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CEO Talk | Christopher Colfer, Chief Executive Officer, Alfred Dunhill

Imran Amed, Editor — Wed, 04 Nov 2009 23:09:03 +0000

Christopher Colfer, CEO, Alfred Dunhill | Source: Dunhill

LONDON, United Kingdom — In 1893, at the age of 21, Alfred Dunhill inherited his father’s saddlery business in London and slowly but surely transformed it into a global business spanning several categories including timepieces, automobile accessories and clothing. In this way, it was the first global luxury men’s brand, paving the way for brands like Ermengildo Zegna, Dior Homme and Tom Ford to follow in its footsteps many years later.

But over the years, despite a strong product mix and rich heritage, Dunhill has lacked a clear creative identity. And while Dunhill has the most prominent presence of any men’s luxury brand in China with over 75 stores, its presence in the United Kingdom, its home market, has paled in comparison.

In 2005, Dunhill announced it was bringing in 36 year-old Christopher Colfer from elsewhere in Richemont, where amongst other things, Colfer had overseen the Swiss luxury group’s prescient early investment in Net-a-Porter. Upon taking the reins as CEO, Colfer embarked on a transformation strategy for Dunhill: buying back licenses, appointing Kim Jones as Creative Director, and launching a series of ‘Homes’ in key markets, including London’s Bourdon House.

Formerly the London residence of the late 2nd Duke of Westminster, who had wooed Coco Chanel within its beautiful walls, Bourdon House includes a private member’s club (modeled after the Hellfire Clubs) and is Dunhill’s London ‘Home,’ tucked away near the end of bustling Mount Street, the new epicenter of London’s luxury retail explosion.

I recently met Chris at Bourdon House to take stock of what has been a very busy few years and to look ahead into Dunhill’s plans for the future.

BoF: We’re sitting here in the London ‘Home’ of Alfred Dunhill. What is the thinking behind this kind of space versus the luxury ‘flagship’. Is there really any difference at all between the two, except in name?

So many luxury houses have built these monstrous flagships. Some of them have unique products, some of them don’t. Some of them are art style, some of them are very design-led.

But one of the key elements of any luxury house is the service element. In fact, it’s the third leg of any stool. So, we wanted to make sure that we didn’t build flagships, which is why we’ve called them homes, because they are a place that you should treat like your home. You should feel comfortable and relaxed. You should be able to find what you need, and if you don’t we should be able to find it for you.

It’s all predicated and built around service. When we started this whole exercise, it was genuinely about becoming the ultimate destination store for men.

BoF: What does ‘ultimate destination’ mean in practice?

Just next door, we’ve built a bespoke, private screening room, where, as a shopper you can rent this room out. If you want to come watch the football on a Saturday night, you can do that. We’ve also had people rent it out to watch the U.S. elections. Probably more than anything else, it’s used by people when they have a dinner in the private dining room or in the restaurant. Afterwards, they watch a film with six to eight of their friends. And, because of our deal with the movie houses, we can get the latest films two weeks before they’re released.

We also have a full-service spa which offers treatments from 15 minutes to two-and-half hours, built especially for the traveling executive. There’s a barbershop and full-service dining, and probably my favourite, the bespoke and custom room. Our custom program, which we brought in globally last year, has been a fantastic, high-octane piece of business. In custom shirts, for example, most individuals who come here will order eight to 14 shirts at a time.

BoF: It must have a lot of time and money to set all this up.

Yes, indeed. The handshake agreement I had with the Duke of Westminster and Grosvenor was to restore this house to its former glory. Signing the lease was one thing, but the restoration was the really big investment and required a lot of consultation. It’s a listed two star building, which means it is one of the top 4 percent of properties in the UK, so you have that involvement. Because it’s the Duke’s personal residence, you have that involvement. Then you have Grosvenor, and Westminster City Council, Health and Safety on top of that.

It was a major undertaking, but well worth it.

BoF: With a space this size and with that kind of investment it must be difficult to turn a profit.

We don’t look at it that way. If you look at it from the point of view that this is a brand statement, that this is an anchor, that Alfred Dunhill needed a home in London, this is it. Alfred Dunhill is truly epitomised by this building. It’s very masculine and Edwardian. And, it’s the only freestanding building in Mayfair and is the former residence of the Duke of Westminster.

We’ve got a 130 year lease so we haven’t looked at this as a small, little project. This is going to be here past my kids, and their kids, and that’s what it’s all about. We never really had that anchor in London, and we have it now.

In fact, the store turns better that we thought it would. We thought it would take a little while because we are off the beaten track. When you look at all of this, and you look at how this particular P&L works, actually it’s a very positive business model.

BoF: How did the appointment of Kim Jones as Dunhill’s first ever Creative Director fit into your broader strategy?

About five years ago, Dunhill had multiple Creative Directors: there was someone designing the leather, someone designing the formal wear, someone designing the casual wear, someone who was doing the shoes. They all had their own interpretation of what Dunhill was, which meant there was no consistent creative thread running through the business.

One of the key things required for getting this brand on track was to get someone in-house to manage all of this, doing it in a relevant way that transcends all product categories and holds it together as a collection.

When we first met Kim, he was the only guy who really tore our archives apart and came back with a very structured point of view on how to rebuild this and put the pieces of the puzzle back together in a slightly different way.

BoF: Still, looking around next door, there are a lot of pieces to that puzzle. What do you see as the pillars, from a product standpoint, of the Dunhill brand?

Our two focal points are menswear and leather. Our pillars within menswear are formal shirting, blazers and outerwear. Those are the areas where we have spent a lot of time over the last fifteen months, and where we are seeing great results.

I want people to understand that actually we make the best blazer in the world. Our Camedeboo mohair blazer is crease-resistant. It keeps you warm in the winter and dry in the summer, and fits to your body over time.

We had to start to build segments within our business. The other bit that we had to do was to ‘release the brand’ a bit. Depending on country you live Dunhill can be sometimes perceived to be …

BoF: …your father’s brand?

Well, you could say that, but I am not going to! (laughs)

Depending on where you are, in certain parts of the world, we’re perceived as one of the youngest brands. In our home country, however, we have suffered a bit. Perhaps we became a bit complacent over time. Perhaps we looked at other markets as more important than our own home market. We became an international brand without building on our roots. Although we transferred those roots very well globally — the Britishness, the creativity, the innovation, the functionality and performance element of what we do — we lost traction at home.

But in the last two years we have seen excellent progress here, with very strong double digit growth. We have a growing client base, and a younger client base.

BoF: Can we talk a little about China for a moment? I was astonished by Dunhill’s presence there. Given the state of the luxury market at the moment, this must be a major boon for your business?

As a business, China has been very solid for us. If you’re a man who bets on demographics, then you should be in China. We were there very early in the day, but we were there under a franchise. In my first year, we bought back some of our retail in China. We now have about 45 directly-owned doors and 30 franchised stores in the country, and it is performing very well.

We also have a fourth Home store opening in Hong Kong later this year, to add to the ones we have in London, Shanghai and Tokyo. From our point of view, southern Asia and China is an invest-to-grow market and we will continue to put a lot of investment behind our businesses out there.

Imran Amed is Editor of The Business of Fashion.

CEO Talk is an ongoing series of discussions with fashion entrepreneurs and business leaders. Previous interviews are listed below:

BoF Daily Digest | Kim Jones for Dunhill, UK economy shrinks, Brazilian new media, Barneys may be sold

Robert Cordero — Fri, 23 Jan 2009 14:47:04 +0000

Kim Jones, courtesy of IHT

Weaving innovation with history (IHT)
“I do like fantasy fashion – but I am a realist too,” says Kim Jones of his much anticipated work for legendary British label, Dunhill.

UK economy shrinks 1.5% in final quarter (FT)
“Britain fell deeper into recession on Friday after new figures revealed the economy contracted by 1.5 per cent in the final three months of last year,” reports the Financial Times.

The Brazilian New Media Force (JC Report)
A new media explosion is underway in Brazil.

Dubai May Opt to Bag Barneys (WSJ)
“Istithmar World, an investment arm of the Dubai government, is weighing a sale of luxury retailer Barneys New York just 18 months after buying it.”

Luxury Outlook | Richemont reels

Imran Amed, Editor — Tue, 20 Jan 2009 01:54:52 +0000

Jude Law for Dunhill, courtesy of Dunhill

ZURICH, Switzerland — “Demand for luxury goods…has fallen dramatically and Richemont is currently facing the toughest market conditions since its formation 20 years ago…we see no cause for optimism. We must assume that there will be no significant recovery in the foreseeable future and plan accordingly to cope with this situation.”

With those ominous words in its trading update on Monday, Richemont provided the first concrete signal to the luxury industry of the depth of the global downturn, raising the question of its long-term impact on the sector as we know it.

Sales at Richemont for the third quarter of fiscal 2008 were down 12 percent overall, on a constant currency basis, but down seven percent when taking into account the dramatic currency fluctuations of recent months, which have seen the dollar and the yen soar versus other currencies.

Still, the larger than expected drop in constant currency sales was nothing less than astonishing, catching many analysts off guard with a performance that was below already conservative expectations. The plunge was led by a 28 percent decline in U.S sales, echoing an American trend seen at Saks and Neiman Marcus in recent months.

Japanese sales sank 18 percent and Europe declined nine percent. China was the only bright spot, but even its 24 percent spike couldn’t make up for an anemic performance almost everywhere else.

In notes to the investor community today, analysts weighed in on the surprising news. Luca Solca, Senior Research Analyst at Sanford Bernstein advised against any short-term investments in the sector, saying that “luxury stocks are unlikely to re-rate in the short-term, but rather risk remaining range-bound as the macro environment continues to worsen.”

For her part, Lisa Rachal, a Partner at equity research firm Redburn Partners, raised the question as to whether we are facing just a “cyclical downturn,” or a more permanent “structural correction” in the size of the luxury goods market overall.

It’s a good question and it also raises the another one. If the market shrinks, who will disappear?

One theory says that “affordable luxury” will suffer as customers retreat to their comfort zones. For the rich, this means only the best products (no trading down) and for the poor, it means highly accessible, mass-produced products (“value retail” as another expert recently described it to me), theoretically leaving an eviscerated swath in the middle of the market, where Coach, Juicy Couture, and Theory are playing.

Others say that small, independent brands are the most at risk. With tough credit conditions in a highly cash-flow intensive stage of their development, these businesses lack the oxygen they need to grow. What’s more, they argue that department stores will flee to “names people know,” a euphemism for those with big brands and advertising firepower.

But big brands are not immune to this slow down either, especially if we take a longer-term perspective of what is going on. Unlike small fragile businesses or overextended banks, it may take years for the eventual decline of some of the big brands we know to play out, as it is unlikely to come from cash flow or liquidity issues. But, it will happen, eventually. Even big names, as we have already seen across the retail sector (and the economy more generally), can fail.

So in truth, there will be companies who will struggle in all of these segments, while others will thrive. This is a good thing. Joseph Schumpeter called it creative destruction; the process whereby sleeping giants are replaced by innovative upstarts over the longer-term.

In the meantime, we await the latest results from Burberry, which will be announced Tuesday morning in London, and the debut of Kim Jones menswear collection for Richemont-owned Dunhill, which will be unveiled in Paris on Sunday.

Luxury Outlook | Faith Popcorn on the Recession Culture

Imran Amed, Editor — Wed, 17 Sep 2008 16:24:09 +0000

LONDON, United Kingdom and NEW YORK, United States – Are London fashionistas living in a bubble?

There was no sign of global economic turmoil last night as party-goers let loose after a busy day of shows during an even busier night of events. Following strong showings by Giles and Christopher Kane, there was the opening of the fabulous new Dunhill flagship (see here for our review of the sister store in Tokyo), an exhibition of stunning fashion photography by Mary McCartney, and the biggest party of London Fashion Week hosted by Giles Deacon and Swarovski (with a huge Giles cartoon ghost made completely of flowers, pictured above).

The mood is certainly more sombre across the pond in New York. And, if there was any remaining doubt as to whether the U.S.A. is entering (or is already in) a recession, that doubt has been erased just as quickly as the market capitalisation of some of the world’s most famous investment banks.

So, while many expert observers don’t know what is going to happen next, The Business of Fashion caught up with noted futurist Faith Popcorn of the Faith Popcorn Brain Reserve to get the lowdown on ‘recession culture’, coping with the downturn, and the winners and losers.

BoF: What is the recession culture and why has it become pervasive in the minds of American consumers? How long will it last?

Recession Culture, A Mindset of Making Do With Less: Economists haven’t yet declared that we’re in an actual recession, but Americans certainly feel like they are and are living that way. We’re shifting from bling and flash to no-logo apparel and accessories; from having the latest and greatest of everything to learning to live a Simple Life. We’re scrimping and saving where and when we can.

The End of Recession Culture, The Big Question: How long this recession culture will last is what people are asking themselves and each other. There seems to be no light at the end of this tunnel. And we may not have an end-date until we see who is elected President and what that person’s first priorities are once he’s in office.

BoF: Given that fashion and luxury products are more of a “want”, than a “need” (well, for most people anyway) how do you think this recession mentality will affect the purchases of fashion and apparel?

People will have to prioritize their spending, choosing the heating oil bill over the “it” bag, filling the gas tank over filling their closets.

They will still want to look their best, and shopping will still make them feel better in this tough time. (Small Indulgences) But when they do make fashion purchases, they will be more careful, selecting apparel and accessories that can be worn multiple ways for multiple seasons and/or items that are extra-special.

BoF: Can fashion companies do anything to combat this mentality?

Offer Sustainable Luxury: The muted logo-free look is widely regarded as the standard-bearer for a new kind of luxury: subtle and with longevity. Luxury consumers don’t want fashion that screams luxury; it’s ‘irresponsible’ during a recession, but they want something durable and worth the splurge.

Offer the Right Price Point: Or A Very Special Garment: People still want to look their best and make themselves feel better especially in bad times. (Small Indulgences) The right price point is essential, if you can offer a ‘special’ garment at a competitive price great, but if you can’t, then the garment needs to be that much more ‘special’ (EGOnomics).

Offer Online Purchase and Return Options: The high gas prices are changing the way people shop. Consumers will want to save gas and buying online is the best way to do that.

Offer Exceptional Customer Service: If and when people choose to venture to the store, customer service is key – especially if price points are on the high side.

BoF: Who will be the winners in this kind of situation?

Exceptional customer service

· Nordstrom continues to be known as a retailer focused on providing the best customer service.

Online shopping options

· Retailers like J.Crew allow customers to return items purchased online at the stores.

· Shoe e-tailer Zappos offers customers free returns.

Customization or special store experiences

· Fashionology in LA is a retail experience for tweens where they can make their own clothes in a fun studio

· Steve Madden’s DIY Shoes, consumers visit the site and can design their own shoes at about a 25-30% higher mark-up

Value price points

· Stores like TopShop, Zara, and H&M offer unique clothing and accessories at value prices.

Logo-free apparel and accessories

· Bottega Veneta: The brand’s signature look is sustainable luxury and has transformed the once-ailing fashion house into one of Europe’s top selling luxury brands with annual sales of more than $500m worldwide

Dunhill Ginza | Welcome home

Imran Amed, Editor — Wed, 02 Jul 2008 23:48:02 +0000

TOKYO, Japan – “Welcome home.” With those words Jun Morimoto, CEO of Alfred Dunhill in Japan, warmly ushered me into the new Alfred Dunhill flagship in Tokyo’s Ginza district, where it rubs shoulders with the impressive architecture of some of the world’s most famous luxury brands. But all is not rosy in Tokyo’s legendary luxuryland, with reports that sales for some international luxury brands in Japan are down as much as 20% versus last year.

As Morimoto-san showed me around the store, the first of a few Dunhill ‘Home’ flagships which will be opening around the world, he also demonstrated how brands like Dunhill are leading the way in adapting their stores and product offering to meet the evolving expectations of the Japanese luxury customer.

The first floor of the flagship is home to the Tokyo-outpost of Bentleys, the antique shop from London’s Walton Street, where aficionado Tim Bent carefully curates an indulgent collection of Goyard, Louis Vuitton and Hermes antiques. During my visit, many of Tim’s finds, some of which cost upwards of $10,000, seemed to have already been snapped up by customers hungry for a taste of luxury of the early 20th century, when trunks were made to exactly to your liking.

Not to be outdone by the past, the Ginza store also offers Dunhill products not available anywhere else in the world, the most spectacular of which is a made-to-spec traditional Japanese kimono, retailing at ¥1.2m (about $11,000), manufactured using traditional Japanese craftsmanship in the Shiga prefecture near Kyoto.

A couple of night before my visit, Dunhill launched the kimono with much fanfare, creating a veritable frenzy in the Japanese press. But this is no PR gimmick. Every last detail has been thought of, from the 6 available colours that can be traced back to Dunhill’s founding year in 1893 to the subtle D8 signature made of exquisite Japanese paper. The best feature, however, is the selection of several different motifs which are imprinted on the inside of the haori, or hip-length jacket, creating a kind of secret bling for the wearer alone.

The Dunhill flagship, which is home to the only aboveground bar looking out onto Ginza’s bright lights and a barber shop offering indulgent spa treatments, also gives us a taste of what luxury retail environments may feel like in the future as brands strive to build deeper relationships with their customers (and give them more reasons to come into their stores.)

The strategy seems to be working. All three chairs in the barber shop were occupied with just the kinds of young, hip men that brands like Dunhill will need to attract in order to continue their legacy of luxury.

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The Dunhill “Home” store in Tokyo’s Ginza district.

Bentleys in Dunhill Ginza

The Dunhill Kimono, available only at the Ginza flagship.

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