Making a brand
The story of Sung-Joo Kim, chairperson and CEO of MCM, is no secret to anyone. Born in a rich South Korean family, she went against her family’s wishes and refused to conform to tradition which would have had her marry and start a family with no hope for a career. Instead, she chose to further her education abroad and create her own business model.
Taking the easy road has never been an option for Kim, who was disinherited by her father when it became clear that she had chosen her own way. When she decided to set up her own business in South Korea, she was faced with a difficult dilemma. “As far as starting the business, there was a lot of corruption going on in Korea at the time,” Kim tells Frontier. “The same thing happened in China and Russia; when you have such huge economic growth, money dictates everything. Therefore people would do anything in order to make money. I was astonished at the level of corruption and it was quite demoralising. So I asked myself whether I would compromise with this corruption even entering such a highly product-led environment as department stores or even typical duty free. But I told myself I come from one of the largest families in Korea, I am well-educated, I come from a strong Christian background and I asked myself if I was willing to compromise to make my own personal money or just to make more profit. I thought: ‘Wait, why not stand out with a clear policy of transparency and succeed that way?’”
And succeed she did. By the time Kim sold her Gucci franchise in 1998 – right after the Asian financial crisis – she had built up from scratch the brand’s fifth-largest franchise in the world. The secret to her success? Investing in technology which allowed her to accurately and quickly supply the required merchandise; investing in her staff to ensure that the quality of service would be the highest possible; and paying attention to her customers, always ensuring that they would get what they wanted, when they wanted it.
The Gucci franchise was Kim’s first foray into travel retail, and by 1998 about $40m of her turnover came from duty free. “This was mainly due to Japanese tourism – we’re one hour away from Tokyo and a lot of Japanese came travelling to Seoul mainly for weekend duty free shopping and leisure,” she says.
The aftermath of the Asian crisis was not an easy time for Kim, but perseverance and the knowledge that things were bound to pick up eventually made her stick to her philosophy and business practices, and by 2005 she was ready to buy the MCM brand out of its own troubles.
Under the creative leadership of Michael Michalsky, the German luxury goods brand is already showing strong gains in travel retail, securing listings with both airports and airlines. April will see the brand’s first airline listings with Emirates and Asiana, the former signing an exclusive listing for a ladies’ purse from the Alda Line, while Asiana has secured products for both its inflight selection and its pre-order brochure. Gebr. Heinneman will take MCM to its shop in Copenhagen in May, and to Düsseldorf and Frankfurt airports in August. MCM has also secured listings with Bahrain Duty Free, starting in July, and has been present in Kuwait airport since March.
“Travel retail is becoming an alternative shopping destination,” Kim tells Frontier. “More people are travelling – and particularly more women – and people also have more time because they arrive at the airport earlier for security reasons, and so they have more time to spend on the duty free side. So travel retail is definitely becoming bigger and bigger. There is a higher sophistication with better products and better services.”
Travel retail really is becoming more important for MCM, which is trying to emulate its domestic strategy in duty free. “We are fast-moving in terms of establishing our presence in top retail environments in duty paid areas,” explains Kim, “and we try to pursue the same strategy in travel retail.”
But unlike some other suppliers, travel retail is not just an opportunity for brand development and the showcasing of the brand’s name and products; it is a real opportunity for developing the company’s business. “MCM used to be known as a luxury German luggage brand,” says Kim. “We are developing many new ranges including travel accessories and luggage sets, so we are in the process of getting there again.”
The troubles that plagued MCM already seem a thing of the past. The new ranges developed by Michalsky are notable in that they offer real solutions for travellers while offering luxury at a price that is not prohibitive. Kim is the first to recognise that she is her company’s toughest customer. Travelling a lot herself, she has a very good idea of what business people – and particularly business women – are really looking for. And it is not a matter of painting standard lines in bright colours to appeal to women – rather, it is always keeping in mind that in her purse or bag a woman will need space for her makeup and toiletries as well as her iPod and Blackberry.
“The 21st century woman consumer is much more intelligent and much more informed,” Kim explains. “We are not targeted at wives, girlfriends or rich daughters anymore. We are targeted at 21st century, high powered, travelling men and women. It is a very different notion. Image-wise we try to pursue the same as Louis Vuitton and Gucci bags; however, price-point-wise, we will always be 20-30% cheaper without compromising quality and design. That is our aim.”
As for the future, MCM is already very well-positioned. The brand has never lost its appeal in Asia, and in Korea it was even bigger than Gucci and Louis Vuitton. Indeed, Asia is where most of its customer base is to be found. “In the case of Louis Vuitton and Burberry, more than 70% of their turnover is generated by Asians,” Kim explains. “Not only in Asia, but also Asians travelling around the world.
“It means that Asia is already dominating the global luxury market and we are lucky to be quite strong there. In the case of Europe, I think it is already quite crowded and we are just aiming to be present at some top retailers. Therefore we are sacrificing secondary shops – I closed 150 stores at once when I took over the brand. It is the same in America where we are trying to secure top retail positions. We try to be in the right position.”
From the buzz generated by the brand and the many accolades already received by Sung-Joo Kim, it would seem that they have gone from trying to succeeding.
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