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- 8 Mar 2010
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The Age of Substance

Guy Salter, Walpole’s deputy chairman, offers some ‘food for thought’ on the future of luxury.


It seems like only yesterday when I first got involved with Walpole. Actually it was over ten years ago. Much has happened since then; it has been a transformational decade – for Walpole and for the luxury sector.

Across the English Channel another evolution has been underway. While tangential to mainstream luxury, it is an interesting story that highlights many of the trends that are shaping our industry.

Those lucky enough to know Paris well may be aware of the slow but seismic shift in the restaurant scene, epitomised by the emergence of the néo-bistros. Like L’Office in the ninth, with its thirty simple tables, or Le Chateaubriand in the eleventh with its paper napkins, these inexpensive, less formal neighbourhood places are doing a roaring trade. However their popularity is not about cheap alternatives in hard times. Their success pre-dates the crash and is based on fundamentals, foremost of which is a passionate focus on the food. The prices may be more affordable but no expense is spared in sourcing (in some cases growing) the best, most seasonal and sustainably-produced ingredients. These are then cooked with a flair and simplicity, which at its best surpasses many three-star establishments. But this isn’t another trendy fusion-style looking to startle. It is a new type of globally-influenced French cooking; sure enough of its roots to introduce unusual spices, new flavours and textures. This approach extends to the wines; you are more likely to be offered a little known grower than a famous name.

It isn’t just the food that is drawing in the customers; there is a vitality that fills these places with a sense of fun, fashion and confidence. The old gastronomic ceremony has gone; people like the casualness and the simplicity. Or maybe a ritual remains but has metamorphosed into something more attuned to the times. For the atmosphere may be relaxed but there is a seriousness underlying it. The customers are there for the food and they are demanding. One notices a dialogue between them and the chef; a level of interaction which is a far cry from the restaurant-goer as mute receiver of three-star brilliance.

Underpinning this success story has been a re-think of the business model. The only way to afford this level of dedication to quality but still offer such value, has been to cut costs elsewhere. This has been done with lower rents, no fancy decorations and less choice on the menu. Interestingly this brings further benefits, as the customer can see where their money is going (and where it is not) and feel reassured by both the values of the chef and the value for money.

What makes all this so interesting for me (greed aside), is how it compares to the crisis of confidence that has affected French cuisine in general. For some time it has become apparent that French chefs were losing their leadership of Western cooking. However this was not an inevitable end game. Actually what was happening was a rebirth – but from a new direction. The combination of a deep-rooted food culture, creativity and frustration with the established order has produced one of the most exciting new trends in cooking for decades. Even the grands chefs are following suit; opening simpler places or loosening the Michelin straightjacket. What’s more this has been a home-grown revolution. The cultural and gastronomic influences may be global but this is primarily a local phenomenon.

For those of us in the luxury sector trying to make sense of the last decade and looking ahead, I suggest the story of the Parisian néo-bistros is worth reflecting on. It shows how a sector whose very existence stands for global excellence can get out of touch and lose its magic frighteningly quickly. In my view this is what has been happening to the luxury industry for some time. There was a strong whiff of fin de siècle decadence and over-confidence many years before Lehman’s collapse. Now the pendulum has swung the other way. The Great Panic of 2008 and the ensuing chaos produced a mood of crisis and introspection. In many I sense a loss of confidence and direction. For although 2009 wasn’t the end of the luxury world as we know it, much uncertainty and significant challenges remain.

For some years Walpole has pursued the theme of ‘a return to luxury basics’. By this I have meant concentrating on things that make luxury different from the middle market. Not being beguiled by the opportunities to improve margins at the expense of underlying quality, rediscovering the art of human interaction and service, finding inspiration in sticking to cast-iron differentiated values and not following the herd into the latest category extension or new market. Demonstrating creative leadership and innovation rather than a pastiche of each twist or turn in fashion. Above all, not being afraid to redesign our business model, so we can afford to concentrate on product quality rather than too much reliance on expensive command & control brand-building.

Pre-crash such sentiments were regarded by many as mildly eccentric. They are now commonplace and often repeated like a mantra. Unfortunately this doesn’t mean they are really understood or being widely implemented.

What the néo-bistros demonstrate is that success came from four key factors: Firstly, a complete appreciation of the customers, how they are changing and the importance of treating them as equals. Something the grand restaurants had failed to appreciate. Secondly, innovation; a willingness to change the rule book creatively and commercially. Thirdly, a genuine passion; a true belief in what they are doing and in the importance of outstanding materials and honest craftsmanship. Finally, a strong sense of purpose and place based on a cultural provenance, which gave the néo-bistros the right to innovate but also shaped their direction, so it remained believable and true.

While some of the best luxury businesses are getting much of this right, too many of us are not. This is especially the case with the first and most important factor – an understanding of how customers are changing. There is still a dangerous lack of knowledge about affluent consumers, especially younger ones; too much received wisdom based on outdated or second-hand opinions. This is especially risky in fast-growing markets such as China, where underestimating the affluent customer or failing to appreciate how rapidly the market is segmenting is to invite failure. As ever, understanding the pattern and growth of discernment in both emerging and mature markets remains critical. Gathering and studying timely, accurate consumer data is a priority, and needn’t be expensive. Maybe understanding this will also bring a willingness to invest in a truly personal standard of service. There are still very few brands, even amongst the biggest and most famous, who are making real progress with CRM or who are introducing a more inspired service culture. A true luxury revival will be impossible without a revolution in this area.

Anyone running a luxury business doesn’t need to be spoon-fed each detailed parallel but for me the main moral in the néo-bistro tale is a bigger, more general and more optimistic one. It demonstrates how, in a creative industry, if the cultural values and reserves of talent are deep enough, the ingredients can be re-mixed to produce something remarkable which reforms, inspires and reenergises. This is what we need.

If Survival was the watchword for 2009, Renewal should be our goal for 2010. A true renaissance needs a vision that is realistic and comes from an appreciation of what has changed, what hasn’t, what we need to do differently and what we should leave well alone.

Some call for a ‘Re-definition of Luxury’ or even to find another word to describe the industry. Of course the word is over-used and de-valued, but we are stuck with it. Better to demonstrate what we mean by it through our products and our actions, for that is we will be judged by our customers. I doubt they care what we call ourselves.

Our main challenge for 2010 is to do what the néo-bistros did and concentrate on what made our brands great in the first place and rediscover our pride, energy and originality. The stage is set for this. Progress is under way with an openness to new ideas and a hunt for freshness and creativity. The investors who got their fingers burnt over the last few years, who, along with others, piled into the sector without really understanding it, are either out or want out. This can only be good, as nothing can be more debilitating than uneducated money. There is a willingness to experiment with new ways of doing business and the shock of the crisis has brought much needed commercial, professional and financial disciplines.

The good news is we already have some ‘néo-bistros’ in the luxury sector; businesses who aren’t about dated rituals or empty promises, are grounded in relevance and authenticity, while being unapologetically dedicated to being the best. Some are large, although most are not, many are new or local. They are the grit in the luxury oyster. As yet there are too few of them, for while the recipe is simple, it is far from easy. Hopefully more will emerge this year. Some economists say the last decade was an Age of Abundance, and that what we face now is an Age of Scarcity. In luxury terms, I prefer to think we have entered The Age of Substance. Now it is up to us to bring this to pass.


Guy Salter, Deputy Chairman, Walpole


This leader is taken from the Walpole British Luxury Yearbook 2010, which will be published at the end of March.


For a map of the restaurants mentioned, click here