Fred chief executive Charles Leung unpacks the jewellery brand’s strategy in an exclusive interview with Vogue Business. Think Tmall, TikTok and Pretty Woman.
It was the first jewellery brand acquired by LVMH back in 1996. Now, Fred, founded in Paris in 1936 by Fred Samuel and best known for its Force 10 bracelet with a buckle and cable inspired by sailing, has emerged as an unexpected winner during the pandemic.
As highlighted by the blockbuster acquisition of Tiffany & Co. for $15.8 billion late last year, LVMH has major ambitions in hard luxury. With a portfolio including both Bulgari and Tiffany, LVMH is gaining ground on Richemont, owner of Cartier and Van Cleef & Arpels.
LVMH is also driving forward Fred, a considerably smaller jewellery brand but one that enjoyed growth in the “nice single digits” in 2020, according to chief executive Charles Leung. That’s quite a performance. Jewellery, albeit among the more resilient categories in luxury, was expected to plummet by 15 per cent in 2020, according to a Bain & Altagamma study published in November.
Although LVMH does not disclose numbers for its individual houses, Fred is understood to have generated around €100 million in sales in 2020, according to our sources. Overall, LVMH’s watches and jewellery division ended 2020 down 23 per cent, at €3.36 billion.
“LVMH is focusing on jewellery as a whole,” Leung says. He notes LVMH’s long-time commitment to Fred — Dominique Watine-Arnault, late sister of Bernard Arnault, was president of the brand. Despite its relatively small size, Fred has a significant role to play in a LVMH jewellery portfolio that also includes Chaumet and a majority stake in Repossi. “I think Fred is a very interesting case at LVMH for a lot of tests, to try different things,” Leung says. “Including having an Asian CEO, I guess.”
Born, raised and educated in Hong Kong, Leung studied at ESSEC Business School in Paris before returning to Hong Kong with Cartier. He then moved to Chaumet where he worked for 12 years. He was appointed CEO of Fred in late 2018. “With 25 years in the jewellery industry, in a way I have collected a lot of miles. I am a platinum member,” he jokes. The brand’s vice president and artistic director is Valérie Samuel, the founder’s granddaughter.
What did the brand get right to outperform the market? One smart move was entry on Alibaba’s Tmall in China in April 2020 — the only LVMH-owned jewellery brand to join the platform (Cartier, Piaget, Chopard and Qeelin also have a presence). “Tmall is not only e-shopping but also an information platform, like a digital magazine but with a shopping function. It helps a lot at the stage where we try to expand and recruit new customers in China,” Leung explains. Within less than a year, Tmall has emerged as one of Fred’s top five stores in China.
The jewellery industry in general is playing catch-up in e-commerce by comparison with other categories such as apparel and beauty. At Fred, e-commerce globally still represents no more than a low single-digit percentage of its overall sales.
However, growth is now rapid — or “really crazy” as Leung colourfully puts it. Likewise, China growth. Overall, the country represented less than a quarter of Fred sales in 2020 but expansion is rapid. Besides Tmall, some 18 new stores are expected to open in China by 2024, pushing the total store count in the country to 30.
Investment in the US market is still two to three years away. “We are concentrating on developing Asia first,” Leung says. A store is set to open in May in South Korea, another booming market.
The emergence of a new jewellery consumer is boosting Leung’s efforts. “More and more young people are buying jewellery; that helps us,” he says. “That’s what’s interesting about Fred’s positioning.”
Fred has not relied heavily on bridal jewellery, a clear positive during a pandemic blighted by wedding postponements worldwide. The brand is also looking closer to home, with the targeting of locals in France a priority. Retail sales to French nationals were up 12 per cent in 2020, supported by clienteling.
As in all sectors, sustainability has emerged as a priority in luxury jewellery, with rising demand for the likes of synthetic diamonds and recycled gold. “We are aware of the market trend but we represent a tradition so we have to do it carefully,” Leung says. That said, he notes how founder Fred Samuel embraced innovation in his time — he was the first to introduce cultured pearls to France. Does Fred have a modern-day equivalent to offer? “We are actually thinking about different gold (but not synthetic) diamonds. The energy used to create that is also considerable,” says Leung. “I think what is important is that our mining and partners respect the criteria imposed by the EU and the Responsible Jewellery Council.”
Growing the offer beyond Fred’s iconic Force 10 bracelet, launched back in 1966, is also part of the strategy. The average price of a Fred jewellery piece is €2,500, also the average price of a Force 10 bracelet, which is available in numerous variations. Force 10 represents a substantial part of the business, he acknowledges. “In the years to come, Force 10 will still be our number pillar, but the two other [lines] will grow.”
After the addition of Chance Infinie in 2016, this January Fred launched its third collection, named Pretty Woman. It’s inspired by the Fred-created necklace of rubies and diamond hearts worn by Julia Roberts in the 1990 hit movie of the same name. The new collection includes a star piece — a €280,000 necklace. “This Pretty Woman collection helps us go back to the high jewellery tradition,” Leung says.
Heritage certainly appeals to young Chinese consumers — even better with the additional marketing rocket fuel of a celebrity endorsement. The Pretty Woman collection has engaged two in particular: global ambassador Emma Roberts, niece of Julia Roberts, and China ambassador Guan Xiaotong, a 23-year-old actor with a high profile on Chinese social media.
The brand chose Guan Xiaotong not least because she was already a Fred customer. Three years ago, she and her boyfriend posted a single, casual photo on Weibo showing off Force 10 bracelets (without any prior deal with the brand). Fans picked up on it and Force 10 took off in China, Leung explains. Both Roberts and Guan Xiaotong are appearing in videos on a new TikTok account created by Fred to coincide with the collection launch.
In a pandemic, brands like Cartier and Bulgari will always have an edge because of their firepower and as consumers tend to favour top-of-mind brands, notes Mario Ortelli, managing director of Ortelli & Co. But, he adds, “Fred’s focus on a young Asian consumer with a price point that’s attractive to that demographic [together with] their digital marketing efforts pay off.”
Leung is far from complacent. He wants to see rapid growth through 2021 — at least 30 per cent is expected. The first two months, he says, have been “very positive”. Fred’s competitors will be tracking its progress with interest in a post-pandemic world.
【Source: VOGUE BUSINESS, 22 March 2021】