The Co-President's of Columbia Business School's Retail and Luxury Goods Club both have experieince at the sharp end of the industry.
Before her MBA, Melissa Mackay moved from Wall Street to work for corporate communications firm ICR in New York City, where she represented firms in the Retail, Apparel, Footwear, and Accessories Group.
Cristina Connor worked as Associate Merchandiser at Club Monaco and Abercrombie & Fitch and is currently a strategy intern at Chanel.
Melissa and Christina tell us how companies such as Hermès have survived the recession, their thoughts on the best luxury stock items to invest in and the benefits of being located in New York City.
What is the main aim of your club?
Columbia Business School’s Retail and Luxury Goods Club aims to educate students about the retail and luxury goods industries through guest speakers, panelists, industry tours, alumni networking, and our annual conference.
Additionally, the club helps students find school year, summer, and full-time employment in the retail and luxury goods industries and works with the administration on the retail curriculum.
In recent years the Retail and Luxury Goods Club has grown to become one of the most dynamic clubs on campus, with well over 200 members.
Why did you choose to come to Columbia Business School?
I think Michael Gould, CEO of Bloomingdales and CBS graduate of ’68, states it best when he says there is really no other city in the world like New York. Going to business school in such a dynamic city presents students with constant opportunities to interact with industry experts, potential employers, and alumni. In addition, the strong retail-focused curriculum, outstanding professors with industry experience, and long list of C-Level alums draws in top students who are interested in pursuing a career in the retail industry.
Who was the most exciting speaker you’ve had this year?
One of the most memorable speakers we had this year was Amy Shecter, President of C. Wonder. Ms. Shecter was a keynote speaker at our 6th Annual CBS Retail and Luxury Goods Conference, which took place on March 30th, 2012. Amy gave a fascinating presentation on the newly launched C. Wonder concept and discussed her career progression throughout the years.
She currently oversees C. Wonder’s overall direction, product strategy, and growth nationwide and has helped the brand quickly become known for its state-of-the-art shopping experience, vibrant and colorful atmosphere, exquisite décor, and overall focus on truly delighting its customers at every sensory level, whether through the eclectic displays and product assortment, the touch screens in the dressing rooms that allow customers, among other features, to adjust the music based on their moods, or simply by offering light beverages and snacks.
Based on Ms. Shecter’s work, the key ingredients in redefining the industry with innovative retail concepts that can sustain rapid growth and capture the hearts of shoppers everywhere are a deep understanding of target customer needs and desires, technological innovation, flexibility, experimentation, and simply thinking outside the proverbial box.
Which companies do you partner with?
We aim to work with companies across the retail spectrum in order to address the needs and interests of all of our club members, covering mass, specialty, online, department store, and luxury goods retail companies.
Our club also works closely with the Luxury Education Foundation to bring speakers to our school and to set up small group visits to company headquarters. For example, we have most recently hosted intimate club events with Louis Vuitton, Dior, Cartier, and Graft.
We also partner regularly with prestigious companies such as Kurt Salmon Associates, Nordstrom, Chanel, LVMH, Coach, Bloomingdale’s, and Estee Lauder.
What proportion of luxury good sales do you think is recession proof?
Although it is difficult to say the exact proportion of luxury good sales that ais recession proof, it is evident that the industry has been resilient throughout the economic decline and it has been quite revealing to follow the luxury goods companies that have reported consistently strong financial performance and growth (such as Hermès, Richemont, LVMH, and PPR).
Indeed, the most powerful luxury goods companies have all recently seen impressive revenue increases, and while the rate of growth will most likely decelerate or plateau in upcoming quarters, the consensus in recent reports is that these companies’ strategy of maintaining quality, creativity/originality, and exclusivity will protect the long-term value of their luxury labels.
They aren't reducing price points or offering lower quality products in greater quantities to improve margins.
There have been mixed reports on whether or not affluent consumers will remain willing to spend at current levels in the future due to concerns about the economy, but it appears that the most affluent segment of luxury goods consumers, as opposed to more aspirational or mid-level affluent consumers, will not cut back on spending. This makes customer retention and loyalty more critical for luxury companies than ever.
Which retail or luxury stock would you invest in?
Any company with excellent operational efficiency, overseas expansion plans, and an ability to constantly delight customers through innovation and consistent quality would be an excellent candidate.
Specifically, because of our belief that the luxury sector is positioned for continued profitability and growth, we would consider investing in Richemont, LVMH, and PPR. Other retailers that come to mind are Lululemon, Amazon.com, and Polo Ralph Lauren.
Do you think buying luxury goods competes with investing in traditional asset classes such as bonds or commodities?
For the vast majority of luxury goods consumers, we do not think this would be the case. The motivation behind the purchase of a luxury good is inherently different from investing in traditional asset classes due to the oftentimes-invaluable aesthetic, emotional, tactile, and practical qualities of the product that cannot be quantified.
Although the value of certain luxury products appreciates over time, for the most part, consumers consider them an extremely personal and unique type of investment.