Behind the Scenes in Luxury
By Jake Cigainero
Bain, Boston Consulting and McKinsey are the big boys on the block but many smaller agencies play significant roles in luxury brand research and development. Here is a short introduction to a few of them:
From design to delivery
Liam Casey is an evangelist on the subject of user experience.
As one of the world’s foremost experts on bringing products from concept to consumer, Mr. Casey believes that great experiences are the capital of the 21st-century economy. He is the founder and chief executive of PCH, a manufacturing consulting firm based in Cork, Ireland, with satellite offices in San Francisco and Shenzhen, China.
Over the past two decades, PCH, which acts as a middleman between makers of high-tech devices and China, has helped some of the world’s biggest companies deliver such experiences.
Relying on a network of 1,200 factories in China and more than 2,600 employees worldwide, the company designs, engineers, develops, fabricates and distributes mostly hardware products for clients that include Apple and Beats by Dre.
According to a PCH fact sheet, 11.5 million components pass through its operations daily. In 2014, the company’s revenues totaled more than $1.1 billion.
Mr. Casey, 49, who comes from County Cork, Ireland, cut his teeth in the fashion business. After spending time in Southern California, he worked for a company that traded in computer hardware. The year was 1996, and he sensed an opportunity in Asia. He founded PCH — then called PCH International, after the Pacific Coast Highway in California — that same year.
“One thing I saw early on was the tech world wasn’t very user-friendly,” he said. “The fashion world was. You could go to a fabric mill and take the fabric to a contract manufacturer and produce a garment pretty fast, whereas in the technology world, there was a very long lead time.”
Mr. Casey is convinced that thanks to the advent of such tools as 3-D printing and crowdfunding, the notion of “fast tech” is around the proverbial corner.
“You’re seeing fashion cycles with devices that you wouldn’t have seen in the past — like Zara bringing a product from concept to store in two weeks,” he said. “That’s going to happen in tech.”
With PCH’s Highway1 program, Mr. Casey is helping entrepreneurs, especially those in wearable devices, bridge the tech and fashion worlds. Start-ups — such as the smart jewelry maker Ringly and Chronos, a device maker whose disc transforms a traditional timepiece into a wearable — send staff members to San Francisco to spend four months learning how to develop, manufacture and distribute their products.
Christina d’Avignon, the founder and chief executive of Ringly, joined the program in August 2013. She said that she had not known about PCH or Mr. Casey but that after meeting him, she was sold.
“His vision struck a nerve with us,” Ms. d’Avignon said. “He’d worked on a bunch of Apple products and his attention to detail and good design resonated with us. It was really about learning how to build a hardware company and learning everything involved in building and shipping a product.
“One of the biggest takeaways for me: It helped expand our network in manufacturing and hardware,” she added. “Plus, we were introduced to people in that space and other companies involved in the program. We can now call up those other companies and ask them things like ‘Who did you use for PR?’ It’s nice to have that network.”
The final piece of the puzzle is retail. In March, PCH acquired the e-commerce site Fab so it could deliver products directly to consumers. “We’re focused on creating the Netflix of hardware,” Mr. Casey likes to say, meaning the website will sell things that cannot be found elsewhere (like Netflix’s original programming).
He predicts that customized experiences focused on “discovery and limited-edition items” will become increasingly important as a bulwark against global homogenization. “People travel so much and see everything through social media,” he said, “so product has to be different in different geographies and stores.”
Mr. Casey points out that the luxury trade, with its emphasis on exclusive, small-batch production, is perfectly positioned to take advantage of the new manufacturing paradigm, which involves creating lean supply chains. “We don’t believe in filling warehouses with products,” he said. “We think make less, not more.” — VICTORIA GOMELSKY
Getting in touch, digitally, in Asia
Despite its economic downturn, China continues to lead luxury spending, accounting for 31 percent of global sales, according to the annual report from the consultancy Bain & Company.
But brands, including some of the world’s biggest luxury names, still need help in telling their stories in China.
‘‘You need to educate the Chinese market,’’ said Patrice Nordey, a digital consultant. ‘‘The challenge is the way you tell the story. You have to look to the future and be contemporary in communication.’’
Mr. Nordey and his Shanghai agency, Velvet Group, are helping to decrypt digital in China for clients such as Dior and Bottega Veneta, advising them on how to reach shoppers through native social media such as Weibo and WeChat.
‘‘China is a great playground to work for luxury companies, even though they’re late in adopting these trends,’’ he said.
In 1998 Mr. Nordey began his own online magazine, which the French television network M6 later bought. He then worked with L’Atelier, BNP Paribas’s finance and technology digital consulting arm, which took him to China.
Even though he grew up in the window-shopping paradise of Paris, Mr. Nordey said he didn’t know much about luxury, or at least he didn’t think he did, until he moved to China. ‘‘It was a specialty I didn’t know I had,’’ he said, until he realized he was a Parisian accustomed to luxury as quotidian.
Mr. Nordey branched out in 2013 and opened his Shanghai agency after deciding he wanted to ‘‘live the big adventure of digital here.’’
He says that in China, Western brands cannot expect to be successful if they use the same techniques they use at home. ‘‘Delivering a campaign full of Caucasian faces doesn’t work,’’ Mr. Nordey said. ‘‘Kate Moss and Cara Delevingne with Mango work. But anyone lesser known doesn’t translate.’’
For the Spanish retailer Mango’s recent global campaign #somethingincommon, Velvet Group adapted the campaign’s photo-sharing concept for Chinese markets by creating a custom user-driven Web application for WeChat and other platforms.WeChat, which boasted of as many as 600 million users in August, is a gateway for European and American brands to connect to young, affluent Chinese consumers, he said.
‘‘No one can explain WeChat, but it’s like Facebook mixed with WhatsApp. You have to come here to get it,’’ Mr. Nordey said — or, as he prefers, you can just ask his team.
The company also has trained clients like L’Oreal and Kering’s Asia operation in digital culture, so they can formulate their own digital strategies. ‘‘We have no fear of not being used after,’’ he said. ‘‘Because we keep track of digital and innovation so they don’t have to.’’
Santiago Alvarez, a general manager for the Spanish company Puig, hired Velvet to better understand the Chinese digital terrain and to help particularly with marketing fragrances from its brand Nina Ricci brand.
‘‘The digital scene is constantly evolving in China,and we thought that an agency was able to cope with that evolution better than us,’’ Mr. Alvarez said. ‘‘The key was then to find someone whom we felt comfortable and could really partner with, and Velvet clearly understood our company ambition and brands’ DNAs.’’
Despite its digital focus, the Velvet Group doesn’t discount the value of an old-fashioned face to face contact. In September, the agency organized the third edition of Shanghai Fashion Web, an annual conference that connects luxury brands and digital influencers such as bloggers.
‘‘It’s two different worlds,’’ he said. ‘‘The world of geeks and world of fashion don’t necessarily get along. But we bring them together.’’ — JAKE CIGAINERO
Sustainability and innovation
Sustainability may be only one of the thoughts in luxury companies’ minds when they come to Material ConneXion to research fabrics and materials, but the resulting products often do reflect that value.
‘‘The luxury market is perhaps one of most sustainable because of the longevity of the product,’’ Dr. Andrew Dent, one of the company’s vice presidents, said. ‘‘It might use expensive materials and require a lengthy process, but I might keep it 10, 15, 20 years.’’
Material ConneXion, whose clients include BMW, Hermès and Neiman Marcus, maintains what it calls ‘‘the world’s largest subscription-based materials library, with more than 7,500 innovative materials and processes across all disciplines of design,’’ samples that may be examined by library members such as Chanel, Estée Lauder and Tiffany & Co.
Those materials, all of which are commercially available, are kept in offices in seven cities around the world, including New York, Milan and Tokyo, with about 60 employees maintaining and curating the collection. Dr. Dent, who earned his doctorate in materials science from Cambridge University in 1994, has been vice president of the company’s library and materials research since 2006.
The company, privately owned by the diversified media company Sandow, also advises clients who are looking for specific types of materials or trying to have something created for innovative, high-performance products they are creating. Materials that appeal to luxury industries tend to fall into two categories, Dr. Dent said: traditional and technological.
In either case, it’s the work that goes into honing a material into something capable of extraordinary performance that makes the difference, he noted: ‘‘With the right amount of time and effort, you can take some quite pedestrian materials and make them work incredibly well.’’
During consultations, he said, Material ConneXion works to educate clients on the value of reducing environmental impact. impacts.
‘‘There are no sustainable materials, only the sustainable use of those materials,’’ Dr. Dent said, adding that true sustainability requires looking at the big picture. ‘‘You need to be aware of the overall impact. Sometimes using a virgin rather than recycled material turns out to be the more sustainable choice.’’
The use of carbon fiber in the nose cones of Boeing airplanes is an example, he said: ‘‘It’s a composite material, but the weight reduction, compared to the metal that it used to be made of, saves so much fuel that it becomes ecological in its use.’’
A problem that supporters of sustainability run into, he said, is that some of the most effective tactics are the hardest to explain. Making use of recycled materials, by contrast, is easy to understand and to convey to the public.
‘‘People hear that you’re using recycled materials, so that must be better,’’ Dr. Dent said, but if something requires replacing in a few years, or less, any benefits derived from its production are lost.
‘‘The challenge a lot of companies have, is they need to do a little of both. They need the attention-grabbing statement, but they also need the fundamental system efficiencies,’’ he added. ‘‘Yes, use recycled materials, get that market share, get everyone talking about you, but also take steps that will allow shaving seconds off the process, of shaving grams off the final product,’’ which will make a larger difference in the end. — HUGH BAILEY
Disruption becomes the future
Words seem to suggest themselves in pairs when it comes to Innosight, the 15-year-old business strategy consulting company. One pair, in a play on the company’s name, is innovation and insight; another, to judge by a recent visit, is nature and art; still another, a question: ‘‘What else?’’
Innosight occupies a two-story brick building that the company leases in a research park in Lexington, Mass., not far from Boston and Cambridge.
Here and there among its offices, glass walls unexpectedly frame birches and other ornamentals in an example of what home décor magazines call bringing the outside in. And the company’s offices, which are anchored by a skylighted lobby and include such elements as ‘‘team rooms’’ and the flexible and modular Business Design Lab, for idea and strategy sessions, are punctuated by colorful modern art on rotational loan from the nearby deCordova museum.
Founded in 2000 by Clayton M. Christensen, the Harvard Business School professor who originated the business theory known as disruptive innovation, and Mark W. Johnson, Innosight is rooted ‘‘entirely in the future business,’’ said Scott D. Anthony, the company’s managing partner, who is based in Singapore. (The company has 15 people there, with 75 others in North America and six in Lausanne, Switzerland.)
Innosight has worked on projects like Procter & Gamble’s New Growth Factory and reorganizing the jeanswear division of VF Corporation, resulting in, it has said, $100 million in new revenue in the first year.
Disruptive innovation theory, Mr. Anthony explained, is one that ‘‘transforms an existing market or creates a new one by making the complicated simple and the expensive affordable,’’ adding that it can ‘‘give you some lenses where you look at the world a little differently and see things that you might miss otherwise.’’ (The theory has been hotly debated and drawn some critics, particularly in the last year or so.)
‘‘We’re not about looking backwards to try to analyze what happened to help people do an even better job of what they’re currently doing today,’’ Mr. Anthony said during an interview at the home office. ‘‘Rather, we’re about helping them interpret what can be very soft signals sometimes — to pick up what can be ‘edge senses’ about what might happen — and then very confidently move forward in the face of significant uncertainty.’’ — MAUREEN BROWN
Source: The New York Times