Tory Burch CEO on building the new-age American luxury brand

Vogue Business Members can watch the full panel recordings from the keynote session below. Not a Member? See what you missed at the summit here, and then register to join. Since joining as chief executive in 2019, Pierre-Yves Roussel has imported the pricing and product management disciplines of European luxury brands to New York-based Tory Burch, helping to turn the brand into a fashion empire expected to generate $1.5 billion in revenue this year. In his keynote conversation with Vogue Business and Google Summit, Roussel shared the strategies behind the famous brand’s new phase. Roussel positions the brand in a new luxury segment he argued is uniquely American, with products designed to the quality specifications of European brands. “We are between the European luxury brands and the so-called accessible luxury brands in the US,” Roussel said, referring to the approach as seeking “value”. “I don’t know how to describe it, because there is no terminology for that.” This is made possible by the brand’s direct-to-consumer approach to distribution. With 340 stores and an active online sales channel, Tory Burch’s direct channels account for nearly 85 per cent of its sales. Roughly 70 per cent of its online sales are on mobile devices, Roussel said. Even in its relatively small wholesale business, the company controls imagery and merchandising so the strategy is the same across all of its distribution channels. An essential element of this approach was culled from the brand’s sales data: the customer who shops online and in-store buys three to four times more than those who shop at one or the other, Roussel said. The company recently opened a new flagship on Mercer Street in New York’s Soho neighborhood, and is using the store as a social hub for events as well as traditional shopping. It’s part showroom – Tory Burch homeware can be viewed there, then ordered online with a sales associate – and also carries a small selection of vintage goods that Burch herself has bought as a hobby, which brings an unusual discovery element to the store. The brand has been raising its prices to reflect its investments in higher quality hardware, materials and construction of its bags and accessories that it is using as it seeks to elevate the brand into a higher tier of luxury. Roussel noted that Tory Burch draws customers from accessible-luxury brands that are priced below it as well as the well-known European luxury brands that it sees as competitors. The company has also shifted its pricing approach away from the frequent discounting that is common among American brands and department stores. That has had a ripple effect on its inventory management — it doesn’t produce products to put on sale, for instance — and has even lowered its customer return rates. Promotions, Roussel said, are “very confusing for consumers”. “The European brands have been a bit more disciplined in that space,” he said. “We have end-of-season sales like everyone does, mostly on ready-to-wear… We are operating on a luxury business model in a way European brands have managed (pricing and promotions) much more than the American model.” Roussel is intimately familiar with the world of European fashion. He joined Tory Burch upon leaving his role as chairman and chief executive officer of LVMH’s fashion group. That path presented itself after he married Burch, the brand’s founder and current chairman and chief creative officer, who he met while exploring the possibility of LVMH investing in her company. The shift landed him in a family-controlled American enterprise that takes the same long-term approach to strategic decisions employed by LVMH, which is controlled by the French Arnault family despite being publicly traded. “Obviously, you have a long-term perspective. And you have a vested interest in building your business,” he said. That has meant investing in long-term benefits such as data management systems and its own distribution centre, while taking a conservative approach to expansion and cash management. “Tory has created a company that was profitable in year two,” Roussel said. “You can take risks as an entrepreneur, but you don’t put the company at risk.” Part of the brand’s new product strategy involves this year’s introduction of T Monogram, a logo-like jacquard fabric that is woven in a decorative new collection of bags, shoes and other accessories, and priced at the same level as leather. The jacquard fabric and hardware is ordered in advance, and later constructed into products according to demand, giving the brand the flexibility to respond to what consumers are buying rather than guessing a year in advance. “We are obsessed with the way we manage inventory,” Roussel said. Observers should not expect to see the Tory Burch name splashed across many collaborations, which has emerged as a major fashion-brand trend. While the brand has collaborated in limited ways with products it doesn’t manufacture, such as Shiseido sunscreens, its strategy is to keep the focus on Tory Burch, its active founder and its in-house creative team. “I see a lot of collaborations out there,” Roussel said. “Sometimes it’s hard to track who does what for what. We bring talent in. That’s the way we’ve been doing it.” To watch more Vogue Business and Google Summit sessions, you can find all of our content here. Comments, questions or feedback? Email us at feedback@voguebusiness.com. More from this author: Gucci’s LA moment: Revival from outside the fashion system Brunello Cucinelli calls for “dignity and morals” at G20 Nili Lotan: Fashion’s rule breaker

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