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The Growing Business of Private Clients

Brands are working harder than ever to forge personal relationships with top-spending clients, often earning higher margins along the way.
Chanel Spring/Summer 2016 | Source: InDigital.tv
By
  • Lauren Sherman

NEW YORK, United States — Scan the front row at just about any major runway show and past the hunched-over editors, high-wattage celebrities and stoic buyers you will likely spy a cluster of private clients. Typically dressed in the designer's garb, not unlike a fan wearing a band t-shirt to a rock concert, these brand devotees — many of whom spend well into the six figures, sometimes seven, on designer clothing each year — can help a brand hit its quarterly sales targets.

At recent fashion weeks, close observers will have noticed the rise of one such private client. Marjorie Harvey, wife of American comedian and talk show host Steve Harvey, has become a front row fixture, attending everything from Dior Couture to Chanel and Hermès ready-to-wear shows. Harvey's invites don't derive from her status as the wife of a celebrity, but from her sizable collection of fashion, which she documents for her nearly one million Instagram followers. In May 2014, Harvey launched a website called Lady Loves Couture, which features outfit posts, product recommendations and other lifestyle content written by Harvey herself and a dedicated team. According to the site's editor-in-chief, Allison Brown, Lady Loves Couture is the "initial enterprise of the Marjorie Harvey brand," which is meant to feel inclusive and positive.

Private clients like Harvey have long played an important role in high fashion. Couture, after all, is a business of one-off orders and notable socialites including Lynn Wyatt, Becca Cason Thrash and Sheikha Mozah bint Nasser Al Missned have developed personal, long-term relationships with the designers whose gowns they’ve commissioned.

But today, private clients are no longer unique to couture. Indeed, top ready-to-wear clients now attract a similar level of personalised attention. To be sure, building a one-on-one relationship with a private client creates the kind of loyalty that is hard to come by in an era of comparison shopping and bland department store buys. What’s more, top clients are more knowledgeable than ever.

“Customers now are almost editors and curators as well, and I think that has to do with the immediacy of information,” says Jess Christie, global communications director of MatchesFashion.com, which operates a private shopping townhouse in London’s Marylebone neighbourhood that is reserved for top clients. “While there has always been a relationship between the couture client and the designer, the ready-to-wear client is now equally savvy. There’s a more precise awareness.”

There is also, in many cases, a marketing upside for the designer. A client like Harvey or a street style star-turned-couturier like Ulyana Sergeenko, who also designs her own clothes, can bring valuable awareness to a brand. In order to tap that influence, MatchesFashion often partners with top clients in cities across the globe to host physical trunk shows. Most recently, the retailer recruited top client Brooke Davenport to host a dinner in honour of designer Joseph Altuzarra in Dallas, Texas. In 2015, Davenport — a longtime MatchesFashion customer who happens to have more than 10,000 followers on Instagram — hosted a similar event in Los Angeles.

A one-on-one relationship with a private client creates the kind of loyalty that is hard to come by in an era of comparison shopping and bland department store buys.

But more than anything, it is the dollar value these clients bring to the table that makes them worthy of a designer’s attention. “In general, the more you spend, the more access you receive,” says Michelle Goad, chief executive of PS Dept, a personal shopping app. While PS Dept takes a commission on sales made via the app, Goad often ends up connecting top users directly with designers so that they can receive true VIP treatment. “If you want to get invited to shows and private parties, as well as pre-order access, you need a direct relationship with the brand,” she says. It doesn't work to purchase through one of their wholesale channels.”

And yet, most trunk shows — pre-order shopping sessions featuring a designer's latest collection — are staged through department stores and boutiques, which charge a wholesale commission on the products purchased during the event. (In most cases, the wholesale markup is between 2.2x and 2.5x.) The model still benefits designers because they are paid a deposit upfront for clothes that only then go into production, meaning that they can afford to manufacture items that may not have otherwise landed on a sales floor. "It's an important part of our business, especially in the United States," says Alex Bolen, chief executive of Oscar de la Renta. "It helps us manage inventory."

Traditionally, trunk shows take place just weeks after a collection is shown on the runway. And, in many cases, they are the only time these clients get the opportunity to speak directly to the designers about their wares. In return, designers are able to gain direct feedback from customers, an increasingly valuable asset in a competitive climate.

But as shopping patterns shift, the model is evolving. “In the past, [a private client] had a calendar of social and charitable events and dinners that she needed to buy things for in advance,” Bolen says. “People don’t lead their lives so much that way anymore.” Now, clients are requesting items just a few weeks before their events and expecting rapid delivery.

In response, some retailers are baking instant gratification into their trunk shows. For instance, MatchesFashion recently hosted its first digital trunk show with Altuzarra to coincide with the Dallas event hosted by Davenport. However, unlike traditional trunk shows, the clothes — an exclusive, in-season collection of shirtdresses — were immediately available to ship. "We're in between Spring/Summer and Pre-Fall, so it's a good time to deliver newness," Christie says. "There is no more so-called Autumn/Winter wardrobe, it's much more fluid. These people have multiple homes, in different time zones and temperatures. And they're excited about things that aren't necessarily available to the masses."

In the case of traditional trunk shows, retailers continue to facilitate the interaction between designers and clients. But more than one brand told BoF that they were considering forgoing the trunk show format and, instead, hosting their own events, either in their own stores or in the homes of current clients in order to make bigger margins. Public companies don’t break out their private-client sales. But the macro trend away from wholesale toward direct sales is indicative of the change. While wholesale remains the dominant selling channel within the personal luxury goods market — capturing 66 percent of the total luxury clothes, accessories, and jewellery sector globally — direct retail is gaining ground. In 2015, luxury brand-owned retail stores saw a 13 percent year-over-year increase in comparable-store sales, according to a report from Bain & Company.

Retailers, however, argue they make things easier for both private clients and brands. “Some of these women are shopping with us on a near-daily basis. There’s a huge amount of interaction,” Christie explains. “We can service them. Designers don’t want to have to deal with returns and the logistics side of things.”

Many of the most elite private clients hire personal shoppers to do the work for them. Joan Kaufman, a New York-based personal shopper whose clients include several high-profile, C-suite executives, shops for her clients through retailers, but most of her work is done directly with the designers. “As the years have gone by, more designers have wanted to form a [direct] relationship with me,” she says. “Then there’s something special when you bring in clients. I can’t even understand why you would want to go to a big department store.” But no matter the avenue, designers are getting to know their clients better — more often than not, through a direct relationship.

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