CEO Letter | What will Walpole do for you? A look ahead to what 2018 holds for British luxury
Last week I wrote to you to review Walpole’s 2017; today I set out Walpole’s goals and priorities for 2018 – and how you, our members, can help play a key role in what is set to become a defining year for the British luxury industry.
But first: a week ago today we thwarted ‘Blue Monday’ with a marvellous dinner for Walpole’s Chairmen and CEOs in the elegant surroundings of the Rosewood London. I was delighted to welcome over 130 leaders from across Britain’s luxury sector to the event, as well as special guest Carolyn Fairbairn, Director General of the CBI, who said in her letter to business as 2017 closed: “we should be under no illusion about the scale of heavy lifting needed in 2018.”
I agree with Carolyn; 2018 is set to be the most important year for the UK economy this century, and aligning with the CBI is a pivotal move as we press on with our determination for luxury to be recognised as the jewel in the crown of British business. While there are many uncertainties when it comes to our future trading relationships and place in the world, with great disruption comes great opportunity and I truly believe British luxury can be at the vanguard of all that is good about this country.
Just eight weeks ago at the Walpole Awards I stated that 2017 had been a vintage year for British luxury, and the latest Bain study from Altagamma found that the global luxury sector grew 5% on 2016 to nearly €1.2 trillion last year. The business context for luxury is strong, but we must ensure Britain’s luxury sector thrives and grows as fast as its European equivalents.
So what will Walpole do on your behalf this year to meet this ambitious goal?
78% of what’s produced by the British luxury sector is destined for export, but buying luxury in Britain is a huge draw for overseas visitors too. Our sector has the extraordinary power to promote Brand Britain throughout the world and with the Brexit focus shifting from divorce bill to future trading relationships, it’s crucial we use this opportunity to showcase our strengths, and maximise the opportunities for export growth. We’re asking two key questions – what can luxury businesses do to contribute to their own trade success and what can government do to help.
Trade relationships cannot be unpicked from Brexit – we are working with our counterpart luxury associations across Europe – the ECCIA – to engage them in the shared responsibility. When it comes to trade, not only are many British luxury businesses in European ownership, Britain is a huge export market for the biggest European luxury brands so we can work together to bring pressure from both sides. In June, the second European Excellence Summit takes place in Madrid – this convenes European luxury CEOs and I’d like a strong contingent of Walpole CEOs to join us to show our commitment to the European relationship.
When it comes to Brexit, our recent study confirmed that your initial concerns still remain, and there are many questions about the nature of the Brexit we will end up with. I’m sure you’ll find March’s breakfast with Keir Starmer, Shadow Secretary of State for Exiting the European Union, extremely thought provoking. I also want to offer you a bit of positive data – in Walpole’s December Brexit study – 70% of members felt that exports to Europe would either increase somewhat or there would be no discernible change. Of course, there’s quite a lot to sort out to make sure that actually happens.
We will develop and build upon 2017’s hugely successful inaugural trade mission to the US; it’s such an open door that there is everything to be gained from keeping the focus on the world’s biggest luxury market this year and into the future – let’s make it even bigger, even better and show that British luxury means business.
LUXURY IN THE MAKING
Crucially, the things we export are made in Britain and we are the only sector of the UK economy for which it’s customer critical to manufacture in the UK. British made is beautiful, clever, creative and something that people believe is worth an often substantial price premium. Nearly two thirds of respondents to our latest Brexit study said that more than half their total manufacturing was in the UK, with plans to increase production, to onshore your businesses, to invest in skills and jobs.
London has always been luxury’s shop window, but its engine room is entirely national – Staffordshire, Devon, Dorset, the Midlands, County Londonderry, Speyside – everywhere you turn there’s a luxury business confounding the received wisdom that Britain has no manufacturing base. And not just conventional manufacturing but making in its broadest sense: creating exceptional experiences in the hospitality sector, and extraordinary innovation in technology that drives growth in some of the newest luxury businesses.
However, one of the challenges we need to resolve is the skills emergency; it has long been difficult to recruit young people into making jobs, and 79% of you believe the gaps will be harder to plug in a post-Brexit Britain. What can we do? Firstly, we will put member companies into schools to discuss the opportunities that exist for students – it’s a light-touch, long-term approach but research shows it will have impact down the pipeline. Secondly, we know there are problems with the government’s apprenticeship scheme; while we applaud the intention, the execution is unhelpful when it comes to apprenticeships for making skills. We have already begun gathering case studies to take forward, and I look forward to sharing more with you in person.
An analysis of apprenticeships and making skills is just one iteration of Walpole’s long-term commitment to developing luxury talent and the sector. On Thursday 8th February we will announce the new cohort of Brands of Tomorrow; for 11 years this programme has helped ensure a pipeline of economic growth for the sector – with established brands sharing their skills and experience with fledgling ones, as well as the reverse mentoring effect: brands created during this time of great disruption have some interesting lessons for heritage brands too.
Walpole’s Programme in Luxury Management at London Business School – nurturing the C-Suite of the future – has found a new chair in Diageo’s Nick Temperley and a new take on the programme with senior leaders in the sector sharing the secrets of their successes. A huge thank you to former Chair Mark Henderson for steering the programme to such success.
Our Women in Luxury programme – new for last year – will be taken to the next level during 2018. We are delighted to appoint Meribeth Parker as Chair as we prepare for two huge moments this spring: next month we celebrate the 100th anniversary of women getting the vote, and secondly, in April, companies with more than 250 employees must reveal any gender pay disparities. When we conduct our crucial and wide-ranging membership study at the end of next month we will not only look for data on export, manufacturing and skills in the luxury sector, but also asking questions about this issue too.
Finally, we will celebrate our Crafted: Makers of the Exceptional alumni and mentors with a special dinner later this year.
QUANTIFYING THE POWER OF BRITISH LUXURY
Before I sign off, I want to highlight the single most important thing Walpole will do for the UK luxury sector this year – and it requires your commitment to get the recognition it deserves. I mentioned earlier that the global luxury market is worth €1.2 trillion. You will have heard me say, time and again, British luxury is worth £32.2 billion. But this data is four years old. That same study said British luxury would be worth £50 million in 2019 and we urgently need to invest in new research to accurately determine the true worth of our sector. More will follow on this crucial issue, and I look forward to discussing this with you in detail soon.
British luxury is unique. It’s a magnificent example of the best that we can achieve in this country. If this is the most important, the most pivotal year for Britain in a generation, we must be bold. We must be confident. We must be audacious. Together luxury can and will show the world that Britain is truly great.
HELEN BROCKLEBANK, CEO OF WALPOLE