A Luxury Brand Leader
An Interview with Vin Lee, Chairman and Chief Executive Officer, Grand Metropolitan
Would you discuss the history and heritage of Grand Metropolitan and how the company has evolved over the years?
First I’d like to express my gratitude and appreciation for being recognized by your fine publication. We have a wonderfully storied history in each of our legacy brand divisions some with roots dating back as far as 1787.
Grand Metropolitan is a privately-held American multinational luxury goods holding company founded in Beverly Hills, CA in 2000. The group controls a portfolio of 120 brands that have conducted over $200 billion in revenue collectively since their founding. Many were acquired as distressed assets after reaching epic leadership positions on their respective markets.
I became Chief Executive Officer of Grand Metropolitan after the turn of the century, incorporating my personal assets under the umbrella company. Our goal was to establish an American luxury goods conglomerate in the manner of Mr. Bernard Arnault’s LVMH Moët Hennessy Louis Vuitton SE, better known as LVMH, Mr. Francois Henri Pinault’s Kering, and Mr. Johann Rupert’s Compagnie Financière Richemont SA.
In 1992, at the age of 22, I invested in my first jewelry company. A modest local fine jeweler that had originated in the early 1950s. At one time, DuQuet Jewelers boasted 5 locations and shop facilities that had service contracts with multiple regional mall jewelers. It was during this period that I read some 50 years of National Jeweler, Modern Jeweler and JCK Magazines stacked up in my new offices. I received a unique perspective of the jewelry industry and its corporate machinations. I was able to read about the assemblage of jewelry conglomerates like Zales Corporation in detail across hundreds of articles.
Prior to this time I had started Cinemagic Marquee. Our patented technology participated in founding the $6 billion/year automated display industry. Leading advertising and entertainment companies around the world including Universal Studios, Regal Cinemas, AMC, Disney, Lamar, and Clear Channel use these applications.
In the 1980s, Cinemagic Marquee was developing a multitude of projects within the entertainment industry initiated by relationships with Time Warner and Hanna Barbera. With the advent of the VCR, video stores were expanding at an exponential rate. Blockbuster Entertainment, the largest of the chains was in the midst of an industry rollup. I learned from watching Mr. H. Wayne Huizenga create Waste Management, Blockbuster Video, and later, Auto Nation. Blockbuster specifically was larger than the next 100 competitors combined. It held tremendous influence not only with the studios but also with the affecting the consumers entertainment and ultimately pop culture. I wanted to do that with our jewelry company.
The principles of vertical integration, volume discounting, and economies of scale engaged together can make two jewelry companies immediately more profitable than one. I created a theory called vendor exclusivity that also has contributed to our progress. My first attempt was to acquire Samuels Jewelers in 2000. Then the fifth largest jeweler in America with over 200 locations across 25 states, it was just too far gone for us to make a deal work. I did learn a lot through that two year period but needed time to lick my wounds and heal. They filed for bankruptcy a month after we walked away from the table.
I was so disenchanted with the jewelry industry I wanted to do something else. Thankfully due to some friends in South Florida encouraging me, I entered the cigar business. The jewelry business is unlike any other market segment. It has a three pronged transactional model. As a fine jeweler, you spend the majority of your efforts in the grand seduction of women. Enticing them with style and form caste from precious metals and stones. But the men are the ones making the purchase often in the form of an engagement ring, anniversary or birthday gift. What we call the secret consumption. The cigar industry is very masculine driven. As a micro market your communication with the end user is often very pure and direct. Ascending within that industry was very appealing to me after 12 years of diamonds. Grand Metropolitan acquired The Beverly Hills Cigar Club and that opened up a great many doors for us.
Over the next 15 years we have thankfully had more successes than failures as we quietly have been working behind the scenes to enact industry rollups of iconic brands in the jewelry, fashion, furniture, and tobacco market segments.
Would you highlight Grand Metropolitan’s subsidiaries and the leadership that these brands have within their markets?
Currently, Grand Metropolitan operates in 7 different industries with 120 subsidiary brands in its portfolio. Whenever we consider participating in any new industry, leadership is the key factor before any investment of capital or resources is committed. A brands ability to identify and maintain a leadership position defined by a significant point of differentiation is vital.
Heilig-Meyers Furniture, originally founded in North Carolina in 1913, grew to become the largest publicly-held furniture retailer in North America when it merged with Atlanta based Rhodes Furniture. Today, Heilig-Meyers owns and operates several of the leading furniture retail brands in the United States dating back to 1858, and collectively achieved $100 billion in revenue in the last century. By 2000, the group represented Broyhill, Thomasville, Drexel Heritage, Henredon, Hickory Chair, Pearson, Lane Venture, and Maitland-Smith in over 3,000 stores, $5 billion in annual revenue.
Wickes Furniture, founded in 1971, grew to be the largest furniture retailer in the United States by the early 80s. (Sold 2015)
Sterchi Brothers Furniture, at its height, was the world’s largest furniture store chain, with 65 stores across the southeastern US and a worldwide customer base.
We are proud to serve North America with leading regional and national retail furniture brands under the Heilig-Meyers Furniture Group including Rhodes, Krause’s, Glick, J. Homestock, Room Store Inc., Marks Fitzgerald, John M. Smyth’s Homemakers. In addition to our group of 50 retail and consumer brands, Heilig-Meyers Furniture also participates in home furnishings including Four Seasons Home Accents, Burkhara Rugs, Gallery Rodeo, Parke-West Gallery and Galerie Vollard. Our Rodeo Collection manages approximately 100 pieces of fine art from such noted artists as Klimt, Picasso, Rembrandt, and Rodin.
Finlay Enterprises is one of the largest privately-held jewelry groups in North America. The original company was founded as Seligman & Latz in 1911 and quickly became the largest salon operator and soon the largest leased jewelry department company in the world. Finlay operated France’s largest leased jewelry operations since its 1994 acquisition of Société Nouvelle d’Achat de Bijouterie (Sonab), which included 104 locations in such leading French stores as Galeries Lafayette and Nouvelles Galeries. Prior to a 2010 bankruptcy, Carlyle & Co., J.E. Caldwell & Co., Park Promenade and Congress independent fine jewelers were added to the operation.
Bailey & Kitchen, as it was originally known, was founded in Philadelphia in 1832. It became Bailey & Co. in 1841, and Bailey Banks & Biddle in 1878. At the turn of the century, Bailey Banks & Biddle was commissioned by the U.S. Government to update the Great Seal of the United States; its design today remains the official version of the seal. The company also designed and made many of the military medals that are still used today, including the Medal of Honor, the Silver Star, the Bronze Star and the Purple Heart. Bailey, Banks & Biddle was the jewel of the fine jewelry group in the Finlay Enterprises operation at the time of bankruptcy. It was sold off to investors.
We began buying stock in then publicly-traded Finlay Enterprises, the original holding company of Finlay Fine Jewelers in 2005. Finlay management soon borrowed $500 million from GE Capital using $200 million to acquire the fine jewelry group from Zales Corporation. This overextension coupled with the economic downturn bankrupted the parent company. We ultimately acquired the Finlay Enterprises brand and have assembled over 50 legacy jewelers under that banner. Today we operate Lundstrom Jewelers, Whitehall Company, Crescent Jewellers, Friedmans Inc., and dozens of other national and regional brands.
IMASCO Ltd. was formed to hold Grand Metropolitan’s liquor and tobacco assets. The group is the largest of its kind in the world. St. Aubin du Cormier Vin & Spirit is the Groups liquor collection available only at select private clubs and events.
United Cigar Stores was the largest chain of cigar stores in the United States. United Cigar Stores is the e-commerce subsidiary of IMASCO Ltd. which services over 1,500 tobacconists both wholesale and retail and direct to American clients. The company also operates the largest network of social clubs, most notably The Beverly Hills Cigar Club, rated Top 5 Private Memberships by Playboy Magazine and home to LOUIXS, the Bugatti Veyron of the cigar industry. The Beverly Hills Cigar Club is a private group of individuals passionate about wine, spirits, food and cigars. We are active in charity auctions, celebrity events, and red carpet functions including the Cannes Film Festival, Oscars, Grammys, Emmys, and Independent Spirit Awards.
We participate at the G20 Economic Summit, World Economic Forum at Davos, Milken Institute Global Conference in Beverly Hills. In addition, Grand Met brands have hosted and sponsored events with NASCAR, Formula 1, Concours d’ Elegance, Sturgis Motorcycle Rally, and Bike Week in Daytona Beach.
In early 2006, Grand Metropolitan added iHumidor, part of a $30 million portfolio, to its operations. Assets also include Cigar Club News, Cigar Registry, and Cigar Finder as consumers are relying more on technology to improve their experience. Portfolio brands in both retail and social clubs participate in most of the top 100 markets in the world including New York, Chicago, Los Angeles, Paris, London, and Dubai.
French fashion house Orcofi, originally founded by Louis Vuitton family patriarch/former Chairman/CEO of LVMH Louis Vuitton-Moet Hennessey Henry Racamier in the late 1800s, and earned an international reputation for luxury goods products (haute couture, ready-to-wear, handbags, perfumery, and cosmetics). Early in its history, the original holding company joined the French banking group Paribas and the French cosmetics giant L’Oréal in buying the Lanvin fashion house.
Between 1989-1991, Orcofi established an impressive portfolio. The company acquired leather conglomerate Andrelux Industries (Bohata et Cie, Lorenzo, Soco, Upla, and Le Tanneur), French trunk maker Moynat, a heritage company founded in 1849, the luxury grocer Hédiard, Cristalleries Daum, Philippe Model (the French fashion shoe and accessories designer), signature ready-to-wear Ines de la Fressange and Paris’ oldest couture house, Lanvin. Racamier later sold Orcofi to French global insurance powerhouse AXA S.A.
AXA sold Orcofi’s Orcanta to François-Henri Pinault’s Pinault-Printemps-Redoute (Kering). Founded in 1995, the exclusive boutiques sold for $42.5 million. In 2006, PPR sold Orcanta to Groupe Chantelle who now offers seven lingerie brands/retail networks: Chantelle, Passionata, Darjeeling, Orcanta, Chantal Thomass, Femilet, and Livera. They started another series of acquisitions. L’Oréal purchased 50% of the House of Lanvin from Lanvin in 1996. Lanvin was later acquired from L’Oreal by Taiwanese media magnate Shaw-Lan Wang in 2001.
Gordon-Choisy, one of the world’s most prominent tanneries specialized in exotic leathers, was initially sold to LVMH and then to Hermes International. Luxembourg-based luxury holding company Luvanis SA, owners of Vionnet and Mainbocher, bought the rights to Moynat in 2009. In a twist of irony, Groupe Arnault, LVMH’s CEO Bernard Arnault’s holding company bought Moynat in 2010, relaunching the brand in 2011.
More consolidation followed. Qatar Luxury Group, owners of QELA, announced the acquisition of a controlling share of the French leather goods company Le Tanneur & Cie in 2011. Le Tanneur, founded in 1898, and Soco, had been listed on Euronext since 2000, the same year it signed a licensing agreement with Michael Kors and Celine. Cristalleries Daum is now part of Financiere Saint-Germain, parent company of Lalique and Haviland Porcelain Works.
In 2013, Grand Metropolitan acquired Orcofi and is reassembling a collection of global luxury brands to be offered through the Bonwit Teller & Company platform.
You will be relaunching Bonwit Teller & Co. this year. What can consumers expect with the relaunch of this iconic brand?
Started in 1895, Bonwit Teller has a complex history of ownership including Floyd Odlum’s Atlas Corporation (RKO Studios, Greyhound Lines, Madison Square Gardens), Walter Hoving’s Hoving Corporation (Tiffany & Co., Avon shareholder), Genesco (Christian Dior, Dockers, Johnston & Murphy, S. H. Kress & Co.), Canadian billionaire Robert Campeau’s Allied Stores [(merged with Federated Department Stores, now Macy’s Inc.) Brooks Brothers, Ann Taylor, The Bon Marché], and Australia’s Hooker Corporation (B. Altman & Co., Bonwit Teller, Sakowitz, Parisian).
The company’s flagship store was sold separately to Donald Trump. The flagship Manhattan location was demolished in 1980 to build the original Trump Tower and Bonwits opened a new location, around the corner from its original store, at Fifth Avenue and 56th Street. Ultimately, Bonwits only lasted a short time in its new location, before being closed in 1990. Bonwits would be replaced by Galeries Lafayette.
Bonwit Teller, in conjunction with the opening of the “Fantastic Art, Dada, Surrealism” exhibit at the Museum of Modern Art, had commissioned a series of windows by Surrealist artists. Who better to contribute than Salvador Dali, exemplar of the movement, creator of the ubiquitous melting clocks and the man who said, “I myself am surrealism”?
Bonwit did retain a role on the development of fashion and design, most notably helping to launch the career of Calvin Klein. This connection to fashion royalty inspired us to acquire French fashion house Orcofi recreating its portfolio of iconic brands including Andrelux, Lorenzo, Collaert, Bohata et Cie, and Acanta. We would also add banners like Morty Sills, John Phillips London, Mitsuhiro Matsuda and Wandalan.
Between 2005 and 2008, we began negotiations to acquire and relaunch the Bonwit Teller department store brand. It would serve to be the retail showcase for all Grand Metropolitan consumer luxury goods. With the new economy Bonwits will be rechristened with offerings found in Qatar Holdings’ Harrods, Russia’s Gum, and Orcofi’s (Luxadvor) Hediards. We have been approached by many luxury brand partners from Lalique to Lamborghini.
You describe Grand Metropolitan as an American multinational luxury goods holding company. How do you define a luxury brand today and what does true luxury mean to you?
Luxury is an elusive phenomenon. Throughout the planet it is defined by the standards of living coupled with the needs and desires of its peoples. I think in America, many people think that luxury is an elevated lifestyle replete with private jets and chauffeured limousines filled with Prada, Versace, and Van Cleef & Arpel. For a mother of a new born, luxury is a solid night sleep. Effectively the truest definition of luxury is something we desire that we cannot have, that is not easily within our grasp. An aspiration. Some would say love is the purest form of luxury. For not all attain it.
There has been this recent movement in the business world of attempting to categorize and market to the Ultra High New Worth Individual (UHNWI). Marketers and branders believe that the sweet spot of the luxury market is to sell to those with the most financial power or influence. Many of this group do not understand that you cannot market directly to UHNWI. They do not understand the psychology of this market segment because they are not of this collective. “We always want what we can’t have”. This is the mantra that today’s luxury brand marketers need tattooed upon them. You cannot create an aspirational product for 1% who can already afford anything they desire.
I recently read that Apple’s Watch has overtaken Rolex in the luxury watch market. Tesla has also been widely reported to have outsold certain comparable models from Mercedes, BMW, and Audi. But these statistics are demonstrating a confusion between what is a lifestyle brand versus luxury. Much of what is a selling point of the Apple and Tesla products are utilitarian, they serve a functional benefit that all can embrace. Venture Capitalist Mr. Stephen T. Jurvetson, partner of Draper Fisher Jurvetson and somehow famous for owning the first Tesla Model S, told Emily Chang of Bloomberg the financial metrics of a Tesla S put it in the category of a Ford Taurus. Not exactly aspirational or luxury. The Apple Watch with all of its utility and function is really only priced at the level of a mall based jewelers Bulova selection. Hardly the prestige or craftsmanship associated with Rolex or Patek Phillipe.
I have been extremely fortunate in my career. Thanks to the hard work and support of my parents, I was introduced to the arts at a very early age and even attended art school. My father’s own business associations allowed my brother and I exposure to chauffeured luxury coaches and private helicopter rides. Throughout his career we were often entertained or hosted at events like Formula 1’s Detroit Grand Prix, Detroit Auto Show, or suites at various sporting contests throughout the year. I struggled through the start of my career chasing luxury. Exotic cars, private aircraft, large homes and of course the fine timepieces haunted me from my teens through my 30s. When I entered my 40s, everything changed. The real luxury in life is not the Patek Phillipe on your wrist, but the time you spend with someone special. It is not the private jet but who is waiting for you when you land. When I was 15, I thought if I just had a Lamborghini Countach, I could get the girl. And I calculated that if I put $1,000/month away by the time I was 25 everything would be perfect. The car, the girl. But if you have one you don’t need the other.
Luxury is a word that is used frequently with phrases such as affordable luxury and mass luxury. Has the word luxury lost some of its cache?
I think the terms affordable luxury and mass luxury are oxymorons like jumbo shrimp. It is a marketing tool used to create niches so bigger shrimp can gain notoriety without being compared to prawns. What many people perceive as luxury is actually opulence. What companies interpret or strive for as luxury is really only premium goods and services.
There are so many new companies attempting to stamp luxury on their offerings for the consumer. Uber, AirBnB, and the ill-fated Gilt Group have attempted to mass-produce luxury to everyone. Tap your thumb on your phone while eating a bagel on the sidewalk, and some guy shows up in his personal car to drive you to your destination. That is not luxury. That is convenience.
Luxury would be if Hobson and Bitterman rolled up in the 1956 Rolls-Royce Silver Wraith Touring Limousine as you stepped out of Bergdorfs.
What is your outlook for growth in the luxury segment based on the state of the economy?
The current state of affairs reflected in the global economy, I believe demonstrate an uptick for the luxury segment. There are so many varied components and definitions to growth in our sector. Currently gas prices have tanked which has been a positive indicator for an increase in consumer’s discretionary income. At the same time gold and other commodities markets have been erratic as money seems to bounce in and out of various investment safe havens. Many of my contemporaries are subject to the fluctuations in currency, interest rates, and stock prices. Companies like Louis Vuitton, Versace, and Gucci have such massive global volume and infrastructure that, like the butterfly effect, a rainstorm in Thailand effects sales on Rodeo Drive, Beverly Hills.
Opulence consumers are the last to restrict their spending and the first to increase it. Luxury consumers are often the ones that are extending credit terms to supplement lifestyle purchases. This group tends to be the largest in discretionary income and the clichéd living beyond their means.
Grand Metropolitan is in a unique position as a privately-held luxury goods company with no debt service. We have experienced exponential growth during downward turns in the economy as a result of expansion through acquisition as opposed to more organic methods that LVMH, Kering, and Richemont benefit from. Grand Metropolitan is simply a holding company in the manner of Warren Buffet’s Berkshire Hathaway. And in similar fashion, we believe in the power and value of strong brands in our portfolio. Since the turn of the century we have been more focused on buying legacy brands than on selling diamonds, handbags, or fragrance.
Beginning in 2008, thousands of jewelers found themselves choking on reduced average purchase prices and shrinking same store sales with soaring diamond and precious metals costs. For four years this compounded eliminating many overleveraged retailers. Since that time, the market share pie has rebounded with fewer people sitting at the table to eat. Simultaneously diamond and gold prices specifically deflated. If you were in a position to have made significant inventory acquisitions either prior to the run-up or as a result of bankruptcy liquidations, you were able to keep the lights on, customers’ needs met and your employees safe.
In similar fashion, the furniture industry is dramatically influenced by large economic factors. Jewelry and home furnishings are not often impulse purchases and certainly not sustaining expenses in American daily life. That engagement ring or dining room set, while an emotional commitment is also amortized for decades in most cases. When home sales slump, people are far less inclined to be redecorating or trading up their décor.
Love is also a metric we attempt to anticipate in our corporate planning. When people are happier with employment and finances, love reigns supreme. Increases in gift giving, engagement, marriages and family all spark purchases in our industry segments. Much of the future of Grand Metropolitan legacy brands is focused on helping our clients navigate through the swings in the economy.
Grand Metropolitan has a long history of corporate responsibility and community engagement. How critical is this to your business and to the culture of the company?
I believe that we all have a responsibility to each other and our communities, corporate or otherwise. Grand Metropolitan strives to preserve the integrity of our legacy brands. These products and services were created to serve our client’s needs, employ our staff, and improve our communities.
When I first entered the jewelry business in the early 90s we were very active in the local charity circuit. We would donate pieces to auctions, raising money for several local and national organizations. In addition, we are more diligent than ever to ensure that our raw materials are sourced from credible organizations around the world, especially our diamond inventories.
One of the standout attractions to Heilig-Meyers when we were working to acquire the brand was their dedication to community and corporate giving. Sure they had a lot of fun sponsoring NASCAR teams, but there was much more heart behind the company than most people knew. We are advocates in support of the efforts made to educate and protect the consumer from the dangers that can be a part of our industry. We support Meghan’s Hope and the International Association for Child Safety and their efforts to keep our families safe from furniture and appliances falling over upon them.
The Heilig-Meyers promise to the thousands of families who live with Cystic fibrosis is that we will be with them until a cure is found. Heilig-Meyers is proud to have supported the life-saving and life-extending work of the Cystic Fibrosis Foundation (CFF) since 1985. The Foundation, founded in 1955, leads the effort to find a cure for the most common, fatal, genetic disease in the United States – cystic fibrosis. Our support for CFF has involved hundreds of our associates and their families, reminding all of us how much we can accomplish when people work together. Heilig-Meyers’ commitment to the Cystic Fibrosis Foundation has resulted in over $9 million for the cause.
Would you discuss the strength and expertise of your team and your focus on building a diverse workforce?
I was fortunate to have earned some modest success very early on in my career. It allowed me to make a lot of mistakes very quickly. The luxury market is very challenging because of the lifestyle that one can enjoy as fruits of your labor. You get to spend time with beautiful people, surrounded by beautiful objects, in beautiful settings. It all seems very glamourous, especially to the outside world.
When I first moved to Los Angeles and established Grand Metropolitan in Beverly Hills, it was a vastly different environment from the Midwestern roots where I had originated. Even as I had lived in Atlanta, worked remotely with New York and continued to maintain a residence in South Florida, the West Coast had a significantly different culture. It is even more brilliant today. The most invigorating aspect of luxury is the diversity of people already excelling here. People from every walk of life can enter the market and with their talents really find identity and growth.
There are industry parties and events every night of the week and twice as many on the weekends with the hottest brands worn and created by the coolest people. It is a very fast and exciting environment. Unfortunately, it can be so seductive one can forget it is a job. Fashion shoots and mingling with celebrities might make for great selfies and Facebook posts, but many staff can be drawn into believing they are a part of the celebration. You really need to have the confidence to stand up in these very public venues amongst amazingly talented and successful people, yet maintain the humility and understanding that it is a business of show and every move is amplified to the world forever. When the lights are turned off, you still have life to live and errands to run.
I remember being at a magazine photoshoot with fashion photographer Bastian Hansen at a private residence near Orange County with a beautiful woman modeling my tennis earring and necklace lines. It was exhaustively long and tedious waiting for the setup, hair and makeup. Some 8 hours of sitting in the back patio next to the sandbox listening to the neighboring frogs. We couldn’t wait for the pizza to be delivered and broke for an emergency run to Tilly’s.
I find that today’s aspiring luxury industry candidate tends to be very much an aficionado of the fashion and couture of the business rather than the business itself. Glossy photo spreads and look books. Balance sheets, budgets, and time tables often aren’t as sexy as those new Jimmy Choos. The Bohle Company had a very young staff. Everyone was fabulous. Even the interns fresh out of B school back East knew every episode of Project Runway and all of what’s trending. Their passion was equally matched by their sense of entitlement. It is often difficult to explain to someone that they don’t immediately get promotions and raises just for showing up to work every 6 months. So it is important to reinforce the sense of team and strength building in each new task or endeavor. But building that team is the real challenge.
The jewelry industry is really so closely related to fashion. I personally get a hundred emails a day from people all over the world wanting to come to work at Grand Metropolitan. They have come across some social media posting or one of our products and want to participate in our journey and story. It is incredibly flattering to receive such a compliment. I often respond that as CEO I do not really engage in the HR function of the subsidiaries but if they wish to tell me which brand they are interested in I will forward their information. So many of them revert back to me to “pick one” they would be appropriate for. Most have no appropriate qualifications, education, or past history relating to any of the industries we are active in.
So it becomes very difficult to find qualified, passionate, and trustworthy candidates to work with. One of the lessons I learned very early on was to not broadcast or highlight your staff in the media too loudly. Mainly this is due to the enormous trend of poaching ones most talented and accomplished executives. Who then in turn will also take with them your other superstars. I didn’t understand this concept at first as I am a big proponent of publicly praising people for their efforts and accomplishments. I am very loyal. I thought of many people as family, until we lost two VPs and millions of dollars in business almost overnight. Competing with larger publicly-held corporations that can offer stock to lure your officers is a harsh reality. Sometimes the engagement is more about weakening you than it is about enriching their organization. The public markets have very deep resources to dip into. Inevitably if you encourage and educate your staff and employees well enough, some will leave to become your immediate competitors or even vendors or clients.
One night I was walking through the offices and came across an executive sitting at his desk hunched over some paperwork. He asked me if he could speak with me stating that when he was working in advertising he was making significantly more money than he was in his current position having only been there for six months. He was struggling financially he offered.
I suggested that we could put him into another division working with our golf company where his talents would be used and there were more opportunities for future advancement. He stated he didn’t believe passionately in the product line. I offered that he could work on the tobacco division where there was incredible opportunity involving events and campaigns all over the country including an upcoming party at the Playboy Mansion. He stated that it was against his faith to promote tobacco use but could he still go to the event at the Mansion?
As I stood up to leave exasperated by the lack of progress I looked at his screen to discover he was heavily engaged in his online gambling. Apparently his faith encouraged gambling, drinking, and scantily clad women but not career advancement.
We launched the diamond tennis earring (ear climber) at the Cannes Film Festival. Months of work were put in to this event prior to even setting foot in the South of France. For two weeks a staff of about a dozen were to be adorning the most beautiful and talented women in the world with my jewelry collection for thousands of media. Hours after landing one of the executives orchestrated a fight with the President over the lack of maid service in the apartments rented for the tour that overlooked the French Riviera. She quit and spent that time on holiday partying with our corporate partners and vendors.
Because of the flood of interest to enter the luxury business segment, entry level and middle management income levels are modest. But as opportunities are created fortunes improve for those instrumental. One Sr.VP had done well enough that she had a second home in Lake Tahoe and slowly facilitated working remotely, flying in just for important meetings.
In a world where billion dollar enterprises like Carolyn Rafaelian’s Alex and Ani, Bella Weems’ Origami Owl, and Michelle Phan’s Ipsy blossom overnight, turnover can be very high.
You do all you can to help assist in managing their careers for tomorrow as much as their expectations for today.
How do you define your role in leading Grand Metropolitan and what do you see as the key traits to effective leadership?
I believe I have one of the easier positions inside of Grand Metropolitan. As a CEO, you get to be a dreamer of sorts. Imagining how you want the future to look and who you want to be when it gets here. I often describe companies such as Grand Metropolitan as ocean going vessels. The larger they become the harder they are to stop, certainly. But also the more difficult they can react to shifts in consumer habits or economic forces. As the captain it is my responsibility to attempt to see far enough ahead of our efforts to be able to direct changes in the currents, avoid icebergs, and get us safely to the next destination. And mapping a course for the next. It is of course everyone else’s efforts to make those ambitions a reality. They struggle, sweat, and toil.
My role specifically is to embody what Grand Metropolitan represents to the community, its employees, vendors, and suppliers. My actions as the face of the organization must be held to a higher standard. First and foremost I am constantly reciting “Manners maketh man” by William Horman.
Each person in the organization represents the integrity of that organization and its products and services. With so much transparency created through social media platforms such as Facebook, Linkedin, and Twitter it is imperative to employ social graces now more than ever. Unfortunately we are in a time and culture of shortcuts and abbreviations. People are engaging one another with such lack of formality the etiquette of conversation has begun to disappear from our society.
I have studied the management styles of many people from Jack Welch to Jacques Nasser. But today many of those hardcore principals do not apply. There are so many new trends appearing in attempts to improve the organization for staff and management. Casual Friday was the beginning (which also started to deteriorate the formal structure and attire of the workplace). Then companies such as Google and Yahoo filled their hallways with toys and scooters and free lunches. Facebooks Mark Zuckerberg thumbing his nose at the financial and corporate establishment with a closet full of hoodies and tshirts. Amazon shoe subsidiary Zappos eliminating titles so no one is a boss or an employee. Netflix’s year-long parental leave for new parents. These are all shaking up the world of business around the globe.
But first and foremost, we have to start with being polite and kind to one another for anything else to work.
What are you priorities to ensure that Grand Metropolitan and its subsidiaries maintain their leadership positions?
Grand Metropolitan brands have many competitors in dozens of markets around the world. But we define significant points of differentiation in each brand that help us maintain an edge either within the industry or within the consumer’s consciousness. There are so many varied ways to package your company as a leader. It is really a matter of priority and positioning in today’s burgeoning new economies. You can be described as a leading brand in the marketplace by legacy, sales, locations, or corporate giving. Companies that sell outside of the consumer market can also ascend their industry by the clients they represent or transact business.
Our public relations and marketing firm, The Bohle Company, is not the largest employer or billable PR agency in Los Angeles. It didn’t have to be Ford Motor Company, but Ferrari instead. Bohle was the first firm Bill Gates and Steve Ballmer hired for Microsoft to manage the media launch of DOS. This milestone helped the agency propel forward to become one of the leading public relations agencies throughout the pc era, dawn of the internet, advent of the gaming industry, mobile platforms, forward through to 3D printing. Over a 40 year history, The Bohle Company has represented hundreds of industry leading brands such as Atari, Sony, Playboy, Pepsi, Kodak, Nestle, Wizards of the Coast (Hasbro), Alienware (Dell), IGN (News Corp), New Line Cinema (Time Warner), Jim Henson (Disney) and of course Grand Metropolitan.
The company also created the Serious Play Conference and Serious Games Association. With leading corporate partners and sponsors like Microsoft, Raytheon, IBM, Boeing, Lockheed Martin and The Getty Museum, the conference was the first of its kind engaging industry professionals from healthcare, military, education, government, and nonprofit. The Serious Play Conference brings industry leaders together annually at such esteemed institutions as Carnegie Melon to discuss the advancements in game-based learning technologies across all of these varied fields. The organization has begun international expansion having recently opened up a Singapore chapter with partners.
Finlay Enterprises, our fine jewelry division, continues to pursue an industry rollup strategy placed upon the platform of the new economy. Many of our jewelry brands have been leaders in their respective markets either geographically or demographically. It is the collective footprint our brands represent across North America that has been important to us. Bermuda-based Signet Jewelers owns 7 leading brands including Zale, Kay, and Jared The Galleria Of Jewelry. They represent over $6 billion in annual revenue across 3,600 locations. In comparison, Finlay Fine Jewelers maintains a portfolio of over 30 leading jeweler brands across the hemisphere.
While companies like Blue Nile are making strides to expand a capital and operationally intensive brick and mortar presence, we are adapting technologies with emphasis on mobile to stay in step with consumer spending habits and culture. While many of our competitors flood cable television airtime throughout the holidays we are engaging solely in social media and mobile platforms. In 2016, we will continue to convert our online presence to responsive technologies and expanding our efforts with Facebook, Linkedin, Twitter, and Instagram. This is the way that your local fine jeweler gains your trust and your business, with personal engagement married to integrity and a sense of community.
When I first was introduced to Heilig-Meyers Furniture in 1999 in a hotel suite in Atlanta, GA, minutes from the founding Rhodes Furniture headquarters, I was shocked to find out that throughout much of its life it had also been one of the largest jewelry retailers in the United States. At its peak, jewelry sales and finance contributed approximately $400 million to almost $3 billion in revenue from 1,250 locations. In comparison, industry leading specialty retailer Zale was doing just about $1 billion in jewelry revenue from its 1,500 freestanding locations.
Heilig-Meyers Furniture along with Rhodes, Krauses, Glick, Wickes, Sterchi Brothers, and dozens of our legacy home furnishing brands have maintained leadership positions in North America throughout their lifetimes, not only as retailers and employers but as part of the community. Relationships with charities and local organizations have helped bring aid to so many and has ingratiated our brands in their hearts and minds for decades and often generations. Again using technology, specifically social media channels to reach the consumer and educate our peers and clients we reinforce those relationships. When competitors of ours have stepped up and come forward donating beds and furniture to people in need, we make sure to spread that story throughout all channels.
Unlike so many businesses in the luxury industry, furniture has a uniquely positioned utility. Donating a bottle of Dior or a Gucci purse to a homeless shelter or Habitat for Humanity will not provide much relief until auctioned off. But the furniture industry, specifically the local retailer has the good fortune to be able to provide beds, and linens, and a kitchen table to families who have been hit with hard times or natural disasters. These are the types of grand gestures we like to promote in our online and offline marketing.
Certainly we have significant competitors in the home furnishing industry. Aside from Target, Walmart, and Sears, we count Wayfair, IKEA, and Ashley Furniture among them. While IKEA has had its share of less than glowing praise in the media, it maintains a segment of the market place we do not really occupy. Wayfair has spent significantly, like our major jewelry competitors, to fund their growth and expansion supported by repeated and expensive television campaigns. They have achieved enormous growth in recent years funded by private equity and offering 7 million products, unfortunately profitability hasn’t been as much of a result as customer acquisition.
We applaud many of these organizations, especially Amazon (and its shareholders) for underwriting the education of the consumer about the new economy. But as we have seen throughout history, it is not always the first to market that dominates. Many have paved and paid the way to get the world accustomed to trusting online commerce in the home furnishings segment. The next evolution for Heilig-Meyers is building upon this history internationally with mobile and micropayment platforms.
The Beverly Hills Cigar Club, a subsidiary of our IMASCO division, has maintained a leadership position not only in the local Los Angeles entertainment and charity circuit, but around the world. We sponsor/host many high profile events around the globe each year. Members may participate in parties at Cannes, Grammys, Emmys, and Golden Globes as well as G20, Milken Global Initiative and Davos. By positioning ourselves with some of the most influential people in the world as a taste leader or concierge we are often at the forefront of the cigar industry. We do not attempt to sell more cigars or scotch than anyone else or campaign to recruit members. In this regard, the exclusivity and inaccessibility is the very essence of our desirability and of course what luxury is really all about.