By Jeanine Benjamin, MBA in International
Luxury Brand Management 2014-2015, South Africa
Strolling into our class, Mr. Alain Viot sketched a very humble
figure. One which belied his impressive resume and the wealth of knowledge he
was about to bestow on us in our short time together. Viot is a name you may
know if you followed the executive profiles of the luxury jewellery industry.
In case you don’t, I have done the homework for you. To cut a long story short,
his previous roles include President of Cartier for North America and
thereafter he was appointed as Director of Business Development at Cartier’s
parent company, luxury goods group Richemont. You would not be far off if you
guessed that we were quite surprised to find that he would be teaching the
course “Managing a Jewellery Brand” to our MBA class.
The first day started off slowly, with Mr. Viot giving us a bit of
what the jewellery aficionados in the class already knew. What was apparent the
whole way through though was that we were being taught by someone who knew
every inch of the industry inside out, from the luxury jewellery houses such as
Boucheron, Chaumet, Piaget and Chopard to brands from the Far East like Carnet
and Anna Hu. After covering the brand profiles of all the major players, we
were introduced to the current market opportunities and market challenges. We
were also taken through the paces of how business decisions led by these
opportunities and challenges would affect the overall business model. We
discussed how the ebb and flow of product demand would affect decisions to
produce in-house or subcontract the manufacturing and how flexibility and
technical innovations are key considerations to this decision.
At this point we were able to clearly understand the differentiation
in capital expenditure, inventory effects and product specifications that sets
the luxury jewellery sector apart from other luxury sectors such as watches or
fashion and accessories. In the fashion industry, seasonal pressure obligates
brands to start from scratch each time. In the luxury jewellery industry,
brands only have to revive existing collections. However, planning and
merchandising in luxury jewellery can be tricky when planning quantities per
precious metal/ring sizes/stone choices. If a brand gets it wrong, the capital
investment lost in stagnating inventory could spell disaster for the brand.
Viot quickly moved on to focus on distribution channels in this
sector and the advantages of each from a business perspective. We discussed how
chains have the advantage of close proximity to customers while branded
boutiques leverage brand image and margins. Department stores win in terms of
choice and services while e-commerce stores are more able to offer sales,
discounts and information on products. He then moved on to discuss
communication opportunities with us and ended off the day with this parting
shot -The luxury jewellery market is growing but there is a fight for market
share due to increasing costs in production, distribution and communication.
Lastly, unlike fashion, hard luxury has to create value, especially to gain
market shares against the non-branded products.
Personally I thought that was it for this course, Mr. Viot had
covered it all. What could the final session possibly cover? How wrong I was.
This session was taken in an entirely different direction, where now we were
placed in the position of luxury jewellery brand manager and presented with a
real world case of whether to acquire an unnamed French jewellery brand with
strong brand awareness and iconic pieces. He provided us with all marketing
data and financial statements and then instructed us to do on-the-spot analysis
and conclude whether this sleeping beauty was worth the acquisition. Thereafter
we were to develop a strategy for the future, a business plan and an action
plan for the early years. Throughout the question session and analysis, Mr.
Viot challenged us. As far as I was concerned this session epitomized what I
came to this MBA for. I was thoroughly engaged and stimulated. He ended off by
sharing some tips that he had felt were key issues in this arena and I will
share these two quotes: “Building a luxury brand in jewellery takes even more
time than in other markets” & on Investors’ Profiles, “They have to be
interested in the long term horizon….be focused on asset building, not
profits.”
