© The Financial Times Ltd 2014 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
September 30, 2013 2:21 pm
Once upon a time the route to the executive suite of a luxury brand led through manufacturing and distribution. Not any more. These days, the way to the top appears to run increasingly through Asia.
From the recent appointment of Victor Luis, previously president of Coach’s Asia business, to incoming chief executive of the company, to the naming of Sebastien Suhl, once head of Prada’s operations in Asia, as chief executive of Givenchy last year, it seems experience in the emerging markets of the east has become a de rigueur part of a CEO’s résumé.
And Messrs Luis and Suhl are but two of a group that includes Pierre Denis, former Asia managing director of Christian Dior who took the reins at Jimmy Choo in July 2012, and Christopher Zanardi-Landi, who oversaw expansion in China of Louis Vuitton, and returned to Paris last year to become the group’s global executive vice-president.
The driving force behind the appointments is partly a significant shift in global spending patterns over the past decade. China, the world’s third-largest consumer of luxury goods, will become number one by 2015, according to Goldman Sachs. While data from Bain Capital suggest that southeast Asian markets, driven by newly wealthy spenders from booming economies such as Thailand, Malaysia, Indonesia and Singapore, grew more than 20 per cent in the past 12 months.
Meanwhile, in Europe and the US, luxury sales are increasingly made to emerging market tourists who descend upon London, Paris and New York, rather than local shoppers.
Floriane de Saint Pierre, a Parisian headhunter responsible for placing numerous high-profile designers and executives within the world’s leading fashion houses, says these appointments are of no surprise given that more than 50 per cent of most luxury labels’ profits now come from Asia. Coach, led by Lew Frankfort, has publicly stated that mainland China is both its fastest growing market and its largest geographic growth opportunity.
“It is clear that Asian customers are younger, savvier and the future face of luxury spending – companies realise that they need leaders who understand them inside out. And executives just don’t have that knowledge without time on the ground,” says Mrs Saint Pierre.
The FT’s online hub for creative and commercial coverage of the luxury goods industry, featuring news, views and special reports
Indeed, some in the industry believe the hierarchy has not yet changed enough.
“The lack of Asian nationals in senior executive positions across the region is a global issue for the industry – brands can no longer rely on their traditional recruitment technique of poaching from competitors as few people have the necessary savvy and expertise,” explains Gilles Auguste, consultant and author of Luxury Talent Management.
The era of the western executive with a translator in mainland China is over, he argues. As pioneers return home to run operations from Europe and the US, luxury groups urgently need to create “leadership duos” that hail from both developed and developing markets.
This year has already heralded the appointments of two Asia-born chief executives at leading global brands – albeit men who have honed their skills in the west. Taiwanese founder of Nautica David Chu joined jeweller Georg Jensen in February, and South Korean William Kim arrived at fashion label AllSaints in March.
Still, other companies remain sceptical about the idea that managerial expertise should derive from experience of a geographical sector.
“We always keep old guard management when entering new territories versus locals from that country or region,” said Neil Clifford, Kurt Geiger’s chief executive, at the Financial Times’ Business of Luxury conference last June.
“Long-term employees who understand our business inside out are far better equipped to grow our company, regardless from where in the world that experience has come from. People, not just products, are what truly make a brand.”
Copyright The Financial Times Limited 2014. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.