Jimmy Choo co-founder has advice for disrupting a market — twice
Iconic footwear brand Jimmy Choo co-founder, Tamara Mellon, is vying to disrupt the luxury shoe market again, this time competing toe-to-toe against the company she propelled to dominance.
Mellon shared brand-building lessons and the vision for her eponymous direct-to-consumer footwear line, Tamara Mellon, Saturday at Create & Cultivate in New York City.
“I want to build the next generation multibillion-dollar luxury brand with a new business model,” Mellon told Yahoo Finance.
‘Still operating in a traditional business model’
“On design and quality, we’re competing against the traditional luxury brands. So my old life, Jimmy Choo — Manolo Blahnik, Christian Louboutin, Gianvito Rossi, Valentino, Chanel, Celene, Givenchy — any luxury brand,” she said. Design and quality are where Mellon said the business similarities end.
“They’re still operating in a traditional business model, which is wholesale-retail. The [Tamara Mellon] model is so different. We have direct conversation with our customers.”
With DTC, Mellon no longer relies on a third-party retailer for customer data.
“We can react to what [customers] want so much faster,” she said. “With inventory planning, before you used to guess and you’d make big bets, and if a bet didn’t work you’re stuck with all that cash tied up. So having that feedback from the customer is really helpful,” she said.
Mellon has also changed internal company communication.
“I’m just learning to say no, now,” she said. “It’s been actually a big part of my career where I haven’t had the confidence to say no, and I’ve felt that I would be called ‘difficult, diva — she’s not easy to work with’ — if I didn’t say yes to everything ... I think women inherently have that fear.”
Mellon said some of her most costly yeses were to firms promising to help scale her former brand.
“With Jimmy Choo, I let private equity into the business too soon,” she said. “I was very young. I didn’t really understand what private equity was. And with hindsight, I should have waited.”
Part of the curse of Jimmy Choo, Mellon explained, was that the company was so successful, early on. The success attracted firms pitching for a piece of the pie. The flood of interest continued, leading to a string of private equity deals every two to three years.
“The burnout on the team, it’s not sustainable,” Mellon said. “You can’t do that over 10 years in a row. The team was underpaid. There was no breathing space.”
Mellon’s exit from Jimmy Choo
After 15 years, in 2011, Mellon exited Jimmy Choo with the company’s acquisition by Labelux. Jimmy Choo has since been acquired by Michael Kors, now known as Capri Holdings Limited (CPRI).
To get her new business off the ground, Mellon had the good fortune to rely on self-funding. When it was time to raise capital, she partnered with a venture capital firm.
“Working with venture capital was very different because they actually put capital into the business,” she said. “They are true partners in the business and they actually add a lot of value.”
The strategy is paying off. Mellon charges half the price of her wholesale-retail contemporaries, and her company is currently debt free.
“I still pay the same factory price as I did when I was Jimmy Choo, but I just don’t mark up my shoes six times anymore because I don’t have to put a wholesale margin in there,” she said.
Tamara Mellon also offers a two-year shoe repair service, free of charge.
“Imagine that you bought a pair of shoes at Neimans or Barneys two years ago, and you went in and you said I bought these two years ago, can you repair them for free — they’d laugh at you, right?” Mellon said.
That’s part of the story Mellon shares through social media.
“That’s where we do all our advertising,” she said. “Facebook converts into more sales and Instagram really sets the tone and the inspiration. If you want to really know who we are go to Instagram. If you want to buy a pair of shoes go to Facebook.”
Above all, Mellon cautions entrepreneurs to be selective about who they let into their brand.
“People promise the world and then they deliver nothing,” she said. “Be very careful who your partners are, who the CEO is. You are married to those people.”
Alexis Keenan is a New York-based reporter for Yahoo Finance. She previously worked for CNN and is a former litigation attorney. Follow on Twitter @alexiskweed.
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