping experience you get from stores when shopping online. It is also buying higher price point items; therefore, consumers might not be willing to spend that much buying goods online without seeing in person. There are certainly solutions to address these issues but can be costly for smaller players. A large amount of money will need to be spent to create a great website experience. They have to make sure that delivery is done seamlessly in a short period of time and have to leave room for a higher rate of return. Brands are hiring dedicated digital and social media team to engage the growing numbers of online shoppers and this would definitely be a competitive advantage if done right. 

Multiple companies we visited mentioned that they have started to put extra attention on Chinese customers who have large spending power. New payment methods, such as WeChat Pay and AliPay are installed for the ease of payments. Sales associates are becoming more diverse and have to know how to speak Mandarin. Tailored holiday products and store decorations are done to welcome Chinese customers to stores and websites. There are lots to be done to manage the rise of shoppers in Asia but brands are seeing the importance of tailoring to shoppers from around the world.

Lastly, fashion industry is moving fast. Consumers change taste quickly and are expecting new designs and products coming out every season. As mentioned at the Vancleef presentation, fine jewelry has always been a slow process but they now notice that customers are asking for more and more. Brands must know how to balance creating new products versus maintaining the value of products to maintain the luxurious image.

Margaret Hung (CBS ’19) is an MBA student at Columbia Business School

London/Paris: Experience the Truly Luxury in Paris

While EuroStar had to cancelled some of the trains due to strike in Paris, we were lucky to arrive without delays. Our tour guide picked us up at the EuroStar station and took us to hotel to settle down. We had a pretty busy yet exciting schedule on the last day of the trip in Paris. Our wonderful organizers, Victoria and Eleanor, arranged three company tours – Christofle, Dior and Vancleef & Arpels.

We kicked off our last day with Christofle, a fine silver flatware and home accessories based in France. It was founded in 1830 by jeweler Charles Christofle. Prior to the trip, I didn’t know much about the brand and the silver flatware industry but it was surprisingly interesting. We were lucky to have the VP of Marketing to speak with us about their three year plan on rebranding Christofle into a truly luxurious retail brand. The presentation covered very detailed strategy plans and timeline to implement the changes. It’s amazing to learn about how a brand decided to go into transformation and I look forward to seeing the new look and feel of Christofle in the coming years.

We were all very excited about our next company visit with Dior after seeing its exhibition at the V&A in London. We went over the Dior house history and current structure before diving into the most exclusive visit to its archive museum. We were not allowed to upload any pictures of the museums online but the experience was definitely one of a kind. We had a lady from the archive museum to take us through all the old collections they bought back from their customers. Items in the museum includes old heels, clothing pieces, perfume and scratches preserved in temperature controlled environment. We were all amazed by the incredible collections of archives and felt really thankful to have the opportunity to visit Dior. 

Last but not least, we visited the workshops at Vancleef to end our trip on a high note. We were introduced to the house’s history first before we were taken through a security door to enter the actual workshops where fine jewelry is made in house. There are multiple stations and steps needed to create a piece of fine jewelry from creation, molding, cutting and assembling. Each and every steps are carefully managed to create a unique piece of art. After seeing the process of fine jewelry making, I learned to appreciate jewelry and the amazing teamwork behind the scene. It was an unforgettable experience to visit Vancleef and the brand truly represents the ultimate luxury in fine jewelry.

Paris was short yet a transformative experience for all of us.

Margaret Hung (CBS ’19) is an MBA student at Columbia Business School

London/Paris: A Diverse Set of Business in London

By now, we have finished the first four days of our study tour and are on EuroStar heading towards our next destination – Paris. It has been an amazing four days; full of incredible learnings from all the company visits, including Christie’s, Burberry, UK’s Department of International Trade, Harrods, Business of Fashion, YNAP and Savoir Beds. There are a great mix of industry representations, giving us a better picture of the retail and luxury goods scene in London.

During our debrief session, a lot of us all agreed that Savoir is our favorite and most memorable visit. We were extremely lucky to have Alistair Hughes, Managing Director of Savoir Beds, to talk to us about the company’s history and strategy. Furthermore, the site visit to the production lines was a sight to see considering these luxurious beds costed £15,000. Alistair has a very entrepreneurial mindset and was bold enough to take on a company with minimal sales and track record at the time. We can easily tell how passionate he is for the business and how his grand vision is to expand the company’s footprint. The combination of quality, provenance, engagement and exclusivity makes Savoir Beds one of the world’s most luxurious mattress brands. It’s the bespoke aspect, the craftsmanship culture and the made to order model that really gives the brand the unique proposition. We admire Alistair’s ambition and focus that will continue the spirit of Savoy hotel and the heritage of legacy.

In terms of one of the most memorable activities, there’s no doubt that the afternoon tea at London’s iconic Savoy Hotel was the highlight of the trip. We sat in the center of the Thames Foyer next to the pianist who was beautifully playing classical music. We were asked to choose tea from an extensive menu and were served with finger sandwiches, homemade scones with clotted cream and jam and a mouth-watering selection of seasonal cakes. We talked about life, school and how we are all in love with London. It was a very elegant and unforgettable afternoon. 

We are on the way to Paris for the last one and a half days of the study tour. We are scheduled to visit Christofle, Dior and Van Cleef to end our study tour on a high note. I am very excited to be in Paris despite the fact that yellow vest strike seems to be a little uncontrollable. I hope that the group would be able to get around the city safe and still be able to see the beauty of Paris.

Margaret Hung (CBS ’19) is an MBA student at Columbia Business School

Paris/London: Let the journey begin!

Most of other CBS students are looking for traveling to a more “exotic” destination, such as Jordan, Bolivia or Colombia, for spring break. Yet, a group of about 20 of us decided to explore the cities of origin for the Retail and Luxury Goods industry. I assume some of us may already know London and Paris, but probably in a very different way. For me, I have only been to Paris very briefly but have never visited London. I am very excited for the amazing access to company executives and the unforgettable memory to travel with a group of people who share similar interests with you.

Our group will be kicking off the Chazen Retail and Luxury Goods trip at the private capsule in the London Eye on March 17th while giving a champagne toast to the Big Ben. For the first four days of the trip, we have a couple well-known brands lined up for company visits, including Christie’s, Soho House, Harrods, Burberry, Business of Fashion, Net-A-Porter, Savoir Beds and more. I love how there is a good mix of different retail categories. Aside from company visits, some of us plan to see Hamilton on London’s West End with a fraction of the price in NYC and join a distillery tour with Sipsmith Gin during the weeknights. On the last day of the trip in Paris, we will be in talk with Christofle, Christian Dior, Van Cleef & Arpels before having our farewell dinner at Georges.

I want to thank our organizers Eleanor Thadan and Victoria Harman for planning such a wonderful itinerary for the group. It must be very difficult to arrange trips for such a large party. Yet, I am thrilled by the company lineups and the culture activities arranged. I look forward to learning more about these companies and understanding their strategies to keep up the trends. I am sure everyone else is all as excited as I am to begin this journey in the retail and luxury good world.

Stay tuned for more updates from me during the trip!

Margaret Hung (CBS ’19) is an MBA student at Columbia Business School