"The role of the distributor will never die", says Bluebell CEO Ashley Micklewright
today Dec 9, 2018
Ashley Micklewright, CEO of the Bluebell group since 2011, was passing through Paris in December. Having landed at dawn, the executive took some time out at his plush hotel in the centre of the French capital to talk to FashionNetwork.com over a cappuccino and some French pastries, sharing his vision of the fashion industry, before shooting out to a conference at one of Paris' business schools. As the leader of a company which has supported the development of big-name luxury brands like Louis Vuitton in Asia, and which is currently the partner of some 150 labels (including Jimmy Choo, Clarins, Brunello Cucinelli, Loro Piana, Kenzo, Castaner and Narciso Rodriguez) throughout the Far East, Micklewright has a well developed business expertise. He gives his perspective on the evolution of Asian markets, as well as on their relationship with the luxury sector and the influence of the Chinese market. The Canadian hockey fan also knows how to fight his corner and has often had to remind luxury brands of their responsibilities. In his opinion, the industry's big hitters have to know how to keep on top of their pricing policies, both in brick-and-mortar retail and in digital channels. This first instalment of FashionNetwork.com's two-part interview with the executive focuses on the role of distributors and the influence of China throughout Asia.
FashionNetwork.com: You've been CEO at Bluebell for seven years now. I read that the volume of business achieved by your company is over $1 billion. Is this true?
Ashley Micklewright: It's actually more than that. It's close to $1.5 billon. I can't say exactly what the company's revenues are because we work with a lot of partners through joint ventures and when we own under 50% of the shares, we don't consolidate the revenue. In real terms, taking into account the deals that we have, I would say that it's between 350 and 400 million euros. We have joint ventures, wholesale and duty free, which explains why the total is $1.5 billion in retail value.
FNW: I've always thought of Bluebell as a partner for luxury brands but I've seen that you're opening up to new sectors with your "Studio" division, which is more lifestyle oriented. What's your work method?
AM: We're a company that has been working in the luxury sector for decades. The majority of the brands in our portfolio are in this segment. But the reality is that, in a lot of countries, rents have shot up so much in the last few years that running a profitable business is becoming harder and harder. What we've decided to do is to work in the accessible luxury or premium segment, which is seeing strong growth. That's also the reason that we're in Paris. We want to forge a connection with these new brands, and then, when they're ready, we'll be able to support them. But we always undertake these developments in accordance with our luxury DNA. All our service criteria are the same as the luxury industry's. Our teams are trained at the Luxury Institute, which is part of the company. Our luxury positioning is an asset that attracts premium brands.
FNW: And how do you convince luxury brands, and also now accessible luxury brands, to let you lead their operations in Asia?
AM: The specificity of our structure comes from the fact that our owners are a European family and the majority of our senior executives are European. We have a growing number of Asians on our team but our identity is essentially that of a European company evolving in an Asian environment. This allows us to communicate with European brands while understanding their culture and their DNA. That's important. And it also works in the premium sector.
We have the credibility that comes from being able to say, "we established Jimmy Choo in Asia. We work with Manolo Blahnik. We've been doing this for the last 60 years." These success stories inspire confidence. It's not a question of money, but one of understanding. Our history across all distribution channels also allows us to understand the demand, to see that it is evolving and that the border between premium and luxury is becoming blurred. Luxury brands, which are looking for new customers, are increasingly flirting with the premium sector through capsules and collaborations. It's a real market trend.
FNW: Do you still have deals with big groups in the luxury sector to develop their operations in Asia?
AM: No, not with the big groups. Now they have their own operations and work in line with their own company philosophy. But you also have a number of brands which have a different approach and want to be distributed in Asia. So we weren't afraid that there might be a lack of brands to develop in Asia. A few years ago, some people were saying that the role of distributors was over. In reality, it will never die. The specificities of each market are so strong that you need people on your side who understand them.
Groups can recruit specialists who will help them avoid pitfalls. But to import an Italian product and sell it in Japan, you need a local presence. I was worried by the development of the first e-commerce platforms. I thought they'd break our model but five years later I'm even more convinced of the importance of our role. The brick-and-mortar network is very different in each country. In Japan, for example, the model is very much geared towards department stores. In Hong Kong, it's malls. But digital retail is also very different from one zone to another. In fact, e-commerce has become more of an opportunity than a threat. If you look at digital marketplaces in Asia, there are three or four in each country and often European brands don't even know their names. Brands need help orientating themselves in this mass of possibilities, which is even bigger than before.
FNW: So when a brand reaches maturity on a market, its owner always takes over operations?
AM: Yes, that's part of the fun but it's also a challenge. A few years ago, when we came to Europe to negotiate with a brand, it wasn't too difficult to secure the rights for the whole of Asia. But in the last ten years, Asia has become very important for the entirety of the luxury industry. Before, it was good to have a presence there, now it's a key part of the strategy of every major brand. So it's difficult to work with a brand throughout the whole region. These days, we work with brands on three or four markets. China is obviously the market that everyone is interested in: some brands have a partner there, others work there directly and then there are some who don't want to go there.
FNW: Where do you currently do most of your business?
AM: In South Korea and Japan. I'd say that these countries currently represent 60 to 65% of our business. Then we have Greater China, which accounts for 25% and Southeast Asia which is just over 10%. That said, our plan is to organically grow our operations in Southeast Asia, with a target of bringing that figure up to 15%. But we're really concentrating our efforts into developing our operations in Greater China, in Hong Kong and in Taiwan.
FNW: China has been identified as an ultra-dynamic market. As the head of a company with operations throughout Asia, what's your vision of the different markets in the region?
AM: When I started out 23 years ago, everything was linked to the Japanese. And that doesn't just mean the Japanese market, which was and still is the most sophisticated country in Asia, and maybe the world, but also Japanese travellers. We have divisions in Hawaii and Guam and they were very much linked to Japanese consumers. The Japanese market hasn't declined, it's still a very big market, representing around 50% of the Asian market outside of China.
When you look at Hong Kong, South Korea, Taiwan and Southeast Asian countries, these markets are solid and are growing significantly. But they can't grow at the speed of the Chinese market, because that started from zero. And if there are no political breakdowns and the country's leaders can ensure the well-being of the middle class, it will become absolutely enormous. So the biggest growth will definitely come from continental China but that doesn't mean that the other markets aren't important or interesting. In our case, we've had great success in Japan and Korea. But can those markets double in size in five years? No! Not through organic growth. And can the Chinese market do it? Yes, without a doubt, provided there are no socio-economic disasters.
FNW: Speaking of which, are you worried about international political tensions?
AM: Whether we're talking about the luxury sector or the accessible luxury sector, there are certain zones in Asia which are highly dependent on Chinese consumers. If they aren't travelling or spending, the situation is going to get difficult. That's why we build our operations around domestic demand. When we're thinking about the expansion of a brand into Hong Kong or Taiwan, we do it to satisfy local demand. Everything that comes from consumers from mainland China after that is just a cherry on the cake. More often than not, you can't avoid suffering from the influence of these events. Just look at Hong Kong! If you have a problem, like the current situation with Trump, sales decline.
FNW: Is that what you've been seeing?
AM: That's what's been happening for the last two months in Hong Kong: there are fewer Chinese visitors and those who do come are spending less. But it's not a disaster. You have to be very careful with the Chinese. The government is very intelligent. Look at what happened in Hong Kong during the umbrella revolution. It was fascinating. In some countries, the government would have been firm and sent in the troops. But the government let the protesters be and waited for public opinion to turn, for solidarity to wane once people started getting stuck for hourse on their way into work. They limited the number of visitors from mainland China. They succeeded in letting the crisis subside without a single death.
And then there are the country's relations with South Korea and Japan – markets that cater to some Chinese consumers –, which have been strained of late. And there are some Chinese groups that no longer visit. That can be brutal on a commercial level. What you have to avoid is investing too strongly in a model which is based on the flow of Chinese tourists, because that can destabilise you very quickly. And it's very difficult not to move towards that kind of model. We don't tell our brands not to go after these customers but we try to draw up a plan with them which is based on the domestic market.
FNW: Some observers are very critical in their appraisal of the benefits of a brand launching on the Chinese market. In your opinion, how are European and American brands perceived in China?
AM: There is no one Chinese consumer. There are Chinese consumers that travel, who are looking for brands that are already established and very well known. So they search for good prices, products which are cheaper than in China, even if the gap is starting to narrow. In this case, it's pretty simple because the customer arrives and you just have to bring them the right product and the right service. If you look at Chinese consumers in China, it's completely different. The brands have to understand that the label's value has to be built up. And, indeed, it's difficult to understand who does what on the ground. Our role is to help brands to see things more clearly when it comes to finding reliable partners. I remember one of my colleagues used to say, "China is a goldmine or a minefield". It's still applicable today.
FNW: A lot of brands have been tempted into major development plans. Have European labels been too ambitious?
AM: I think that they are often following more of a feeling of opportunity than a well thought-out strategy. You can find a partner who's going to open 50, even 100 stores very quickly, but if it doesn't go to plan, everything's going to collapse extremely rapidly. Because opening 100 or so stores is one thing, but the market never forgets it if you close 100 stores. The brand is damaged and sometimes it can never return to the market. You have to be very careful, not only about the way you operate your brick-and-mortar and digital channels, but also about who you do it with.
It's complicated if a brand is opening 50 boutiques when it doesn't even have a network of that size in Europe. Is there sufficient infrastructure in place? Is the brand capable of managing supply? While there are are some brands which achieve real success, for most it's a lot more complex. But then there are so many options for a brand looking to launch in China. There are deals with digital platforms like Tmall and Alibaba, but also with third-party partners who work on these platforms. In my opinion, these days China is the most advanced country in terms of digital retail and digital marketing, and even, in some cities, in terms of physical retail. And at the rate they're going, nobody can keep up.
FNW: As you see it, are the Chinese at the cutting edge of retail?
AM: Six months ago, I was visited by someone from China who had done a "retail tour" of Hong Kong and found the city boring in comparison to Shanghai. I went to see him three weeks later and, my God, it was really impressive. They're so far ahead in terms of concepts. Of course, the fact that the cost of these kinds of developments is much lower than in Hong Kong helps the situation. But to catch the attention of Chinese consumers, retailers really have to come up with a new, quirky approach. They're doing things that haven't even started in other places.
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