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Walpole CEO’s lessons in luxury

Walpole CEO Helen Brocklebank

Despite a recent stellar performance, Walpole’s CEO Helen Brocklebank admits the luxury sector is not immune to Brexit fallout and high street headwinds. Drapers speaks to her about how to ensure a healthy future for the industry. 

Helen Brocklebank is a woman who knows the luxury sector inside out. As chief executive officer of Walpole, the official sector body and voice of UK luxury, her role is to promote, protect and develop the “jewel in the crown of UK business”. The lobby group counts 250 luxury brands among its membership, including Alexander McQueen, Burberry, Mulberry, Harrods and Net-a-Porter. Walpole is named after 18th-century prime minster Robert Walpole, who was known as a particularly skilled businessman and encouraged an outward-looking approach to trade and exports.

Before joining Walpole in 2017, Brocklebank worked in director-level roles for luxury publications including Harper’s Bazaar and Town and Country

On a balmy spring afternoon in London’s Marylebone, Drapers meets with the 52-year-old in a room called the “Secret Salon” hidden inside private members’ club Home Grown, of which she is a founding member.

The married mother of two, who lives in west London with her family, apologies for arriving hot and flustered after a hectic morning in Walpole’s Westminster office. In reality, she is cool and chic, and lives up to her role as a luxury leader in a fuschia Mulberry Whitney dress and a pair of crimson Mulberry heeled loafers. Even Walpole’s Boston terrier, Dolly, got the Mulberry memo, coming along for moral support dressed in a merino wool pullover.

A staunch defender of UK luxury, Brocklebank is vocal on a range of subjects, from promoting British brands in the face of Brexit, to the harm high business rates can have on new fashion brands. Walpole also runs a variety of mentoring and training programmes to support the young brands that she sees as essential to the future of the sector.

Success story

British luxury, Brocklebank says, is having a moment in the sun: “It is an incredible success story. You could say that just because businesses like Burberry, Alexander McQueen, Manolo Blahnik and Gieves & Hawkes are really famous all over the world – that’s a good reason for it to be so precious. But actually, the economic value, as well as the intrinsic value of the sector, is extraordinary.

“We call it the jewel in the crown of UK business, and I’m on a mission to get it the recognition it deserves.” 

Sales for the UK luxury industry grew by 49% to £48bn in the period between 2013 and 2017, a new report by international consultancy firm Frontier, commissioned by Walpole, found.

“The power of British creativity has never been stronger”, Brocklebank adds. “High-end car manufacturing saw the biggest growth, but apparel, footwear and accessories came second in the ranking.

“British luxury has so many different components, from bone china to whiskey, so the fact that fashion is number two is pretty amazing – especially as they have vast competition. The fact this sector is so strong in Britain is a real testament to the energy and creativity of those brands.”

During those four years, multiple success stories have emerged. Luxury menswear and accessories brand Dunhill, for instance, opened three stores in China; a new Middle Eastern flagship; a Tokyo flagship and a headquarters in London.

Johnstons of elgin

Johnstons of Elgin

Meanwhile, Scottish fine knitwear and cashmere brand Johnstons of Elgin was losing money five years ago. Today, its profits, sales and staffing have all increased significantly with a 58% growth in sales and 88% rise in export sales since 2012. Elsewhere, luxury department store Harrods topped £2bn in sales in 2018 for the second consecutive year.

Despite its gallant performance Brocklebank admits the luxury sector is not immune to high street head winds and the fallout of Brexit: “There are more affluent and adventurous customers than ever before, with a huge appetite for the maverick spirit of British luxury. But there are external factors that you can’t control and that’s what is frightening – things that might derail you or push you slightly off course. Those are the geopolitical examples, like Trump’s trade war with China and his potential tariffs with the European Union, which will negatively impact a lot of the smaller handbag, footwear and clothing businesses.

“Then, of course, there’s the dreaded Brexit word.”

The UK’s crisis over EU membership is approaching its finale with an array of options including further delays, a no-deal Brexit, a general election or even another referendum. In the Frontier report, Walpole stressed that leaving the EU without a deal would jeopardise up to 20% of luxury industry export revenues, equivalent to £6.8bn a year.

Brocklebank says: “UK luxury exports could be at risk as a result of detrimental changes to market access, driven by tariff and non-tariff measures that would come into effect in the event of a no-deal Brexit. Trading under World Trade Organization (WTO) rules disproportionately disadvantages the sector because of high tariffs on clothing, alcohol and cars. It is too high a price to ask the sector to pay.

“I really want to call the government out on this one and say, ‘Don’t hamstring the sector that is doing twice the performance of the overall market. Don’t give it a reason to lose money when its whole trajectory is about extraordinary growth’.”

These are businesses that have a real will to create something human

Helen Brocklebank

Michael Ward, managing director of Harrods and chairman of Walpole, agrees that a no-deal Brexit would have a “devastating impact” on the luxury industry: “Walpole has consistently pressed the importance of pro-business Brexit with the government and continues to warn of the severe consequences of a no-deal exit.

“Harrods believes the ongoing uncertainty and instability in the government means a no-deal Brexit is becoming more and more likely. Our hope is that the next prime minister will take no deal off the table to prevent further damage to this important sector, as well as end the uncertainty that continues to stifle businesses across the UK.”

Walpole is also lobbying for the government to review the UK business rates system. Selfridges on Oxford Street was among the hardest hit in London’s West End when the latest business rates hike took effect in April. Its rates bill increased by 59% compared with 2016/17 to £17.41m.

“Harrods and Selfridges are among the top 10 business rates payers in the whole country”, Brocklebank says. “Harrods has the second-highest business rates in the UK after Heathrow. In 2018 it turned over more than £2bn, so it can arguably afford its business rates.

“However, what that does is it then prices the smaller players out and it makes it very difficult for small, cool brands that are so important to the growth of luxury in the long term.

“It then means that they can’t get a foothold, so if you are a tiny brand then you’re going to be really digitally driven, but actually what you really want is a great space and place for customers to feel the products.”

She adds: “It’s about getting policy-makers to see that these are businesses that have a real will to create something human, but if you’re going to make it hard for them then it’s a real missed opportunity.” 

The sector has also dodged multiple bullets after the near-collapse of several UK high street department stores. Brocklebank says: “The luxury sector is certainly not resistant to the high street downturn. If House of Fraser had collapsed it could have been detrimental to Walpole members that have concessions in the stores, such as Mulberry and Estée Lauder.

“However, I would say that the luxury sector has better protection than the low-middle market because there is an extraordinary story to it and an enchantment that is woven around its products.” 

Weathering the storms

Brocklebank insists that the sector is “hard-wired for the long term”: “It’s an interesting sector because it is so resilient. It’s got a very specific focus on affluent customers and so it can weather those storms.”

“If nothing spoils its extraordinary growth, then the UK luxury sector can look forward to a magical future.” 

She also believes that the rest of the industry could learn from the luxury sector (see “Four ’P’s”, below).

Walpole’s report forecasts that luxury fashion sales to the end of the 2019 financial year will be between £51.1bn and £57bn, contingent on the UK and EU securing an agreement on their future trading relationship. It projects that the value of sales could grow to between £65bn and £75bn between 2019 and 2024.

Continual brand regeneration is helping, Brocklebank says: “British cultural heritage will always be really appealing for the high-end customer, but we are also seeing continued regeneration of these historic brands, which will heighten growth even further. Burberry is a really good example with chief creative officer Riccardo Tisci’s new energy and revolutionary vision for the brand.

“Harrods is also undergoing the biggest revamp in its history, spending £200m as part of a four-year investment plan due to complete in 2021.”

She adds a fresh supply of new brands is also crucial: “There is also a huge pipeline of new brands coming in and Walpole plays a really big part in helping them on their way.” In 2007, Walpole launched a 12-month programme called Brands of Tomorrow, which helps aspiring British luxury companies with a turnover of under £5m to fulfil their potential.

Brocklebank says: “For example, footwear brand and Walpole member Duke & Dexter was almost non-existent three years ago, and now it is really big internationally.

“Ultimately, you’ve got organic and strong growth from the big, established players, but also new brands coming in all the time that will drive the sector forward.”

The introductions and advocacy that Helen has personally created have got us into meetings at a level we could not have achieved any other way

Simon Cotton, Johnstons of Elgin

Walpole has several other initiatives in place, including US trade missions, as well as its Crafted: Makers of the Exceptional programme, which “enables small craft companies to develop their business skills”. It also runs a series of workshops in luxury management at the London Business School “to identify and nurture carefully selected MBA students who aspire to become the next generation of luxury leaders”.

Simon Cotton, CEO of Johnstons of Elgin, said: “We have gained tremendously from the relationship with Walpole. We have taken part in the two New York trade missions, and the introductions and advocacy that Helen has personally created have got us into meetings at a level we could not have achieved any other way.

“Like most members, we feel that Helen brings enormous energy and drive to the role and has transformed Walpole into an enormously dynamic advocate for the sector.”

Gieves & hawkes

Gieves & Hawkes

Luxury’s future

A study by luxury ecommerce platform Farfetch and management consultant Bain & Company suggests millennials will represent 40% of the global luxury goods market by 2025. Similarly, online monitoring service Hitwise estimates that half of all UK website traffic to luxury brands Louis Vuitton, Gucci and Burberry comes from aspirational millennial consumers.

“The luxury customer used to be recognised as the older you were, the wealthier you were, but that’s not the case any more,” says Brocklebank. “There is now a Generation Z and millennial customer coming out of China and the Far East – and even the UK – so it is vital to cater to them.”.

“Luxury customers are now not only ‘The Lady’ with the high heel and the fabulous pussy-bow silk blouse – they can be ‘street’ as well. 

”The streetwear trend has been interesting to follow, particularly to see how brands have adapted to it.”

The retail “drop” mode, pioneered by niche skate brands such as Supreme and Palace, involves releasing a limited edition product or collection in small quantities at select retail locations, without much warning.  

Brocklebank says: “The basic idea is to create a sense of urgency and the illusion of scarcity among consumers, which works well with Gen Z and millennials, where instant gratification and having the latest limited edition items have become the new status symbols.

“Regardless of whether you’re willing to pay £500 for a pair of Gucci trainers, or £700 for some Vetements tracksuit bottoms, luxury appeals to everybody and you don’t need to be super rich. If you long for a Mulberry handbag then it’s just a choice about where you spend your money.

“That’s why brands have got to play at all price points now. Luxury is not about the price any more – it’s about taste and buying into creativity.

“It should be something that holds a mirror up to who you are as a person and makes you feel absolutely incredible and lets you be who you are in your dreams.”

As the high street’s struggles continue, luxury has bucked the trend with big investments, brand rejuvenation, new talent initiatives and tailoring to younger customers. The sector’s inherent innovation and receptive global client base mean the industry is well placed to meet these head on, but Brocklebank is well aware that she will have to support her sector through external challenges to deliver the “magical” future she hopes for. 

 

Walpole’s statistics on UK luxury

  • UK luxury sales grew by 49% to £48bn between 2013 and 2017.
  • Forecasted sales for end of 2019 is between £51.1bn and £57bn.
  • 80% of British luxury production was exported in 2017 –  a value of £38.5bn, up 54% from 2013.
  • Top export markets are the EU (42%), North America (23%) and China (11%).
  • A no-deal Brexit would jeopardise 20% of luxury industry export revenues (£6.8bn a year).
  • Luxury sector employment grew 38% from 113,000 to 156,000 from 2013 to 2017.
  • It accounted for almost 6% of all jobs created in the UK during 2013 and 2017.
  • The UK luxury sector is growing on average 9.6% year on year.

 

Helen Brocklebank’s “Four Ps” to emulate the luxury sector:

1. Participation Use digital channels and visual tools to allow the customer to feel part of your story. For example, show every stage of the creation of a handbag in a video.

2. Playfulness British luxury has a sense of fun about it – it is subversive. Don’t be afraid to break the rules.

3. Purpose If a product is beautiful, special, incredibly well made and achieves its aims, then it will be kept forever.

4. Personalisation Luxury customers cannot have a homogenised experience in every city that you go to. Make them feel like an individual – not just a customer.

 

 

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