When the internet came of age, department stores were a driving force in designer fashion — so it was only natural that the industry would try to build big, multibrand luxury emporiums for the digital world.
And try. And try.
But where so many failed, Michael Kliger led Mytheresa to a win by focusing on ultra high-end shoppers with a very focused assortment of the latest fashion.
Now he’s trying to do it again, but on a much bigger scale as group chief executive officer of LuxExperience, formed this summer when Mytheresa acquired Yoox Net-a-porter in a stock deal with Compagnie Financière Richemont, which now owns a third of the overall company.
In conversation with James Fallon, chief content officer of WWD and Fairchild Media Group, at the WWD Apparel & Retail CEO Summit, Kliger was clear-eyed about the weaknesses that have dogged Net-a-porter for years, but confident in the ability to turn it around.
And while some back-end functions are being merged, he said each brand — including Mytheresa, Net-a-porter, Mr Porter and Yoox — can shine in its own way.
“We always felt that to be successful, you have to stand for something,” Kliger said of why he did the deal. “We are a true believer that as a retailer, you need a personality. While we believe Mytheresa has so much more room to grow, we felt we have an opportunity to bring in some other personalities.”
That thesis checked out, he said.
But the combination wouldn’t work if the businesses lost their personality.
“If you really want to be relevant to a customer, everything that is customer facing needs to be on its own,” he said. “So everything that defines the perception for the customer, be it the buy, the marketing, that’s separate.
“Everything that the customer doesn’t care about, as long as it works, we bring together,” he said. “We believe as Mytheresa we have some really amazing skills and expertise in technology and operations, why not use that? The customer actually doesn’t know that there is a company called LuxExperience. It’s Mytheresa, it’s Net-a-porter, it’s Mr Porter. This should be and will be the relevant brands.”
There are good reasons for keeping it that way and not making the larger group into some kind of mega brand.
“The customer views these [online stores] as different personalities,” Kliger said. “There’s geographic play also involved in it. And so let’s keep that. Let’s, let’s not move customers left and right within a bigger group. That doesn’t make sense. We are in a moment where there’s market shares to be grabbed and so the businesses should be outward looking.”
By outward looking, he means focused on customers and how each brand can connect with them.
Where as Net-a-porter was among the first to connect with shoppers online, it has had trouble holding their attention.
“It’s dusty for sure,” Kliger admitted of Net-a-porter, adding that there was “some real mess in the machine room, no question about it.”
But that dust can be cleaned up, he said.
“As long as you understand why it doesn’t work, then you at least have a clear plan for repair,” he said.
Customers sense the troubles at Net-a-porter, of course, and see that it’s not as good as it was, but still they love it, said Kliger, describing that affection as a big opportunity.
LuxExperience, like the fashion brands that are excelling in today’s mixed up economy, is looking to stay very close to shoppers. Part of that means taking businesses that primarily exist on screens and projecting them into real life.
Mytheresa is increasingly hosting experiences for its clients and popping up in key shopping areas with temporary outposts that help them sync with shoppers.
“It’s no secret that while 90 percent of our interactions are on Messenger, are on email, to really have a strong customer relationship, that physical moment is key,” the CEO said.
But that moment will look different for each brand. While Kliger recently hosted Mytheresa customers at an evening at the ballet, Net-a-porter will need a different approach.
“The customer defines what is the physical moment, what is the emotional moment that these customers are looking for,” he said. “There’s a lot to be learned from customers. And the big part of learning is also what not to do. I mean, strategy is more about what not to do than what to do.
“We scrub the data for repurchase rate,” he said. “We want to know how many customers come back after 30 days out of 90 days. And that’s a commonality that we will bring to all our store brands. But then you have to translate it into what does it mean for that specific customer they’re chasing. It’s not about me, it’s about the customer. We do whatever it takes.”
And LuxExperience is incentivized to have even closer relationships with its very best customers.
“We ended last fiscal year with 42 percent of our business sitting with 3.8 percent of our customers,” Kliger said. “That’s where the engine is. If you add to that aspirational customers, and I think collectively the industry did a fantastic job in September providing a lot of stimulus, a lot of buzz [about designer debuts at major brands] for customers that maybe were on the sideline to come back and engage with brands.”
There are a lot of balls to keep in the air at LuxExperience and Kliger is also operating in the spotlight as a publicly traded company.
“Being listed is extra work and you are under much more scrutiny,” he said.
But the publicly traded shares gave the company a currency — shares — that helped it close the Net-a-porter deal.
“Is it extra work? Yes. Does it take away time from stuff that I like even more? Yes,” Kliger said. “But really it allowed us to do this. So in that way, it’s great.”
