Digital stores will never replace physical stores in the luxury segment: François Arpels

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In 2000, Van Cleef & Arpels, of which he was a member of the board of directors, was sold to the Richemont Group. François Arpels has been advising lifestyle and luxury brands. He has been working in India for over 15 years and now lives in New Delhi.

Arpels is also the Founder and Managing Director of Brands and Beyond, an India-based private equity (PE) fund that seeks to invest in local luxury and lifestyle brands. He was one of the speakers at The Timeless Legacy of Indian Jewels, an Indian jewelry conference hosted by Saffronart in October in Mumbai. He spoke to Lounge about the luxury market in India and the luxury trade. Edited excerpts:

There must be several kinds of pressures on old family businesses, pressures to be competitive and to reinvent yourself …

I don’t think pressure is the right word. The company had been part of my breeding. The whole family got involved and the knowledge, the know-how and the reins have been passed on from one generation to the next, in complete transparency.

That said, the only way for brands to endure and grow is to innovate in all aspects: design, marketing, expansion, staff training and customer service.

Van Cleef & Arpels has always been innovative. Some of the techniques my family invented still exist today. Invisible setting, a technique in which the prongs on which the precious stones are mounted are invisible (also called Mystery Setting, and patented in 1933 by Van Cleef & Arpels), remains in great demand today. We were the first jeweler to open a boutique in Japan in 1974.

In the late 1950s, my family realized that luxury, as it was seen at the time, was changing. It was the time of the hippie movement in Europe and people were looking for clothes and jewelry that were easier to wear. Van Cleef & Arpels imagined the La Boutique collection, initially intended to offer a younger and more accessible line of jewelry to a wider clientele, such as the Alhambra, which today remains one of the brand’s best-sellers. This was long before Cartier launched the Must jewelry line (Les Must de Cartier) in the 1970s.

In 1976, Van Cleef & Arpels became the first jeweler to launch a perfume.

It demonstrates the brand’s agility to be a pioneer in understanding and adapting to consumer preferences.

What do people need to understand about the luxury business?

Let’s first differentiate between luxury and lifestyle: lifestyle is more common and luxury is more exclusive.

For luxury goods, the legitimacy of the product is essential; what is behind the product, who made it, whether the brand controls and improves the craftsmanship of the product, these are extremely important factors.

It is very important for a luxury brand to be able to rely on know-how that is communicated to customers. It is therefore important that brands own or control this aspect. Then, communication, storytelling, must be consistent with the history and values ​​of the brand. And the service part; sellers need to be particularly knowledgeable and trained to be able to speak with consumers as knowledgeable brand ambassadors.

The brand must be protected in all directions; building a luxury brand takes a lot of time, even if today communication tools can shorten that time, consistency and reliability are therefore essential.

Stores are also essential. For a consumer, beyond the product, the experience matters.

So there is no alternative to the brick and mortar store?

Digital stores will never replace physical stores when it comes to the luxury segment. Social networks and e-commerce complement physical stores. They can help customers learn more about a brand and its offering, and make it easier for the brand to interact with them, but most of the time, hands-on product experience is essential.

If you buy a limited edition watch, for example, you would like to see how it looks and feels on your wrist, it’s impossible to replace.

What are the future projects of Brands and Beyond?

Brands and Beyond is a PE company that provides strategic advice and will help brands add value. Our goal is to invest in luxury brands made in India, non-ethnic lifestyle and luxury, and guide them to expand internationally where there is the greatest potential for growth and the most. strong interest in emerging disruptive brands, while consolidating them selectively, locally. We target, among others, the beauty, clothing, jewelry, accessories, gastronomy and hospitality sectors.

Our business model is to help the companies in our portfolio improve their value cycle, put in place the best processes and work with them to design and implement a successful international deployment strategy.

It has been three years since my partners and I started working on the project called IndEU Capital and a year since we market Brands and Beyond. We will be making our first two investments in the coming weeks.

Our goal is to invest in about 12 companies over the medium term, say about five years per investment, contributing between $ 1-4 million (about Rs 6.4 to 25.7 crore) per transaction in one or more installments. , in businesses generating $ 1 to $ 5. million revenue.

Why a fund dedicated to India?

As far as I’m concerned, India has always been a part of the global lifestyle and luxury story in many ways. Centuries ago, with the trade in the rarest fabrics, gold, diamonds and other precious stones, spices, a large part of these noble materials would come from India. And if they didn’t, they would pass through India at some point during the trade.

In the 20th century, India inspired many international brands; from jewelry to perfume makers to fashion designers. Look at Cartier and Van Cleef & Arpels, for example: their creations were largely influenced by India in terms of styles, designs, colors, techniques, etc. Also like Chanel and Hermès, they were all inspired by India. Almost all international brands would have an Indian inspired product in a collection.

Also, the brands have relied on India for its many trades, such as embroidery, the application of gold, and its know-how. The time has come for Indian brands to internationalize by capitalizing on its history.

People in India are slowly realizing the value of India in the history of global brands. Saffronart recently hosted a conference in Mumbai on the timeless heritage of Indian jewelry and it is time for more such events to be promoted in India to put the country back on the luxury world map.

It seems that India has always had the potential, both as a market and as an incubator of luxury brands. Why did the country not live up to expectations then?

From my point of view, the reasons are relatively simple. India does not offer the right environment for the development of international brands and the addressable market remains tight. Taxes are extremely high, forcing Indians to travel outside the country and purchase luxury goods at more competitive prices. They might also find a greater variety of choices and a much better overall shopping experience outside the country.

The infrastructure in India is still not at the international level. Where does a brand open a store here? And even if they do, where do they go beyond a second store? The education system does not yet offer a real curriculum for luxury management except for rare cases such as luxury crafts and lifestyle businesses (courses) at IIM (Indian Institute of Management). ), Ahmedabad. The local ecosystem is still quite unprofessional. Luxury brands therefore do not come to India and have only a few stores there.

As for Indian brands going international, it’s a little different. I would say that there has been a lack of conviction and confidence on the part of Indian designers, creators and promoters in their ability to internationalize, and they have been relatively sheltered in the local market for worrying about the globalization. It is not easy to build a brand and even more difficult to maintain that brand name. Groups like LVMH, Richemont and Kering have been so successful because, like any other industry, they have the best processes in place and have access to a large pool of professional, managerial and professional skills and talents. creative. This was lacking in Indian brands.

That said, brands from emerging markets Brazil, India, Lebanon, Bali, Singapore, China, Australia have led the way. Look at Elie Saab, Carlos Miele, John Hardy, Rahul Mishra, Royal Enfield, Skin Inc., Nappa Dori, Pashma, Amrut, Shiatzy Chen, Aesop, etc., they are either in the process of rolling out or already very successful at the international. So things are happening and soon you will see a wave of brands from emerging countries impose themselves on the international scene.

How has the luxury industry evolved over the years?

Well, some things have happened in the last four decades. Countries like Japan and, more recently, China have contributed to the development of the industry. For luxury brands, this translated into double-digit growth. The increase in the number and diversity of brands, the flow of information through the internet and social networks, and the development of travel have resulted in more informed, sophisticated and volatile consumers. In addition, the new and young generation does not buy for status but for experience and emotion. As a result, the demand for brands with legitimacy based on personalization, craftsmanship and uniqueness is increasing. As the market grows, smaller and more innovative brands from emerging countries have the potential to be a disruptive and attractive proposition in the market beyond global brands.

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