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Dear friends and industry colleagues, After a thought-provoking LINK Jewelry Summit - a new milestone for the industry, and a stepping-stone for the future - during which Vienna’s magnificent Hall of Sciences became a place of learning, we are now back home in our own countries, reflecting on what we learned. The theme was, appropriately, ‘Reflections,’ and over the next days and weeks I’m sure that we will all be pondering on what we learned. We were treated to fascinating debates and talks on wide-ranging subjects. Retail merchandizing and the huge influence of digital media and blogging were key topics. We listened to an absorbing session about predictive modeling based on statistics gathered in the apparel industry in the 1990s, and what that might mean for the future. The evolution of style and creativity - primary drivers in the jewelry business -were addressed in some detail, along with the need to ‘think global, act local’ in applying European design heritage to new markets. Finance came up for discussion, too - what motivates investment in the jewelry sector and how the business landscape might look over the next five years. And, of course, in an increasingly eco-conscious world, sustainability had an important place on the agenda. We were prompted to put on this event by the fact that the jewelry industry has never been as well represented as fashion, and we hope that LINK Jewelry Summit will prove to be a step towards correcting this situation. We hope, too, that you were galvanized by the knowledge you gained, and that it will help you move your business forward. A sincere thank you to the many people who helped to make LINK Jewelry Summit such an important landmark: The International Herald Tribune who organized it so superbly, the inspiring speakers who gave their time to talk to us persuasively on crucial subjects affecting the jewelry industry, and the delegates who shared their knowledge and experience throughout the two days. With best wishes,
Markus Langes-Swarovski
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Dear LINK Jewelry Summit Attendee, I hope you enjoyed the LINK Jewelry Summit and found it a worthwhile and inspiring two days. The IHT was delighted to be able to help organize this event. We’ve always devoted coverage to what’s happening in the jewelry industry, both from the creative and business viewpoints. Our “Cut Above” series of special reports covers the luxury trends defining the worlds of watches, jewelry, craftmanship and gifts, while our Style Magazine, T, delivers a sophisticated and often edgy mix of culture, design, travel and fashion. And of course, every Tuesday, the legendary Suzy Menkes covers the essential goings-on in the fashion world. The art and business of jewelry has been our business for most of our 125 year history. And so it made perfect sense for us to work with Swarovski on this event. The concepts so deeply embedded in both our DNAs – those of creativity, imagination, and the exchange of ideas – were of course the core values of the LINK Jewelry Summit. Our speakers addressed some of the most challenging issues facing the global jewelry industry. They enlightened us, they inspired us, and they brought us together for two magical days. And of course, who can forget the fabulous gala evening at the Palais Liechtenstein? You have been part of something very special. Thank you.
Stephen Dunbar-Johnson
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Day ONE Tuesday, April 23, 2013 SPECIAL OPENING SESSION The edge of perception Pete Eckert, Photographer fficial welcome O Markus Langes-Swarovski, Member of the Executive Board, Swarovski Stephen Dunbar-Johnson, Publisher, International Herald Tribune Chair’s opening remarks Katharina Flohr, Managing and Creative Director, FabergÊ ession 1 S Why jewelry: the psychology of adornment Lois Sherr Dubin, Author and Curator Session 2 Delfina Delettrez Fendi, Founder, Delfina Delettrez in conversation with Nadja Swarovski, Member of the Executive Board, Swarovski Session 3 Key consumer insights for jewelry retail success Anne Martin-Vachon, Chief Merchandising Officer, HSN, Inc. Rita Clifton, Branding Expert and Board Chair, Populus Rory Sutherland, Vice Chairman, Ogilvy Group UK ession 4 S How is social media redefining retail? Susanna Lau, Blogger, Style Bubble Chris Morton, CEO and Co-Founder, Lyst
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ession 5 S LINK Inspiration Chris Bangle, Car Designer ession 6 S Sparkling aspiration: New markets for fashion jewelry Mohammed A.R. Al-Fahim, CEO, Paris Gallery Kent Wong Siu Kee, Managing Director, Chow Tai Fook Rony Rodrigues, Founder, Box 1824 Sanjay Kapoor, Managing Director, Genesis Luxury Janet Wang, Director of International Business, Tmall.com ession 7 S Creating retail magic Joseph Wan, Group Chief Executive Officer, Harvey Nichols Session 8 Outlook 2020: Crystal clear vision Thomas Tochtermann, Director, Leader of Apparel, Fashion & Luxury Group, McKinsey & Company Session 9 The fashion jewelry leaders’ roundtable Bryan Crisfield, Founder, Crislu Massimo Carraro, Chairman & CEO, Morellato Lise Aagaard, Founder, Trollbeads Joe Cavalcante, CEO, Ippolita Robert Buchbauer, Member of the Executive Board, Swarovski Guest Chair: Victoria Gomelsky, Editor-in-Chief, JCK Gala Dinner at Palais Liechtenstein
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Day TWO Wednesday, April 24, 2013 Chair’s recap and day two opening remarks Katharina Flohr, Managing and Creative Director, Fabergé Session 10 Style and creativity: Always evolving, yet always the same? Deborah Lloyd, President and Creative Director, kate spade new york Iris Apfel, Businesswoman, Style Icon and Tastemaker Nadja Swarovski, Member of the Executive Board, Swarovski ession 11 S Strategic activity in the jewelry sector Colin Welch, President and COO, Financo, LLC Session 12 The evolution of fashion jewelry Haysun Hahn, Founder, Fast Forward Group Cher Potter, Editor and Futurist, WGSN Giles Last, Senior Lecturer, Central Saint Martins Emre Dilaver, Creative Director, Sevan Biçakçi Session 13 Sustainability and the jewelry industry: Is all that glitters green? David Mayer de Rothschild, Founder, Sculpt the Future Foundation Greg Valerio, Co-Founder, Fair Jewelry Action Bernhard Pleschko, Executive Vice President – Manufacturing, Swarovski Claus Teilmann Petersen, Vice President, Group CSR, Pandora Session 14 Keynote Richard Saul Wurman, Architect and Designer; TED Founder Close of LINK Jewelry Summit and Lunch
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Pete Eckert discusses visual perception and his light portrait photography
Special opening session: The edge of perception Blind photographer and visual artist Pete Eckert delivered a rousing opening speech at the LINK Jewelry Summit 2013 in Vienna. Eckert, who gradually began to lose his sight while studying as a young graduate, delivered a fascinating insight into how he uses sound, touch and memory to build images in his mind’s eye. Eckert went blind as he planned to study architecture at Yale University. He fell in love with photography after finding his mother-in-law’s 1950’s Kodak camera while clearing out a desk drawer. Over two decades he has gone on to become a renowned photographer, shooting images from landscape to architecture and, now jewelry. “I use a technique called echo location,” he explained. “Using this I can determine where in a room my model is, and I memorise my pieces through touch”. Eckert painstakingly builds each image gradually, echo locating his models, memorising each piece of jewelry in his mind’s eye adding layer by layer of information to build a finished image. Eckert calls it “painting with light.”
“Shooting jewelry has been a big learning experience for me, and extended my imagination” Pete Eckert
When building his creations, Eckert strives to create ‘maximum sparkle’, reflecting the aura that is built up around a woman. His outlook is refreshing – rather than perceive the loss of his vision as a negative thing, he sees the positive in tackling the challenges that not being able to see throws at him.
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Official welcome and chair's opening remarks Opening comments at the LINK Jewelry Summit 2013 came from IHT Publisher Stephen Dunbar-Johnson, Member of the Executive Board of Swarovski Markus Langes-Swarovski and chair of the event, Fabergé’s Katherina Flohr. Dunbar-Johnson promised a ‘rich cocktail of speakers’, while Flohr went on to stress the relevance of a conference that “unites and ignites” creative and business thinking. As the first on stage, Langes-Swarovski outlined some of the two-day agenda’s key topics, which focused on the evolving consumer, the potential of aspirational and emerging markets and the impact of technology. “The jewelry sector is a passionate one, although perhaps not quite as well represented as other luxury sectors such as fashion,” he said. “This is the reason that we really felt the need for a summit of this kind, so that global industry leaders can come together to interconnect and to exchange ideas.”
“The launch of this summit is planting a seed” Markus Langes-Swarovski
“When I learned that this was the first jewelry summit of its kind, I was amazed and intrigued and we feel very privileged to be a part of it,” added DunbarJohnson. He went on to welcome IHT fashion editor Suzy Menkes, who was also in the audience. Katharina Flohr, who made her conference chair debut at the LINK Summit 2013 stressed that despite the current global economic situation, the jewelry industry continues to thrive and to innovate in response to the challenges thrown at it. Referring to her experience at the helm of Fabergé, Flohr explained how the heritage of the brand has helped it through today’s tougher retail environment. “I say that we are ‘dancing with history’ at Fabergé. The brand has bequeathed the world with a rich legacy of exquisite refinement, cultural depth and powerful emotions, and with such heritage and such powerful associations we can face the challenges of new collections today,” she said. Flohr went on to stress the responsibility that the industry must take for nurturing skills and talent and rejected the notion that jewels should be manufactured for speedy sales. “It is that kind of process that has become responsible for the descending number of gold and silversmiths. Too often the pressure is on the marketplace for rapid production and that leads to products that lack any genuine character or human imprint. These are jewels without integrity and soul,” said Flohr. Ending the opening session on an upbeat note, Flohr pointed out that there is today a real appetite for true artistry: “The quest for ingenuity and individuality is escalating to new markets at a quicker pace than ever before. It’s fantastic to see this fresh, impetuous drive for quality and investment.”
FROM TOP TO BOTTOM Katharina Flohr, Stephen Dunbar-Johnson, Markus LangesSwarovski
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session 1 Why jewelry? The psychology of adornment From Paleolithic times to the present, jewelry has been about far more than just personal adornment. The humanity of jewelry, and the multiple connections it provides was the focus of an illustrated talk by Lois Sherr Dubin, Author and Museum Curator of the George Gustav Heye Center, Smithsonian Institution, and author of “The History of Beads: From 100,000 B.C. to the Present.” Dubin believes that we wear jewelry as a status symbol, we wear pieces that resonate to others our cultural or religious beliefs. “We have an emotional connection with the pieces that we choose to adorn ourselves with” she says. “As people, we are attracted to the exotic, to the unusual and the rare.” Jewelry, she points out, transcends class systems: “In many communities, jewelry defies age, gender and marital status,” she says, “I am interested in the story a piece tells about the person who is wearing it.”
“Jewelry is above all a way for people to communicate their personality to others”
Lois Sherr Dubin
Dubin is not so much of an advocate of the fashion market. “I think that these days, far too many of the designs just don’t have meaning. My message to the industry would be to focus on things that create lasting value, pieces that people will want to treasure and to pass on through the generations.” It’s a refreshing perspective in an industry that appears to be dominated now by quick turnaround and high fashion. For Dubin, the joy in jewelry is in the meaning behind each piece. She unsurprisingly takes a dim view on copycats and mass production. “It’s the aspect of the industry that I inherently dislike – the lifting and appropriating of ideas,” she says. Some of the most striking and original work exists, for Dubin, within Indian American culture. She has long been a champion of their work, and showcased several pieces in her presentation in the belief that as a movement, and as an industry which she estimates to be worth $1 billion, it has not had the chance to show itself to the global market. It‘s the beads that draw Dubin to Indian American jewelry. “Beads are timeless and there is something very primal about them, but jewelry is above all a way for people to communicate their personality to others. A customer may not even realise that they are subliminally picking out pieces that reflect who they are.”
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Lois Sherr Dubin delivers an inspiring and educational tour through the history of personal adornment
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Left to right: Nadja Swarovski, Delfina Delettrez Fendi
session 2 In conversation: delfina delettrez fendi Famed for her unusual, passionate and romantic designs, where single pieces often serve a dual purpose, Delfina Delettrez Fendi spoke to Nadja Swarovski at the LINK Jewelry Summit 2013 about the sources of her inspiration. The interview opened with an arresting video collaboration of her work, which takes inspiration from nature and the human form. “My personality and my past are very influential in what I make,” said Delettrez, when asked about her inspirations, “From my creations you can understand my fears and my phobias.” Insects, once feared, are now a major source of fascination in Delettrez’s output. She works with all kinds of materials, not just silver, gold, precious and semiprecious stones, but also modern man-made materials such as rubber and leather, elevating those materials into a sense of luxury. The Delfina Delettrez customer is described as a “cyborg, made of flesh, bone and jewelry.”
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“My strategy is to promote my jewelry on the web, using Facebook and Instagram” Delfina Delettrez Fendi on her social media-based marketing strategy
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Left to right: Anne Martin-Vachon, Rita Clifton, Rory Sutherland and Katharina Flohr
session 3 key consumer insights for jewelry retail success Understanding and knowing the jewelry consumer is critical to the success of retail. The new reality for jewelry retailers was examined in a lively and illuminating panel discussion chaired by Katharina Flohr. Taking part was Anne Martin-Vachon, Chief Merchandising Officer at HSN, Inc, branding expert and Board Chair of Populus Rita Clifton, and Ogilvy Group UK Vice Chairman Rory Sutherland. “The consumer is the boss,” explained Martin-Vachon who, after playing a short film to introduce the HSN jewelry operation, went on to outline the two typical HSN consumers. The first wants immediacy: “She wants it now, whenever and wherever,” explained Martin-Vachon, while the other consumer is more interested in the brand and shopping experience, elevating the action of purchase from mere transaction to an emotional encounter with her chosen brand and all it represents.
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In response to these demands, HSN has evolved from its shopping channel origins - digital represents around 40% of its business - to a structure of networked experiences built on around the pillars of content, community and commerce. HSN has left no digital stone unturned as it strives to “redefine the shopping experience,” resulting in the creation of “one holistic experience, so she [the consumer] can shop 24 hours a day, 7 days a week, 365 days of the year and have the same experience everywhere.”
“For younger consumers the experience of buying jewelry isn’t as exciting as it should be” Rita Clifton This view was echoed by Rita Clifton: “Consumer expectations are heightened all the time. Everything needs to be about the consumer and their behaviour. It’s all geared around the when, where and whatever. There’s also a trend towards multi-sensory,” she continued. “In today’s experiences there might be sight and sound - but consumers expect more excitement and more entertainment”. Clifton and Martin-Vachon also agreed that the transactional nature of purchasing needed to be addressed by jewelers. “This is something we pick up on in our research,” explained Clifton. “There are some exceptions in the top end, but for younger consumers the experience of buying jewelry isn’t as exciting as it should be. They’re expecting cues for inspiration and lifestyle, but instead they‘re overwhelmed and confused by the dense product presentation by retailers”. Lacklustre presentation in stores was a topic that would resurface in a number of summit sessions.
“Creativity is the new wealth”
Rory Sutherland
Rory Sutherland, Vice Chairman of Ogilvy Group UK highlighted the changing consumer attitudes towards status goods. “The traditional mechanisms by which we convey our status may be completely changed by digital signalling,” said Sutherland, as he explained the shifting priorities. “Creativity is the new wealth” for younger consumers who don‘t attach the same value to established demonstrations of success. “Globalisation has brought a cast of very rich people who don’t seem to be deservedly rich,” continued Sutherland, “displays of wealth only work when that wealth looks earned.” Sutherland returned to the theme of a retailing disconnect, stating that jewelry doesn’t have “the retailing it deserves”. He complimented HSN’s efforts to create a brand-friendly environment that was engaging for consumers, but stressed that physical retail spaces were lagging behind. He also made some entertaining, if slightly cynical observations about the motivations men have for buying jewelry for their wives, girlfriends and partners.
Bottom Rory Sutherland
Clifton cited Apple’s revolutionary approach to retail spaces, while acknowledging that it was something of an overused case study. But the Apple example also demonstrates that successful brands can lead consumer expectations and not just aim to meet them.
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session 4 How is social media redefining retail? Luxury fashion and jewelry brands have, until recently, had an uneasy relationship with social media. The attractive marketing opportunities are tempered by a perceived loss of control over brand image. By contrast, retailers have been quick to harness the potential of social media and social commerce offers new opportunities for the online retail sector. Susanna Lau, the eminent fashion blogger behind Style Bubble, together with Lyst CEO and Co-Founder Chris Morton presented their views on the social state of retail.
Susanna Lau launched her Style Bubble blog in March 2006, and is now regarded by many as the grandmother of fashion blogging. Lau discussed the merits of the different social platforms including Facebook (“eternal”), Twitter (“a resource for information”) and Instagram (“close up detail shots get the most comments and interactions”) and challenged the expectation that all social media activity could be directly linked to a purchase call-to-action. Lau was joined by Chris Morton, who reclaimed the term ‘social commerce’ from discount services like GroupOn. Noting that Facebook attempted to launch a retail operation without success a few years ago, Morton outlined the five laws of social commerce that brands should take notice of in their online operations, and was keen to stress the importance of brand curation by retailers. Only 10-15% of brands that have ever applied to be stocked on Lyst have been successful. “We’re swamped with brochures, information and stimulation,” said Morton, “curation is a natural way of bringing back everything to the hands of consumers.”
“I have an edited point of view that lets me collaborate on a number of different brands” Susanna Lau
MAIN Susanna Lau INSET Chris Morton
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Chris Bangle discusses art, design and inspiration
session 5 Inspiration: sharing ideas Renowned automobile designer Chris Bangle is best known for his work as Chief of Design for BMW Group, where he was responsible for design of the iconic BMW, MINI and Rolls-Royce motor cars. At the LINK Jewelry Summit 2013, Bangle shared his thoughts on why the jewelry and car industries are really not that dissimilar. “Art should make you nervous, it should make you uncomfortable and above all, it should make you think differently,” Bangle told a packed room of delegates. “If you can use art as a solution for design, so much the better. Cars and jewelry – we share a common background which is that of art sculpture,” he added. “Every car that you see on the road has been hand sculpted, automobile sculpture is a highly skilled craft, in exactly the same way that the sculpture of jewels is.”
“By opening up and sharing ideas we can all achieve so much more” Chris Bangle
Bangle compared the two industries in their relentless pursuit of perfection. “A conversation topic that keeps coming up is that of how secretive the jewelry industry is. It can be the same with cars – we create something so perfect that we don’t want to share it. But actually, by opening up and sharing ideas we can all achieve so much more, because it allows us to constantly raise the bar.”
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Left to right Rony Rodrigues, Janet Wang, Sanjay Kapoor, Mohammed A.R. Al-Fahim and Kent Wong Siu Kee, Katharina Flohr
session 6 sparkling aspiration: new markets for jewelry There are an increasing number of opportunities for fashion jewelry retailers in emerging markets such as China, the United Arab Emirates and South America. This year’s LINK Jewelry Summit brought together industry experts from different corners of the globe to talk about the trends within their markets and how consumer tastes differ by market and region. Taking part was: Mohammed A.R. Al-Fahim, CEO, Paris Gallery Kent Wong Siu Kee, Managing Director, Chow Tai Fook, Rony Rodrigues, Founder, Box 1824, Sanjay Kapoor, Managing Director, Genesis Luxury and Janet Wang, International Business Director, Tmall.com. When it comes to the emerging markets, the over-riding feel is that it is younger consumers – the 18 to 35 year olds – who are influencing the future of the jewelry category. As Rodrigues puts it, where once daughters looked to their mothers for inspiration, now it seems that the trend has reversed.
“Where once daughters looked to their mothers for inspiration, now it seems that the trend has reversed” Rony Rodrigues
“In Brazil, around 60% of the population is under 40 and now it seems that culturally, the older generation is looking to the younger generation to understand design and fashion influences,” he said. Rodrigues talked too about the emergence of fashion jewelry in a world where society is less concerned about the idea of “forever.” In nearly all cultures we change jobs, home and relationship status a lot more frequently than in the past, and by extension the buying of jewelry has become more transient too. In China, the desires of the younger consumer have given rise to a movement that sees jewelry and fashion converge. Now too is the time that China should start to be considered a powerhouse in the jewelry industry, not least because of the rise in popularity of online retailing. Wang is the director of international business development at retailer Tmall.com, the largest e-commerce platform in Asia with 370 million registered members and 800 million listed products.
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According to Wang, Tmall.com amassed more than 800 million visits to its jewelry pages, leading to 56 million purchases being made. “The retail potential in China is up about 10.9% year on year,” she said. Ecommerce is big news in China. According to Wang, China could very possibly operate the biggest online retail market by 2016 – doubling that of the US and Japan combined. While the ecommerce market in China may well be on the cusp of something amazing, in the UAE it is not a channel that has big potential, according to Mohammed A.R. Al-Fahim. “In the Middle East, ecommerce does not work for all categories,” he said. “In Dubai and in other regions, going to the shopping mall is often seen as a way of entertaining oneself, which is why we have some of the biggest and grandest outlets in the world. Ecommerce to date hasn’t really formed a significant part of our industry.” Al-Fahim also pointed out that whilst the UAE is close to India geographically, they couldn‘t be further apart in retail terms. “Here in the UAE, there is the embracement of fashion jewelry, whereas in India the culture of heritage remains.” Kapoor agreed that the fine jewelry market is still much bigger in India compared to the fashion or “casual” market, going so far as to suggest that still the fine jewelry sector is some twenty times the size of its counterpart.
“China could very possibly operate the biggest online retail market by 2016 – doubling that of the US and Japan combined” Janet Wang
If younger consumers are shaping the future of their own emerging markets, where are they gaining their influences from? According to Wang, the manufacturing and buying of pieces continues to happen largely inside of the market it is created for. “In China, 90% of consumers would rather purchase pieces locally than from Europe, even if the influence has come from there. The best working model for jewelers looking to sell in China today is to create an idea, then find a local partner to make and sell the pieces locally. The idea of buying local resonates with consumers.” This advice is well timed. The Chinese jewelry market is an incredibly lucrative one and according to Wang, spending on the category has increased 150% year on year over the past two years. If this panel session was anything to go by, the industry should expect an increasing amount of power and influence to come from the emerging markets in not too distant future.
Left to right Janet Wang, Mohammed A.R. Al-Fahim, Sanjay Kapoor, Rony Rodrigues
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session 7 creating retail magic Joseph Wan is the Group Chief Executive Officer at flagship London department store Harvey Nichols. The store is famous for its opulent window displays and for housing hundreds of luxury brand names – including DKNY, Valentino and Vivienne Westwood. Katharina Flohr, chair of the LINK Jewelry Summit 2013, caught up with Wan to talk about how Harvey Nichols positions itself as an inspirational destination store. KF: How important is the customer experience, and how have you gone about creating an experience for your customers at Harvey Nichols? JW: In order to engage a customer you have to look at all aspects of the business – it’s not just about selling from the shop window. I call Harvey Nichols a multibrand department store. When we talk about our customer relationships we see those as a long term thing. There are three important elements of the customer relationship and they are product, environment and service. Can you explain the Harvey Nichols approach to each of these elements? When it comes to products we constantly strive to bring new things to market. For example in 1993 it was us that brought Canadian cosmetic brand MAC to the UK. We work with local agents in lots of different markets to find new and exciting products. From that we build a reputation, and now brands see us as a launch pad. Environment is about so much more than merchandising. We strive to create a deep and lasting connection with our customers through our environment. And we listen to what they say too.
“There are three important elements of the customer relationship: product, environment and service” Joseph Wan
Service is about so much more than a smile – that level of service we take for granted at Harvey Nichols. What we are selling is not just transitionary we are selling our whole ethic. Our buyers are very experienced and they know what our customers will like, what will excite them. How important is jewelry as a sector to Harvey Nichols? The jewelry category accounts for about 5% of the floor space in our London store. That’s quite small, but it’s a category we’d like to grow. We have two constraints – one being floor space and the other being the expertise – we like to be confident that we are doing things in an authoritative manner. Certainly we would look to grow jewelry as a category in the future and as we expand into the online marketplace, where we do not have the physical constraints, there will be more opportunities. Can you explain a little more about the digital strategy for the store? We started out on an online strategy deliberately late so that we could learn from the mistakes of others. Around 18 months ago now we really started to embrace online – at that time we had seven people working in our ecommerce department, today we have 39. It is our aim for our online store to be the best
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in the world within our sector by the end of the year. If you go online month on month from now you will no doubt see big improvements. Increasing your online presence will open the Harvey Nichols brand up to new markets. Which emerging markets do you see the most opportunity in? Brazil and China both have huge potential. China specifically is a long term prospect for us, as we don’t feel that the market there is yet ready for our type of offering. There is still a lot of brand education to be done. Emerging markets in general excite us for three reasons; firstly because they contain large populations with a rising influence; secondly because the cost of business is lower and the chance of success higher than in more mature markets, and lastly because the competition is lower than in established markets.
“Adaptation is the key for financial success in new markets� Joseph Wan
What would you say is the key to success for a brand looking to globalize its footprint? Adaptation is the key for financial success in new markets. It just has to be done suitably and appropriately and without diluting the overall brand experience.
Katharina Flohr in conversation with Joseph Wan
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session 8 outlook 2020: crystal clear vision Thomas Tochtermann, Director, Leader of Apparel, Fashion & Luxury Group, McKinsey & Company took delegates through a look at the key trends that will affect the future direction of the global jewelry industry, including the changing role of brands, the use of multiple channels, the consolidation of core players and the rise of the megacity.
To look ahead to the jewelry industry of 2020, Tochtermann drew parallels with the apparel industry of the 1990s. Democratization of jewelry began in the 20th century, and fashion and fast jewelry have become increasingly popular in recent decades. “Owing to this new-found accessibility and keen interest, the future of jewelry will be entirely unlike anything seen in the past,” said Tochtermann.
“The future of jewelry will be entirely unlike anything seen in the past” Thomas Tochtermann
“We expect that through 2020, jewelry will develop in much the same way the apparel industry has evolved over the last two to three decades. According to Euromonitor, the apparel market has grown at about 5 percent annually in recent years, from EUR 750 billion in the late 1990s to a staggering EUR 1.3 trillion in 2011. Jewelry, today a EUR 148 billion market, is expected to reach annual global sales of EUR 250 billion by 2020 – a compound annual growth rate of 5 to 6 %.” Tochtermann conceded that jewelry prices were higher than apparel, and purchase frequency was lower - creating longer product cycles and different distribution challenges. Tochtermann’s presentation revealed that the high and lower ends of the market were very dynamic, causing a stagnating middle ground. Much of this is brought about by consumers trading up and down as economic circumstances allow. “A Gucci suit costing EUR 1,200 in 2000 now sells for EUR 1,700 which is more than the EUR 1,300 expected based on inflation. Players in high end apparel have created a substantial premium. At the same time prices dropped in the mass market. Today, jewelry is starting to see similar developments.”
Thomas Tochtermann
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session 9 jewelry leaders roundtable Five leaders from the fashion jewelry sector took part in a Q&A panel, moderated by Victoria Gomelsky, Editor-in-Chief of industry bible JCK. Topics included how the industry was dealing with an unpredictable trading environment, the key to survival and the future of the jewelry sector. Taking part in this leaders’ roundtable was Joe Cavalcante, CEO of Ippolita, Crislu founder Bryan Crisfield, Morellato Chairman and CEO Massimo Carraro, Trollbeads founder Lise Aagaard and Swarovski Executive Board Member Robert Buchbauer. First on the agenda was a look back at trading conditions in 2012 and the Q4 holiday season.
“We need to be global enough to catch the new consumer tastes without diluting the brand heritage” Massimo Carraro
Gomelsky opened the session by asking for a snapshot for current trading conditions: Cavalcante: The holidays were great for us. Half our US wholesale business is going great, that’s the independents, which are meaningfully outperforming the department stores. It’s also been an interesting beginning to this year. Crisfield: There’s an overall sense of quiet compared to the market last year. Department store sales are flat, not growing. But independent jewelry is very strong, and so is duty-free retail. Carraro: In the last five years we opened in GCC (Gulf Cooperation Council) countries and China, where business is big. Aagaard: We’re doing really well in southern Europe, despite the financial crises. The Asian markets are progressing very well. It’s stable in the rest of Europe and there‘s a little progress in the US. Buchbauer: Our own stores are doing pretty well. Latam countries deliver some very nice growth rates, some parts of Asia as well… we expect single digit growth in 2013 for Swarovski overall. In such a competitive market, and in an environment made up of wholesale, retail, mono- and multi-brand operations, keeping consumers and wholesale customers engaged can be a challenge. How did the panel reconcile these demands? Cavalcante: You have to train your staff to keep them up to speed on service levels. You also want to have the product available, which in times of rapid growth can be a major challenge. As consumers get used to mono-brand stores in almost any high street in the world, it’s a huge challenge to develop new experiences. But I’m not talking about experience for experience sake, nor digital for digital’s sake. You sometimes see these installations standing around in a store, doing nothing for consumers. Aagaard: Customers have played a big role in Trollbeads since we launched in 1976. We’re used to engaging with them. They often send us design drawings, so five years ago we invited our customers to design for Trollbeads. Last year
TOP Victoria Gomelsky BOTTOM Robert Buchbauer and Lise Aagaard
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we received 4,000 entries that were viewed by a panel of judges. One hundred designs were posted on the web, where anyone can vote on the bead designs they think should win. It’s a fantastic thing to engage with all these creative people. They get to be a Trollbead designer and they receive a lifelong royalty from the sale of their bead. Our collection has ended up being very diverse, helping our customers get what they want. Crisfield: It’s been a challenging environment, a lot of it comes from our experience with the department stores. We do a lot, and I mean a lot of painful analytics. After looking at category, price and style, we can identify the 20% of the line that drives 80% of the sales. We give the store the complete package to keep the product looking good that‘s always worked for us. Gomelsky then turned the discussion to future tech. Innovations like 3D printing represent an exciting future for jewelry design, manufacture and distribution. But what was the panel’s attitude towards technology innovations that were fresh out the lab? Cavalcante: We’re extremely archaic. We don’t use CAD, everything is sketched. We make our models in house. All our stones are randomly cut, we’ve had to train our manufacturing partners to rid them their regularity. There’s perfection in imperfection. Crisfield: We looked at 3D printing, it’s just incredible. It’s being brought together by the medical industry. In jewelry you could put something inside the device and create that piece right there in no time at all. Thinking it, making it and shipping it in the same day. Carraro: Technology is just the instrument for arriving at the dream. As I see it there are two trends in the market. The first is for easy to wear jewelry, the other is the consumer demand for strong branded entity. Technology will be important in the manufacture and combination of these two different trends: easy to wear, with impressive design. To close the discussion, and the Day One of the summit, Gomelsky wanted to know the one single jewelry industry issue that kept the panel awake at night: Cavalcante: I would say our own internal issues. The product is king, and making sure we do everything to remain in a leadership design position, thinking about the consumer and what they‘ll want in the future.
TOP Joe Cavalcante BOTTOM Bryan Crisfield
Carraro: We’re the Italian market leader in fashion jewelry, with a strong design heritage. When you go to China or Russia, you need to be global enough to catch the new consumer tastes, without diluting the brand heritage. Aagaard: We cater to different people. We have strong fans who know every story behind every bead. We also have casual collectors who follow the brand - but how do we convey everything we have in a little short message? That’s what we‘re working on right now. Buchbauer: We have a mission, which is to add sparkle to people‘s everyday lives.
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Left to right Nadja Swarovski, Iris Apfel and Deborah Lloyd
session 10 in conversation: iris apfel, deborah lloyd It’s difficult not to talk about Iris Apfel without resorting to cliche, which is frustrating as this taste-setting fashion pioneer is anything but. The exciting, and no doubt daunting prospect of interviewing Apfel fell to Nadja Swarovski, who was joined on stage by fellow style arbiter Deborah Lloyd, President and Creative Director of kate spade new york.
“I don‘t see anything wrong in a wrinkle” Iris Apfel
Summit chair Katharina Flohr introduced Apfel as “the world’s oldest teenager,” although Apfel referred to herself as a “geriatric starlet.” It might seem a little ungallant to mention the lady‘s age, but her boundless energy and enthusiasm for all things creative at 91 has to be admired, and is undoubtably infectious. This Queen Mother of avant-garde style started her career in home furnishings, and developed an interest in fabrics, working with an artisan weaver to recreate fabrics using patterns and methods drawn from a span of centuries. This partnership would eventually lead to Apfel opening a fabric shop in New York. Apfel claims that it wasn’t until the Metropolitan Museum of Modern Art dedicated a show to her style that she says she became, “Very cool, or very hot, depending on who you were.”
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In reality she has always been cool, deeply cool. Her interior design skills were called on by various wives of incumbents of the White House, and she delighted the audience with delicious but innocently indiscreet tales of phone calls from Mrs Nixon: “She calls me up and cries, ‘Iris, I got everything wrong, please get in the car and come for lunch!’”. Apfel is rightly proud of her achievements, “Being in fashion is new to me, I‘m having so much fun!” she said. “At 91 to be able to engage in new projects and fabulous career changes. I’m the oldest living broad that‘s ever graced a campaign for cosmetics.” Despite fashion being a new career, Apfel has stung opinions on the industry. “Trends are good for business, but people shouldn’t get too involved,” she explained, “Just because something is in, that doesn’t mean it’ll look good on you!” She talked of the fashion police, quoted Vreeland, and commented on how the media have frightened American women into style slavery. Applause and laughter from the audience punctuated most of Apfel’s remarks. She’s a funny lady (“It’s one of the gifts bestowed on me,”) but this is not gentle old lady humour: Her barbed wit touched upon her trademark over-sized eyewear (“All the better to see you with”) and the futility of some women trying to look like Angelina Jolie, and there was a wry comment about the current absence of summit hosts Swarovski from her jewelry show on HSN. Humour in fashion was a theme discussed by Deborah Lloyd. Not many people could share a stage with Iris Apfel, but Lloyd’s success with the witty, whimsical kate spade label, where handbag linings bear advice like ‘Eat More Cake,’ made her a natural foil for Apfel. Lloyd has taken kate spade from a handbag company to a global brand operating in five product categories. When she joined, she had one designer and a room full of interns, this didn’t stop Lloyd from creating one of the most exciting labels in the fashion and accessories industries. “kate spade is wit, whimsy and sophisticated,” explained Lloyd when asked about the brand appeal. “We have a lot of little touches that create a personal connection, like a saying on the inside of a bangle, or inside a bag. There’s so much to buy in the world, you need a personal connection to make it yours.” Top Deborah Lloyd Bottom Nadja Swarovski,
But being fun doesn’t mean compromising on quality. Lloyd countered the myth that manufacturing in Asia means sacrificing standards: “We work very closely with manufacturers in Asia. The quality is just amazing.” Lloyd was also able to share her experience of taking a brand into new markets, with fascinating anecdotes about product performance: “You have to take it slowly,” she explained, “You can assume an awful lot, but its about the nuances. There might be certain key pieces, but you have to nuance the collection around those. In China, they love a red wallet, but in Japan you can’t sell a red wallet as the colour is linked to bankruptcy, they want a yellow one!”
Iris Apfel and Deborah Lloyd
“There’s so much to buy in the world, you need a personal connection to make it yours” Deborah Lloyd
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Colin Welch in conversation with Katharina Flohr
session 11 an investor’s perspective: strategic activity in the jewelry sector The success of an industry can often be gauged by the mergers and acquisitions activity taking place within. But for investors looking to acquire a jewelry asset, there’s more than just the price tag to consider, as Colin Welch, President and COO of boutique investment bank Financo went on to explain. “The characteristics of an attractive jewelry asset include a strong brand, with clear and consistent messaging, global presence with resonance across multiple countries and demographics,” said Welch, who went on to list the importance of quality control, well executed diversification and an intelligent distribution network with an emphasis on owned stores. “Jewelry mergers and acquisitions from 2003 to 2012 were dominated by luxury and contemporary brands,” explained Welch. In numbers, luxury and contemporary brands accounted for EUR 7 billion aggregate value (2003-2012), while moderate and retail brands totalled EUR 2.2 billion.
“The characteristics of an attractive jewelry asset include a strong brand ” Colin Welch
Welch also pointed out that contemporary and luxury branded companies trade at premium valuation multiples. Beyond the numbers, Welch presented a film containing a selection of high profile M&A stories from a wide range of industry, specialist and business news sites, illustrating the high levels of activity.
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session 12 evolution of fashion jewelry As the lines between fashion and fine jewelry blur, what does this mean for the future of the industry? Haysun Hahn, Founder of Fast Forward Group, Cher Potter, Editor and Futurist at WGSN, Giles Last, Senior Lecturer at Central Saint Martins and Emre Dilaver, Creative Director at Sevan Biçakçi took to the stage on day two of the LINK Jewelry Summit 2013 to discuss how trends and technology are propelling the jewelry industry forward with speed. “The lines between fashion and jewelry are blurring”. This was an opening remark made by Potter, and one that seemed to resonate with many of the attendees at this year’s LINK Jewelry 2013 Summit. The four-way panel session took its audience of listeners on a dizzying journey that started with Dilaver’s delve into the Byzantine era and its influence on designers, and ended with talk about the role of technology in the future of the fashion jewelry market. At several points throughout the two days the synergy between fashion and jewelry had been woven into speaker presentations, and now in this penultimate panel discussion, the very crux of the matter was brought to the fore.
“Where once we saw two collections a year, now we might see twelve” Cher Potter Fashion and jewelry have always certainly been close allies, and in modern times with both constantly chasing innovation at break neck speed they are forging a closer relationship than ever. “Where once there were two collections in fashion per year, now we might see twelve,” says Potter. “We live in an era of micro trends – and that’s true for both the fashion and jewelry industries.” “Fashion can enrich the jewelry industry and we’re also seeing hunger and appetite from designers to take out the seriousness and make things more fun,” added Giles, making his case for the rising success of the fashion jewelry market. “Creativity too can happen without threatening established brands. The important thing is to invest in the right look and shape and to be brave. Step into the unknown and think outside the box.” The presentation of jewelry has always been quite traditional and at the fine end of the market will forever remain so – any consumer spending upwards of thousands on a precious piece is likely to want to see and feel and touch the product first. But at the fashion end of the market, technology is playing a pivotal role in helping to market the merchandise. Web technology allows the consumer all kinds of options now – from being able to rotate an image of a stone by 360 degrees to get a ‘feel’ for it, to being able to virtually try on pieces. “This is where digital is breaking the barriers and making jewelry more accessible. The technology is creating a whole new era of visual merchandising,” said Potter.
TOP TO BOTTOM Cher Potter and Haysun Hahn BOTTOM IMAGE LEFT TO RIGHT Emre Dilaver, Haysun Hahn, Giles Last, Cher Potter and Katharina Flohr
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session 13 sustainability and the jewelry industry: is all that glitters green? Consumer demand and expectation for sustainably sourced and responsibly produced jewelry is increasing. So how should the jewelry industry be incorporating sustainability and corporate responsibility into its planning and management? David Mayer de Rothschild, British adventurer, environmentalist and Head of Sculpt the Future Foundation led an invigorating panel discussion on day two of the LINK Jewelry Summit 2013.
“We have become obsessed by using nature as a marketing tool instead of a life support system on this planet” David Mayer de Rothschild Introducing the session, de Rothschild got straight to the point that environmentalists had done a bad job when it came to sustainability. Pressure is on especially for the jewelry sector to be seen as responsible because it is an industry that depends on the extraction of a finite supply of materials from the ground. Greg Valerio, Co-Founder of Fair Jewelry Action was first to discuss his take on the topic, taking issue with the language. “I don’t actually like the word sustainability itself,” he explaing, “I think it can be interpreted in too many different ways. Of course I agree with the essence of it. Sustainability as a concept is important as it connects us to the world. We only have one planet and if we consume everything on it we’re in trouble. Our industry depends on extraction so if we use everything up then what do we have left?” On the subject of blood diamonds, Valerio was candid: “Of course in places like the Congo this issue exists. Gold is extracted, sent to China or Dubai for manufacture and then goes back to America to be sold as a luxury item. This supply chain is not sustainable, and its something we must put right.” Claus Teilmann Peterson, Vice President and Group CSR at Pandora agrees, but added the difficulty for the industry to be, or even look accountable, even when jewels are manufactured in a more sustainable fashion. “We produce things that everyone wants but nobody actually needs,” he points out. “Our actions have impact, we make the world a more pretty place and we have to accept this as a fact and just be as responsible as we can”. Valerio believes that the industry needs to own up to what it doesn’t know. “I am just honest with my customers, I will tell them if I do not know where a diamond comes from and I will strive to find that information out. The right thing to do is to question your whole supply chain.”
TOP David Mayer de Rothschild BOTTOM Greg Valerio
“We only have one planet and if we consume everything on it we’re in trouble” Greg Valerio
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A problem still lies in jewelry companies believing that doing this is costly. But Valerio believes that a pound of truth is worth a million pounds of PR: “When I started out as a jeweler 20 years ago I didn’t have any money, I didn’t have a big marketing budget or a big PR company behind me. I didn’t have corporate stakeholders to worry about either.” Valerio describes how he and others had to plumb “the dirty world of gold” to get back to reach the small scale miner and build the supply chain coming back up. “You don’t need millions of dollars to do that – that’s what the bankers tell you because they want to charge you interest on the money they’re going to lend you,” he says. If not a costly process it can be a difficult one. “Supply chains, particularly for larger firms are often fragmented”, says Bernhard Pleschko, Executive Vice President of Manufacturing at Swarovski. “Often the person we buy from is buying from someone else and so on – but at the end of that chain there is always a gold mine. It is our job as an industry and as ethical people to make that chain transparent.”
“It is our job as an industry and as ethical people to make that chain transparent” Bernhard Pleschko
LEFT TO RIGHT Katharina Flohr, Bernhard Pleschko, Greg Valerio, Claus Teilmann Petersen and David Mayer de Rothschild
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Richard Saul Wurman
session 14 keynote: richard saul wurman Rounding off the two day agenda was Richard Saul Wurman - architect, designer and founder of infamous ideas network, TED. Once described by Fortune magazine as an “intellectual hedonist with a hummingbird mind,” Wurman treated link delegates to his languid and off-the-wall style of storytelling. But storytelling is what his session was about, together with the “flipside to every story.” Wurman kicked off his session by driving home the importance of embracing the unexpected. Illustrating his speech with examples of flipside benefits of famous historical events – such as how the Black Plagues of Europe helped kick-start the Rennaissance. “Creativity is the opposite of expectation,“ explained Wurman, who founded the famous TED conference to celebrate the creativity in technology, entertainment or design. He said “I love stories - they‘re about how change happens, and it happens constantly.”
“Creativity is the opposite of expectation” Richard Saul Wurman
Wurman shared his views on creativity and change, how to best understand the rapid changes in Information Technology, as well as his unique formula to achieve genuine innovation. In Wurman’s view, Innovation = ANOSE (Addition, Need, Opposites, Subtraction and then Epiphany). Wurman also addressed the issues of needs and desires, a subject much discussed at in other sessions. “There‘s a fundamental difference in life between need and desire,” said Wurman, “and everybody here is in the desire business. I think desire is more important. Needs should be taken care of. We don‘t need to talk about needs.”
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memories, dreams and reflections
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the summit in numbers
12 presentation hours
300
the industry in numbers
45 % of delegates who predict a 2-5% increase in manufacturing/ sourcing costs
delegates
62
38 speakers on stage
% of delegates who predict growth rate of over 10% for online channels in next year
1080
44
steps climbed by each delegate during the summit
% of delegates saw Innovation as the most important core competency for success in the international jewellery marketplace
7 Languages translated
44
40 % of jewelry market that will be branded by 2020
Nationalities attending
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THANK YOU A note of thanks from Swarovski and the International Herald Tribune for your sterling efforts in making LINK Jewelry Summit a success. Without the impressive behind-the-scenes organization, the speakers who gave their time to address us on important subjects, and the delegates who contributed to mapping the future of the industry, we would not have had such a stimulating conference. With best wishes.
CHARITY LINK Jewelry Summit and Swarovski are proud to have helped raise €10,707 through their donation campaign in support of the “Life is about Learning” program. This initiative is organized by the globally active children’s charity, SOS Children’s Villages, whose patrons include Angelina Jolie and Brad Pitt. Instead of receiving commemorative gifts, delegates have generously donated to this program, which provides destitute children with the education they need to shape our future. For every donation made, Swarovski has added to it. A sincere thank-you.
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Press inquiries Organized by
Swarovski is the world’s leading producer of precision-cut crystal. Founded in 1895 by Daniel Swarovski, the company is family-owned and run by fifthgeneration family members, with a presence in 120 countries. Throughout its long history, Swarovski has been the designers’ choice across fashion, jewelry, and accessories, as well as interiors, lighting, and architecture. Leading the way with groundbreaking innovations, Swarovski has raised the bar with its industrial research and development. SWAROVSKI ELEMENTS is the premium brand for the finest crystal elements manufactured by Swarovski. The designers’ choice since the founding of the company in 1895, the brand provides creative talents from fashion, jewelry, and accessories, as well as interiors, lighting, and architecture, with a palette of inspiration and on-trend innovation. For press enquiries, contact Katharina Pretzl at: katharina.pretzl@swarovski.com For general enquiries, email link.jewelrysummit@swarovski.com
Organized by
The International Herald Tribune is the global edition of The New York Times. It has been organizing market-leading events for over thirty years. Conference agendas are developed with input from the newspaper’s award-winning editorial team and in consultation with industry experts and respected partner organizations, around balanced, thought-provoking, and intellectually rigorous formats. Distinguished speakers have included heads of government, CEOs, senior policy-makers, leading academics, and IHT journalists. For press enquiries, contact Vicky Taylor at: vtaylor@iht.com Tel: +44 (0) 2070 613 520
Photo courtesy of Juergen Hammerschmid, Editor: Mark St. Andrew Text: Mark St. Andrew, Claire Weekes ©International Herald Tribune and Swarovski, 2013 www.linkjewelrysummit.com post report
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