Why luxury brand managers require a portfolio of skillset to work in the industry

INDUSTRYARE OFTENpeople in the luxury

referred to as homoluxus. The homoluxus should always knowthatthe life span ofluxury brands is varied and totally surprising. The homoluxus is convinced that he is eternal and nothing can happen, protected by his brand, sure that he is and will remain successful. He is applauded in his social circles. He can see his own name or the name of the company he leads, in the best streets of all the cities, he is thrilled to speak about his brand, is in all the magazines—his image is seen everywhere, usually with charming ladies and stars, dressed in ablacktie. How can he be afraid of anything? …Heisnotobsessedwith money but with the product and its quality.. He is not in ahuny, has time and he is not under pressure; he is zenlike in his focus, and has nothing to demonstrate. Does he still exist in the luxury forest or is he a dinosaur?

The creator: One concocts
extraordinary olive oil that the creator presents in beautiful, elegant bottles. The creator intends to sell them in luxury delis, and he will no doubt succeed. The creator has the energy, the taste, the talent, and the patience that ittakes. Another loves jewelry, makes one-off pieces with stones that she finds from who knows where. Another mixes colors, matches fabrics, and makes necklaces of unusual shapes.

One creator was adesigner, but his former luxury house laid him off after closingits doors. He opened alittle boutique, but it didn’t work; he wasn’t a good manager. He is a creator, not an accountant. Then there’s the one who makes sandals and the other one who makes dresses. They are all in luxury’s waiting room. They struggle. Creators often have plenty of illusions. Mistakenly, they think that luxury designers can do anythingtheylike!

A creator’s freedom has to be based on rules andknowledge; otherwise, nothing good can come of it That said, the golden rule in real luxury is to

The road to


The Evolution, Markets,
and Strategies of


THE ROAD TO LUXURY: The Evolution, Markets and Strate­gies of Luxury Brand Management

AshokSom, Christian



464 pages; Rs 599

make sure creators have no managerial responsibilities, and are given a free rein. The truth is that luxury can only work if the products are unexpected and unplanned. If design becomes standardized, there is no chance of surprising the customers and making a sale. Producing articles that resemble others, that have afeel of“deja vu,” would doom the luxury market to failure. Creation goes beyond a system or habits. The organization of aluxury house has to allowforthis.

Of course, creators can be unbearable

megalomaniacs, demanding and obnoxious. But it’s in their nature, and the rest of us just have to accept that.

Luxury needs entertainers. Luxury could not exist without artists. Creators drive luxury and so sometimes reason must giveway to imagination, reality gives way to the irrational, and truth succumbs to dreams! That’s what luxury is all about Atleast, that’s howit should be. What is the common thread running between Gabrielle Chanel, Hubert de Givenchy, Yves Saint Laurent, and Christian Dior? Are all the names
of designers or brands? This is one of those rare questions where one can never E>e wrong. These are names of designers who gave their names to their brands. In the earlier days ofluxuiy, the designer stoodforthe brand. Each brand displayed the eccentricities, the enigma, and the individuality of the designer it stoodfor. What remains importantto date is that the designer gave identity to the brand, making the designer and the brand inseparable. Thus we were in a regime, where the “Creator was the Controller.” But can the creators actually




run aglobal business or manage the value chain ofthe business? What will happen after they leave the brand? And when they leave, most important, who is going to sell their brand?

.. .two decades ago, the luxury indus­try model was almost completely dominated bythe family business. However, the rivalry between Bernard Arnault (LVMH) and Henry Racamier created a historic structural shift within the industry as each aimed for market control through growth and acquisition. As a consequence, the industry started consolidating, andfamily houses that could not survive were absorbed within the multibrand conglomerate, except for a select group of French and Italian companies such as Hermes, Chanel (Wertheimer Family), Armani, Prada and Tod’s to name a few. These tectonic shifts from the family business model to corporatization pushed the luxury industry away from its historic style ofmanagementasthekeyfactors of success become finance instead of fam­ily, and the focus shifted to the colossal conglomerate instead ofthe small, art­isan business, which became “inadeq- quate” for a global business strategy.

To understand the management styles of the managers in the luxury industry, we need to dwell briefly on the role of the managers—and the usual typology of the management styles.

The Ambidextrous Luxury Manager: Combining the right and the left brain:

.. .Managers in the luxury industry are required to understand the unique properties ofthe luxury experience, manage highly creative people, apply tough management disciplines, and be sensitive to the cultural nuances involved in running a global business. Speed versus time: The manager has to grapple with timelessness and profitability. For example, Hermes and Chanel might be of the opinion that they are not looking at short-term profits, yet during every quarter they have to keep an eye on the revenues, which in turn will determine their

growth and investment plan. The focus on profitability is now extending across the portfolio to highly prestigious, loss-making brands, and the introduction of International Financial Reporting Structures is forcing greater transparency in financial reporting by large groups. The speed of growth and the time required have a direct bearing on the talent management of the companies. On one hand they have to nurture talent that understands and communicates the story of the brand, the product characteristics, timelessness, quality, and service of the luxury business, while on the other hand they have to cater to the speed of marketing, sales, and after-sales in international markets.

Everywhere or not: The luxury man­ager has to understand French and Italian savoirfaire while selling prod­ucts in Shenzhen, Sao Paulo, Singapore, or San Francisco. Dispatching expatriates to manage stores is one realistic option, although the expatriates more often than not do not speak the local language. The expatriate manager on his or her “colonizing” mission of emerging markets is probably well equipped but finds himself or herself short of understanding the local nuances and can be afailure. Research from Martens & Heads shows that not more than 15 percent of the actual operating CEOs are from the local emerging market. Also Maxine Martens, CEO ofMartens & Heads, rightly questions, “How many French or Italian luxury firms that do 30 percent of their business in Asia have 30 percent of their top management from Asia?” Some propose that with globalization and corporatization, the luxury industry should also follow the path of the global corporation. They should also hire more locals in the emerging markets and bring more emerging markets professionals to the HQ.

Internal versus external: Should the ambidextrous manager be found internally or should she be headhunted

externally? Research shows that there is a trend