Opinion

What’s next for Jimmy Choo after the Michael Kors acquisition?

As the high-end handbag brand joins forces with the iconic shoe designers, Landor APAC's Nick Foley examines the best way to maximise brand synergy and identity

There’s been a significant buzz in financial circles, recently, following the takeover of Jimmy Choo by Michael Kors. It is understood the North American retailer paid out US$1.2 billion to acquire the luxury shoe brand once renowned for its cameo appearances in HBO’s iconic series Sex and The City.

Given the stagnant performance of Michael Kors in recent years, seeking growth through acquisition is not an unusual approach. From a branding perspective, the key question is whether the fit between Michael Kors and Jimmy Choo is right?

With JAB Holdings having now divested the Jimmy Choo brand from its portfolio, its new custodians will quickly need to determine what type of brand architecture will yield the greatest return on Michael Kors’ investment? In its simplest form, the decision is whether to pursue a multi-brand or monolithic brand strategy?  Sound complicated?  It’s not.  

Monolithic or multi-brand?

In this day and age of start-ups, mergers and acquisitions, marketers are increasingly tasked with managing a variety of different brands and offers. If a company focuses on one single brand, then this is known as a monolithic brand strategy. Think Johnnie Walker or BMW.  Effectively, one brand stretching across a number of different segments. When a company opts to have a variety of brands in similar segments and categories, this is known as a multi-brand strategy. General Motors exemplifies such an approach, managing multiple brands including Chevrolet, Vauxhall, Pontiac, Holden, Hummer and Cadillac.

When contemplating what the new owners of the high-end, luxury shoe brand will do, the actions of previous owners should be top of mind. It may come as a surprise to some of Jimmy Choo’s patrons that the couture shoe designer exited the company quite a while ago – 2001, to be precise. Since then, the Jimmy Choo brand has had a few owners. Anecdotally, it seems that many of Jimmy Choo’s well-heeled patrons are not aware he ceded direct involvement with the fashion icon back in 2001. This suggests subsequent owners have successfully deployed a ‘multi-brand’ strategy resulting in the brand’s perceived independence.

The option to endorse

What makes the Michael Kors deal so interesting is whether the temptation of ‘endorsement’ will prove too great for the brand’s new owners? When such an approach is activated, a brand’s owner is seeking to maximise the synergy between two relatively disparate brands. Traditionally, endorsement has occurred when the parent company has made its name visible on a brand that previously existed independently. Think Kellogg’s Special K or Mercedes Maybach.

How Michael Kors may choose to endorse, or co-exist, with Jimmy Choo is no doubt a key topic of discussion within the company’s headquarters at West 42nd Street, New York. With a deal such as this, a high-end brand like Jimmy Choo is unlikely to benefit from endorsement courtesy of a more mainstream brand like Michael Kors. The focus, then, is likely to be how the venerable Jimmy Choo brand may stretch across some of the products currently within the Michael Kors stable of offerings.

Let the brand be

An Australian bushman, who went from swagman to millionaire by creating a bespoke, high end range of riding boots might act as a useful analogy to the marketing team at Michael Kors when considering how Jimmy Choo could best be managed. Reginald Murray Williams, better known as ‘R.M’, started a leather saddlery business in South Australia back in 1935. As time evolved it became apparent that the cobbler from the bush had a real knack for crafting high quality, handmade, leather riding boots.  R.M sold his business in 1988 and it has been passed through a couple of different owners. In April 2013, 49.9 per cent of the business was sold to L Capital, the private equity arm of LVMH.

No doubt, the marketers at L Capital have been tempted to use the RM Williams brand as a portal for its other brands and products. Instead, the brand has been left alone and its distinctly independent DNA remains. So far this approach seems to be working, with the premium price tag on RM Williams branded goods still intact.

Resisting cost rationalisation

Aside from brand integration options, the finance department at Michael Kors could well be excused for looking at its latest acquisition and wondering where ‘savings’ could be made through manufacturing and back-of-house synergies. This could be risky. Between 1990 and 2008, the Ford motor company learnt a difficult lesson when it acquired the British luxury marque, Jaguar.

While Ford’s marketing team never sought to incorporate the Jaguar brand under the Ford masterbrand, significant damage was done to the Jaguar brand as a result of Ford sharing componentry with its new acquisition.  Consumers quickly figured out that the Jaguar X type was little more than a trumped-up version of the Ford Mondeo and not worth the premium being charged by the brand’s new owners on the CD132 shared wheelbase platform. During the time Ford owned Jaguar, other reductions in quality also occurred and, eventually, the brand was sold to Tata Motors in March 2008.

Where to now?

Over the next year will it be interesting to observe how Michael Kors chooses to maximise its return on the company’s investment in Jimmy Choo. Michael Kors would do well to take some time in understanding how other companies treat newly acquired entities. Regardless of the ownership structure, the charter for successful brand management doesn’t change.

When wondering just what to do with the brand of Jimmy Choo, its new owners should stick to some fundamentals. Namely, keep the offer relevant to its target audience, keep the brand distinct from the competition and continue to earn the trust and esteem of loyal customers. Given the brand’s history, innovation must underpin its new season range. The greatest synergy and upside of being owned by Michael Kors will stem from activities not directly associated with the brand.  Better distribution models, effective inventory management, buying-scale and a greater focus on e-commerce are logical areas to focus when seeking to increase revenue and profit in Michael Kors niche fashion investment. Failing that, I’m sure a guest appearance by the famous shoes on a future sequel of Sex and the City may be a savvy contingency.

Nick Foley is the president of South East Asia, Pacific and Japan for Landor

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