The Economic Impact Study also forecast that this strong growth trajectory should continue, despite the impact of Brexit, estimating that British luxury could achieve a value of £65b by 2024.
The subsequent launch of the British Luxury Sustainability Manifesto in January 2020, outlined the long-term commitment of British luxury brands to their important role as custodians of people and planet: the stage was set for a buoyant and exciting future for the sector.
Walpole travelled to Brussels at the end of January, just before the UK’s official exit from the European Union, to meet with ECCIA colleagues and presented another substantial piece of research – a pan-European evaluation of the luxury sector, conducted by Bain, and demonstrating the highly integrated nature of luxury across continental Europe and the UK. It was at this moment that the impact of coronavirus on the all-important Chinese customer (both in market and from travellers) was making itself felt. Key brands including Burberry reported sharp falls in sales in Greater China.
Less than two months later, with international tourism sharply curtailed by the spread of the pandemic, the PM announced the UK’s lockdown, and with it the closure of all non-essential retail and hospitality – the twin engines of the British luxury sector, thrusting the sector’s growth into reverse.
As I write this in June 2020, and pause to reflect on this projection in light of all that has happened to our sector and our country in the last few months, it’s clear that the economic consequences that come with such a serious crisis will bring exceptional challenges for the foreseeable future. When I look ahead to next year’s AGM, I hope we will be able see the green shoots of recovery in what has always been a resilient, creative and entrepreneurial sector. In the meantime, it’s important to look back at 2019 to remind ourselves of the exceptional achievements of British luxury and of the strong foundations on which it is built. Add to that a commitment to sustainability and the lessons of an accelerated focus on digital, and the opportunity is there for our sector to build back even better.
Above all, I want you to know that Walpole’s resolve to do all it can to bring British luxury together to rebuild and recover has never been stronger, as we work collectively to realise that vision to make the UK the best place in the world to grow a luxury brand.
When I joined Walpole as CEO in February 2017, my priority was to secure the long-term financial stability of the organisation, both in terms of building back the reserves and in cash in the bank. This was to enable the organisation to withstand shocks and also to give Walpole a secure platform on which to build Phase 2 of its work on behalf of its members. In 2019, Walpole was able to commit twice as much to the reserve as it had the previous year and to double the cash in the bank. The impact of the crisis had already, by the end of March 2020, demonstrated the wisdom of prioritising Walpole’s finances. More than three quarters of our funding comes from members (primarily annual fees, but also advertising in the Yearbook and other discretionary activities), underpinning Walpole’s purpose: to work on behalf of our members to promote, protect and develop British luxury. In 2019, we were delighted to welcome new members – including Lock & Co, founded in 1676, and Black Tomato founded 15 years ago - as well as supporting our existing ones. Our membership has grown by 68% over the last three years and now sits at 270 member businesses, from the internationally recognised brands like Harrods, Burberry and Rolls Royce, to exciting emerging talent, like Flowerbx and Charlotte Tilbury, as well as inspiring family businesses and SME’s and Brands of Tomorrow Alumni. To be a Walpole member means to be one of the very best brands in Britain.
Our strategic partners and sponsors also play a crucial role, contributing expertise and insight as well as supporting Walpole financially. Our long-standing relationship with Mishcon de Reya continues to grow, and their support for Brands of Tomorrow has been central to the success of the programme. MoneyCorp joined us in January 2020 as co-partner of the programme and it is to their great credit that they offered hands on support and advice for the 2020 Brands of Tomorrow cohort as soon as the pandemic began, working with new Brands of Tomorrow Co-Chairs Balthazar Fabricius and Chris Downham to do all that was possible to support our most vulnerable fledgling brands.
Walpole is more than a trade body – it’s also a unique, closely connected and collaborative community of brands from a diverse spectrum of business sectors who share a common customer and common values. Bringing this community together is central to Walpole’s offer, and in 2019, we sought to further enhance our member events and experiences. We hosted 47 events between April 2019 and March 2020. These included the second year of the Future of British Luxury Summit in February 2020, as well as a number of insight workshops and masterclasses to help develop the knowledge base of our members; we developed our Women in luxury programme with four events designed to contribute key soft skills as well as building a network within a network; we built on our regional chapters with four events in Scotland, hosted at Gleneagles; and introduced two new events – the annual Walpole Power list, celebrating fifty of the memberships most influential individuals, shining a light on the talent in the sector, and a monthly member social, designed to create an informal space for members to network and collaborate.
Walpole also introduced the luxury strategy working groups, formed of CEO’s from across the full spectrum of Walpole membership, to inform the strategy for Walpole’s work to strengthen and support the sector post Brexit. Together we established two strategic pillars for 2020 and beyond: Sustainability and International Trade. We began work with McKinsey to create the British Luxury Sustainability Manifesto (published January 15th 2020): this brought together a common mission for the sector with the goal of making British Luxury the global benchmark for luxury sustainability. Sustainability will become as important a signature of luxury as craftsmanship, and the Manifesto is the first stage in a long term piece of work for Walpole and its members. Our second pillar, International trade, reflects the importance of export and international visitors to the sector, and includes the work we do with government and stakeholders – not least the representations we made around the impact of Brexit on export and also on access to international talent – and the insights from the Economic Impact Study were invaluable in giving evidence based submissions to the various government roundtables. It also became enormously important when the US announced new, punitive tariffs on luxury goods in response to the Airbus/Boeing dispute with the EU. These disproportionately affected the British luxury sector – cashmere in particular - and our work on this in Westminster, and with ECCIA colleagues in the EU, is ongoing.
In addition to doing what we can to make sure there is the right policy framework so Walpole brands can maximise their overseas trade, we have also continued to build on our practical support to members. With the US accounting for 23% of total British luxury exports, last year saw the third year of our New York Trade and Media Mission, with an added focus on British luxury hospitality and inbound tourism from the US, complementing our work on members exporting products to that market. We also continued our work to support members in smaller yet lucrative markets like Korea and the GCC, and added a new stream of work to help brands use digital to connect with Chinese luxury consumers. China is a small export market for British luxury (11% of exports) but 33% of luxury sales in the UK are to Chinese visitors, so promoting the appeal of the sector is key.
2019 established a strong foundation for Walpole’s work: whilst the impact of the COVID-19 crisis will mean our work will change and increase in complexity, the collegiate spirit of the community, the resilience of the sector and the commitment of Walpole to supporting its members will see as swift a return to strength as possible
CEO, Walpole, June 2020