LGDBC Kicks Off "Week in Luxury" with a Bang

Gucci Group’s Robert Polet
The Luxury Goods and Design Business Club’s “Week in Luxury” began Monday with Gucci’s Robert Polet. Polet, whose visit coincided with his daughter’s 19th birthday (she is currently a Harvard undergrad), was appointed to his current role as president, CEO and chairman of the Management Board of Gucci Group in July 2004. The Gucci Group reported roughly $3 billion in annual revenues in 2005 and includes a portfolio of 10 of the world’s most glamorous brands: Gucci, Alexander McQueen, Balenciaga, Bedat & Co, Bottega Veneta, Boucheron, Sergio Rossi, Stella McCartney, Yves Saint Laurent and YSL Beaut‚.

Mr. Polet joined Gucci Group after a 26-year career at Unilever, bringing considerable global management experience and a deep knowledge of the development of consumer brands in a multicultural environment.

“What excites me is to energize people to bring brands to a new level, to achieve impossible things together with people and see the twinkle in their eyes when they achieve it,” Polet said.

Born in Kuala Lumpur on July 25, 1955, Mr. Polet, a Dutch national, studied business administration at Nijenrode in the Netherlands and earned an MBA from the University of Oregon. After joining Unilever in 1978, Mr. Polet filled a variety of marketing and senior executive positions throughout the world, culminating as president of Unilever’s Worldwide Ice Cream and Frozen Foods division, a $7.8 billion business consisting of over 40 operating companies.

Polet identified the three major tasks of the Gucci Group leadership as brand management, professional coaching and creating an environment that fosters creativity. He cited the management of creativity as the major difference between his previous work at Unilever and his current role in “the business of selling dreams, gold and glitz.” According to Polet, creativity is at the heart of his business, driving both brand strength and company longevity.

Polet touched on several trends in consumer behavior that are currently driving the luxury industry. Among them, the “I need it factor,” which increases the role of desire and emotion in consumer purchases (as in “I need that Gucci bag!”); a more confident consumer who mixes and matches across channels and designers; consumers trading up and down simultaneously; and finally the growth of ultra-exclusivity.

His advice to students? Visit stores and talk to employees. Polet credited a seven-week trip around the world as the key factor in his successful transition from consumer products to luxury goods. During this trip, which he embarked on after his first month at Gucci Group, Polet visited 168 stores and met 2,500 employees, allowing him to gain significant operational knowledge from the field regarding people, strategy and competitors.

Over the past 22 months, Polet has instituted several reforms and structural changes that led to consistent growth rates of 18 to 22 percent. Two of his most notable moves were a decentralization of control within the organization: instituting brand autonomy by appointing individual brand CEOs and setting profit-making deadlines for each brand.

Today, the Gucci Group is a true multi-brand business with each CEO in complete charge of operations and designers free to express creativity within the specific DNA of each brand.

Robert Chavez, HermŠs of Paris, Inc.
Robert Chavez of HermŠs of Paris, Inc. followed Polet’s visit on Tuesday. Chavez, who became president of HermŠs of Paris, Inc. (USA) in August 2000, originally aspired to a profession in teaching. A native of San Antonio, TX, Chavez graduated from Princeton University and entered the Executive Training Program at Bloomingdale’s, planning to take a few years off from academia before beginning graduate school. He subsequently became an assistant buyer in Cosmetics. Three short years later, at age 25, he became a furniture buyer.

In 1986, Chavez joined Macy’s as merchandise administrator for Cosmetics and Fragrances. By 1991, at 36, he was appointed president of Merchandising.

In 1992, he joined Etienne Aigner as CEO. Under Chavez’ leadership, Etienne Aigner experienced a significant increase in growth and profitability by improving Aigner’s brand image and awareness, as well as managing customer relationships. During his tenure, the company’s sales increased by $160 million.

Chavez’s talk focused primarily on the heritage and essence of the HermŠs brand. Founded in 1837 to produce equestrian goods, the company is now led by the sixth generation of the HermŠs family based in France. While the invention of the automobile marked the business’ transformation into the company we know today, the company’s equestrian heritage has served as inspiration for many of HermŠs’ signature products.

For example, the colorful HermŠs scarf was conceived from the exquisite silk linings of equestrian jackets and the highly coveted handbags are derivatives of century-old saddle carrying bags.
The HermŠs brand can be described in four words: quality, craftsmanship, heritage and service. To illustrate this point, Chavez cited numerous examples of the company’s products and production processes. For example, the HermŠs “color kitchen” in Lyon keeps 70,000 colors on file for screening silk scarves and ties. Scarves and ties are printed in an intricate process that demands for each of up to 43 colors to be screened separately.

Hand production also separates HermŠs from many competitors in the luxury space. All leather goods are stitched by hand; a master craftsman in France spends an average of 18-24 hours to complete one bag from start-to-finish, helping to explain the products’ high price tags and long customer waiting lists. As Robert Chavez says, “HermŠs is not expensive, it just costs us a lot of money to make the product.”

Given the nature of HermŠs’ hand-production process, the company’s major challenge is to continue growing without compromising its heritage. In other words, neither outsourcing nor converting to machine-made products is an option.

“Week in Luxury” ended on Sunday, April 2 with the Retail and Luxury Goods Conference featuring keynote speaker Robert Bensoussan, CEO of Jimmy Choo.

April 3, 2006
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