Few businesses have crossed the footwear to fashion boundary as successfully as LK Bennett. Chairman Robert Bensoussan and chief executive Margaret McDonald plan to transcend it even further.
When the former Jimmy Choo boss Robert Bensoussan led a buyout of LK Bennett in the summer of 2008 rumoured to be worth £80m, no one would have predicted that the entire banking sector, and with it consumer spending, was about to collapse.
Bensoussan says business has been tough since the deal but maintains that LK Bennett was always going to be a good business to buy simply because it has so much untapped potential.
In January, Margaret McDonald joined as chief executive from Gap-owned retailer Banana Republic, where she was vice-president for Europe, and the duo set about installing their strategy to make LK Bennett an “affordable luxury” retailer with a global reach.
Already LK Bennett’s advertising has been given a sexy makeover, which has a distinctly glossy feel, while product has been upgraded with better-quality materials and more fashion-forward handwriting. Prices have gone up as a result, with the over-the-knee boots featured in the ads at £495. But McDonald insists LK Bennett is not turning its back on its core 30-plus customer, who tends to be a professional or a yummy mummy.
Luring new customers
She says: “It’s not just a question of putting prices up. Our product is much more complicated and sophisticated, and the level of quality is up.”
McDonald adds that the “makeover” of LK Bennett – which had sales of about £60m in 2008, split 45% clothing to 45% footwear and 10% bags and accessories – was about bringing new customers through the door, while holding on to the existing shopper.
She says: “A lot of these [new] shoppers thought LK Bennett was too classic for them. We are trying to bring in a new client with a touch of modernity. We haven’t changed the fit though.”
However, Bensoussan is keen to point out that the LK Bennett classics are still there. “New product is there to entice new customers but our classics are still there too. We will find a balance.”
Bensoussan, whose background is almost exclusively within the luxury sector – he was responsible for the explosion in popularity of Jimmy Choo and prior to that worked at labels such as Gianfranco Ferré, Christian Lacroix and Sonia Rykiel – says he senses a shift in consumer buying habits at the top end of the market that could play into the hands of businesses such as LK Bennett, which bridge the gap between the high street and designer brands.
He says: “We want to have an image closer to the designer sector but without the price points. It’s about affordable luxury. The level of prices in luxury are getting out of the reach of most people.”
He adds: “We’ve seen no resistance to higher price points when the quality is there. We did the best execution of a double-faced wool coat [this season] and we do Italian-made court shoes. There is a real opportunity to do more premium items.”
Along with a change in consumer attitude, Bensoussan’s “affordable luxury” strategy is undoubtedly influenced by his desire to transport LK Bennett overseas – the global expansion potential is what first attracted Bensoussan, who purchased the business via his own private equity firm Sirius Equity in conjunction with Phoenix Equity, into making a play for LK Bennett.
However, he says the growth story won’t simply replicate that of Jimmy Choo, which benefitted from a huge amount of global publicity off the back of TV show Sex and the City. Bensoussan says: “This is a very different strategy [to Jimmy Choo]. It’s not based on high fashion or celebrities. We are very close to the consumer.”
However, upping the glam factor will be a necessity if Bensoussan is to successfully roll out LK Bennett overseas, where the chain has little, if any, brand recognition. Bensoussan says he plans to target the US, Asia and selected European markets but that this is unlikely to happen much before autumn 2010.
Bensoussan says: “Our first strategy is to successfully take the business international. We have 100 shops in
the UK where we are an established brand. We need to give a consistent image and glamour to get international shoppers interested.”
Sources in the footwear sector say international expansion is where Bensoussan will likely draw on his Jimmy Choo experience. He already has a network of contacts within US department stores for instance, which he admits will provide the core part of his overseas expansion strategy, either via concessions or supplying them on a wholesale basis. He will also look for distributors local to foreign markets.
He adds: “We need to build an infrastructure that is part retail and part wholesale. We are not organised to sell wholesale at the moment.”
LK Bennett already has a store in Paris. Sources say business at the store has been patchy because of low brand recognition, but McDonald and Bensoussan insist trade is good. “We get local Paris shoppers,” says McDonald.
However, McDonald adds that she plans to collaborate with a British designer next year to help lift recognition of LK Bennett overseas. She explains: “The Britishness of LK Bennett will be extremely important. Prices will be above the core LK Bennett range but will be much less expensive than the designer market.” It will be distributed to selected stores both in the UK and overseas.
Back home, Bensoussan says there is still room for expansion of the chain, which has about 100 stores and concessions within department stores such as John Lewis and Selfridges. He says:
“In the UK we are looking for more stores and bigger stores. We could add 20% to 25% more [stores]. We want to open in affluent middle-class areas.”
The UK stores are also being upgraded. A new upmarket storefit debuted with the relocation of the Bluewater store in the summer and the opening of a flagship on London’s King’s Road reinforced the chain’s premium positioning. Bensoussan says the results have been immediate, with a significant uplift in sales at the new-look stores.
He says: “Trade is very complex. We are down like-for-like overall, which is a disappointing factor, but some areas and some stores are much better. London is much better and the Bluewater shop is showing growth.”
Bensoussan has also cut the levels of promotions – a bold move in the current climate – and has strong views about how the promotional trading tactics of the department stores are damaging the long-term health of the high street. “It could take five years to escape this mentality,” he says. “The UK market is moving more towards that in the US where shoppers won’t buy anything full price any more. This is very worrying.”
Bensoussan remains committed to LK Bennett’s outlet strategy though, which sources say is big business for the retailer. He says this is about being able to manage your own clearance stock away from high-profile locations. “For us it is important business. As you grow you have more stock to clear. Ralph Lauren has sales of about €750m (£676.5m) through its outlets.”
However, Bensoussan remains optimistic that trade will bounce back and shoppers can still be tempted into buying full-price goods. He says: “The future lies in creating special editions of things. If the product is hot, people will still pay.”
2008 Founds Sirius Equity, buys LK Bennett
2001-07 Chief executive, Jimmy Choo
1999 Buys luxury retailer Joseph for £100m
1999-2000 Chief executive, Gianfranco Ferré
1992-97 Chairman and chief executive, Christian Lacroix
1980-91 Roles in Brazil and Paris, including director for Lacoste, Charles Jourdan, Sonia Rykiel and Escada