Business Model

 

Jimmy Choo has the merchandising, design, supply chain, communication and retail skills and assets to outperform in this attractive and complex category by superior execution. Jimmy Choo has a strong position in the luxury shoe market, being one of a very small number of luxury shoe specialist brands with the requisite scale to compete globally.

DEDICATED AND EXPERIENCED MANAGEMENT TEAM

The Group is run by a passionate and dedicated Senior Management team with a degree of focus on execution which we believe can only be achieved by a pure play luxury goods company.

The Senior Management team is highly experienced, with a long and successful history of working in the luxury goods sector. The team is led by Pierre Denis, CEO, who joined Jimmy Choo in 2012 with more than 25 years of experience in the luxury industry and a deep knowledge of Asian markets.

LEADING DESIGN TEAM THAT DRIVES PRODUCT AUTHORITY

Jimmy Choo’s design team of 15 is led by Sandra Choi, who has been Creative Director for the brand since its inception. Jimmy Choo’s design team has a proven track record of developing Sandra’s conceptual visions into beautiful products multiple times each year through a structured process encompassing line plans, designs, prototypes, edits and pre-launch samples.

Jimmy Choo’s design team is at the forefront of the industry in terms of its ability to interpret fashion trends. This provides clients with a very broad product range that addresses all categories and functions of the luxury shoe offering, including evening, day, catwalk and boots and the full spectrum of client tastes.

MERCHANDISING EXCELLENCE

Jimmy Choo’s merchandising model is designed to nourish the brand through innovation and to drive footfall through the timely delivery of fashion-forward products, underpinned by a continuative core of iconic products which are continuously reviewed and refreshed. The product calendar is managed in order to create a structured flow of new products into our DOS and multibrand networks which drives editorial focus, footfall and conversion into sales. The calendar is based around multiple collection drops each year, with the continuative core Choo 24:7 collection complementing the seasonal offerings. 

 

Designing successful collections and managing the complexity of multiple collection drops each year relies upon the seamless interaction, integration and cooperation between Jimmy Choo’s merchandising, design, supply chain, brand communication and distribution teams. The success of this collaboration is shown in Jimmy Choo’s track record of offering a considerable depth and breadth in its collections, across multiple functions, heel heights, materials, sizes and colours. We have also been able to leverage our expertise to replicate this model across our Accessories offering.


BESPOKE SUPPLY CHAIN FOR PRODUCT EXCELLENCE

Jimmy Choo operates a lean and flexible supply chain, outsourcing production and logistics to gain flexibility and speed in bringing products to market. Those elements which protect the brand are owned and managed by Jimmy Choo, including vendor liaison, engineering assurance and product development which are managed through Studio Luxury S.r.l.. Jimmy Choo produces well over one million units per annum in its supply chain. Materials research and sourcing, product development, engineering, production planning and control, quality assurance, as well as customer service and after sales are all controlled by Jimmy Choo.

In order to produce luxury shoes with a high quality finish, Jimmy Choo partners with suppliers with the specific skill sets to match each particular shoe style. Accordingly, Jimmy Choo’s products are produced by specialists in the Florence and Veneto regions of Italy, with the exception of espadrilles which are made in Spain. In addition to providing specialist skills, this multi-supplier strategy provides scalability, flexibility and speed to market, as well as diversifying risk. This model enables the Group to drive gross margin improvement through early deliveries of new collections and inventory control, resulting in lower markdowns.

Jimmy Choo’s online infrastructure was relaunched in November 2013, with a new, flexible and powerful platform to enable the roll out of online sites in new countries, while retaining a core backbone to deliver excellent customer service. In August 2015, this was further upgraded to a fully responsive site to leverage the growing proportion of mobile use (mobile telephone and tablet) which paves the way for the progressive Omnichannel roll out starting in 2016. The Jimmy Choo online store represents Jimmy Choo’s largest single DOS within the retail segment.

More importantly, our online presence provides a powerful route to engage with new potential clients and for clients to begin a purchase process which may be completed in one of Jimmy Choo’s boutiques. As Jimmy Choo invests in supply chain infrastructure to move towards an integrated Omnichannel model, we will increase the integration of the online platform with the retail channel.

We are already starting to see the benefit of the investment in our systems and logistics. During 2015, we moved to a new central Swiss warehouse and implemented SAP. We are largely past the transition period and are now starting to leverage this investment so that we can enhance product availability and improve inventory management. We see this as being largely a product of our Omnichannel initiative, which is a key leverage project for the investments we have made. This leaves just one region for SAP implementation in 2016 at which point our SAP landscape will be complete.

360° COMMUNICATION STRATEGY FUELS THE BRAND

Jimmy Choo’s status as a globally recognised luxury brand is a result of our entrepreneurial and dynamic approach to brand communication. The Group applies an all-encompassing brand communication strategy which includes celebrity placement, editorial and digital influencer engagement, product advertising (in both digital and print media), launch events and store layout and display.

We adopt this approach for all our new product launches and our success has resulted in Jimmy Choo currently being the top ranked brand globally in editorial for luxury women’s shoes. At the end of December 2015, we enjoyed a very strong social media following, including over 11m YouTube views during the year and now with a total of 3m Instagram followers, which are our two fastest growing channels. We have continued to enjoy global recognition for our high profile product placements, most notably at the Oscars when Anna Kendrick and Neil Patrick Harris lyricised in the opening number about Jimmy Choo, as well as in other productions such as “Empire”, the television series. This builds upon the proven success and penetration of the brand and key products in “Sex and the City” in 1999 and more recently in the Korean series “My Love from the Star” which has elevated the brand significantly throughout Asia.

We also enjoyed a very high profile success following the involvement of Sandra Choi in the design of the Jimmy Choo take on the Cinderella shoe. The shoe was famously worn by Lily James to the film’s première in Berlin and subsequently featured in selected locations around the world, attracting orders for many hundreds
of pairs.

After increasing significantly until 2013, Jimmy Choo’s brand communication spend has now settled at an appropriate level, being 4.7% of revenue in 2014 and 4.9% in 2015. This level of spend has allowed us to retain our position alongside our larger luxury brand peers. This is a level of spend as a proportion of revenue which is within appropriate parameters for a leading luxury shoe brand.

MULTICHANNEL DISTRIBUTION MODEL

Jimmy Choo has successful and effective distribution networks with significant opportunity for expansion. In addition, Jimmy Choo benefits from having a balanced multichannel distribution network with our retail DOS network at the core.

Jimmy Choo has a particularly strong presence in EMEA, USA and Japan, with a growing footprint in the rest of Asia. The Group has experienced strong growth in recent years across all of these markets. 2015 has seen the continued transformation of our DOS network with the opening of 13 new DOS, conversion of three franchise stores in Singapore and Malaysia into DOS, the roll out of our New Store Concept and the ongoing comprehensive renovation programme of our existing portfolio. By the end of 2015, we had 141 DOS, of which 30% are now in the New Store Concept. See page 15 for the progress we have made in our retail network.

As part of our DOS strategy, the Group continues to invest significantly in its online platform, which has experienced strong revenue growth in recent years. This year was no exception with the introduction of the new responsive website in August 2015, designed to capitalise on the growing trend of shopping on mobile devices. This investment, together with the broader investment in the supply chain, is expected to lead to the progressive roll out of our Omnichannel client offering starting later in 2016.

The Group continues to benefit from our strong multibrand distribution offering, which provides attractive economics and acts as a lead indicator of collection success and as a benchmark against competitors. The Group’s franchise channel acts as an important entry model into new markets. These serve as a potential springboard to expanding the DOS network once the new region has become established, exemplified during the year by the conversion of three franchise stores to DOS in Singapore and Malaysia.