I was reading about the NexCen-Camuto acquisition of Shoe-Box and it got me to thinking about Tom Ford. Why, you ask? Because, unlike his tenure at Gucci where, as Fashion Inc points out, it was all about controlling everything, Tom has been using an innovative strategy similar to NexCen’s in building his eponymous business.
Nexcen (NEXC) believes that by focusing on developing the brand while outsourcing other activities to carefully chosen partners, they can capture outsize performance from their brand investments. It’s certainly not an easy proposition to "fix" brands like Bill Blass and Athlete’s Foot this way, but I have been intrigued by NexCen ever since I heard Craig Hoffman, an MD at NexCen, speak at the HBS Luxury Goods & Retail Conference earlier this year.
As I thought about it some more, Tom Ford’s model is not too different from this, i.e. control the critical branding and creative aspects, while carefully partnering with others to execute on the rest: distribution, production, and brand extension.
Now, long-time readers of the Business of Fashion will know that up until now, I haven’t really been a cheerleader for the Tom Ford business. Back in May, I visited Tom Ford’s first flagship (which is company-owned and operated) in New York and found myself feeling sorely disappointed. Mind you, I had very high expectations, especially because I hold Tom Ford in very high regard.
While in the store, I was frustrated about not being able to examine the product. Much of it was literally out of reach in glass cabinets and the rest figuratively out of reach for fear of upsetting the salespeople who seemed to be hovering around me. I was not alone in my views as both Cathy Horyn and Horacio Silva of the New York Times had previously reported that they found the store environment intimidating and the price points excruciating ($2400 shades, anyone?).
However, from an overall business model standpoint, I think Tom and Dom have done some incredibly smart (and frankly, necessary) things to try build a business of global scale, reasonably quickly. Whereas before, at Gucci, they had the luxury of controlling every step of the process, the new business is being built based on trusted, strategic partnerships with some of the most prestigious and competent players in the industry.
They are working with Zegna on Production, Estee Lauder for beauty, Marcolin for eyewear, and a host of retail and wholesale groups internationally to rapidly develop international distribution. The retail and wholesale partners read like a who’s who list: Lane Crawford in Asia, Villa Moda in the Middle East, Mercury in Russia, Neiman Marcus in the U.S., etc. These distribution and licensing partners will allow Ford to build a bigger business, more quickly, with a smaller investment than if he tried to do everything on his own. What’s more, he has built an organisation with the clout of a major global Luxury group, without having to give away any control or equity. Very smart.
Now, if only we could do something about those glass cabinets and price points. Ford has announced that his second store will open in Milan in the Summer of 2008 so we’ll see if he fixes the pesky cabinet issue. Wholesale distribution of the RTW collection will begin in 2008 and will act as a litmus test for whether there is a real appetite for Ford’s 100-store network, complete with its astronomical prices.
And before you ask, I am not even going to comment on the ads. I think they speak for themselves. Anyway, if you want some insight into Tom’s seemingly endless obsession with sex, read this article — it explains a lot.