MBA Luxury Brand Management

MBA Luxury Brand Management
Class of 2016-2017

Wednesday, July 1, 2015

Learning from the Experts: Managing a Jewellery Brand

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.”