Milestone: Q&A with Pedder Group’s Peter Harris

He’s the master of Asia’s complex retail market.

Peter Harris, president of Pedder Group, has spent the last decade developing the Hong Kong-based company, a division of The Lane Crawford Joyce Group, into an industry powerhouse that emphasizes cutting-edge product and innovative store design.

While there’s no question that shoes are now a major category in the market, Harris said the segment had been largely untapped when Pedder Group was spun into a standalone company in 2003. (Before that, the firm was part of Lane Crawford, where it ran the women’s shoe and accessories departments.)

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“The categories had a new importance in the world of fashion [when we launched],” Harris said. “Both were represented in Hong Kong, but with a limited point of view. We could see that consumers had a passion for them.”

The demand has only increased, and Pedder Group continues to diversify its business and target new cities to keep up with the rapidly evolving market.

Today, the company operates two retail concepts: luxury destination On Pedder and its contemporary sister, Pedder Red, which stocks its own in-house label. The firm also manages the high-profile shoe departments at the Lane Crawford and Joyce stores. In addition, Pedder Group has teamed with some of the industry’s biggest labels, from Christian Louboutin to Stuart Weitzman, and emerging stars such as Charlotte Olympia to open standalone stores across Asia.

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“[Pedder Group] is a business driver for [our company],” said Jennifer Woo, chairman and CEO of The Lane Crawford Joyce Group. “It is unique because it operates an integrated business model, which drives store and online retail, brand management and product development in greater China and Southeast Asia. At its heart, Pedder Group reveres the product, elevating it through beautiful store environments and fantastic collaborations.”

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By the end of 2014, Pedder will count 50 stores across 10 cities in Asia, with offices in Hong Kong; Singapore; Shanghai; Beijing; Chengdu, China; and Jakarta, Indonesia. It expects to report revenues of about 2.5 billion Hong Kong dollars, or $320 million at current exchange, for the fiscal year ended March 31.

The company also is making a larger push across Asia, with a focus on mainland China. Last fall, for example, it debuted the country’s largest footwear department inside the new Lane Crawford at Times Square in Shanghai.

“Our buying teams used the Shanghai opening as an opportunity to extend our partnerships with our existing brands to engineer exclusives, and where possible to support local designers,” Harris said. For example, Pedder developed Chinese zodiac flats with Charlotte Olympia and expanded its assortment from Alexander Wang, a designer who has had a strong following in China.

At Lane Crawford in Shanghai — and at the department store’s other locations — Pedder Group has been expanding its Blitz program, which focuses on unique collaborations. Previous projects have included working with Manolo Blahnik in 2012 to celebrate his 40th anniversary with a special pop-up. Not only did the space display 10 of Blahnik’s best archival styles but it also featured some of the designer’s favorite objects, including Globe-Trotter suitcases and Connor stationery. Blahnik added his own design touch to everything in the space.

“There is not a formulaic approach to how ideas come about for Blitz. The common factor is that we aim to start new dialogues, celebrate discoveries or ask what’s next,” said Kim Kollar, who oversees group creative for Pedder Group.

Similarly, On Pedder Loves is another program that spotlights vendor partners. For instance, the company opened a seasonal store with Charlotte Olympia at the Landmark in Hong Kong last fall. The inside was decked out like a 1950s diner to complement the designer’s cruise collection.

Another way the firm touts its unique approach is through Pedderzine, an in-house publication that is mailed to VIP customers and available in stores and online.

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“The Pedderzine is neither a catalog nor an art book but an amalgamation of both. Each edition is approached as a new chapter,” said Jenny Sung, DMM at On Pedder. She added that the publication is a way to link marketing, visual merchandising and store events each season.

According to Harris, all the creative initiatives originated from the company’s mantra: “Beyond desire.”

“It’s this idea of asking those two words before each of the projects we take on,” he said. “It’s a very fast market, so we need to have a lot of confidence in what we are doing and come up with ideas that are beyond desire. This is a lasting initiative.”

Looking ahead, Harris said, the company, which sells more than 350 brands across the portfolio, has several major initiatives on deck this year.

Pedder Group will focus on building the contemporary business, which has been a prime area of growth during the past few years. In fact, the company inked a deal with Ash last fall and already has opened Singapore and Hong Kong stores with the label. “Ash is very cool and on trend. It is a brand our customer follows,” Harris said, adding that labels like Toms Shoes and Sam Edelman have resonated strongly as well.

Beyond the product mix, the company, like most other retailers, is crafting an ambitious omnichannel plan as part of its next phase of growth. “Some of the biggest challenges [we have] are related to increasing operating costs, especially with real estate at a premium in the first-tier cities in China,” said Harris. “This can increase start-up costs and [delay] our payback. In this respect, e-commerce and omnichannel are very important.”

In the end, Harris said, the company’s success is a direct result of its ability to stay agile.

“Asia is a very fast-changing market and there have been a number of things that have happened, like a financial crisis, so a high degree of flexibility has been required to propel our strategy,” he said.

Here, the executive talks candidly about hot brands and new opportunities.

After exponential growth in Asia, there have been concerns about a slowdown. What is your outlook?
PH:
China is still growing, with a forecast GDP for 2014 of 7.5 percent compared with the U.S. forecast of around 3 percent, so the opportunities are still very much in Asia. The luxury market in greater China has matured and we are perfectly positioned to take advantage of the customer’s hunger for new brands and products. At the same time, we’re also seeing opportunity in the affluent middle class that subscribes to a luxury lifestyle, and whose point of entry will be through international brands that are accessible in terms of product and price. As we see in ready-to-wear, customers shop high and low. Self-expression comes in the freedom of being able to style across brands and price point, and that is true of our business as well and it plays to how the market is moving. Our business model provides a high degree of flexibility, so we can anticipate and react to the market’s movement.

Define the typical high-end Asian consumer?
PH:
They want to create a personal style and are looking for something unique. Certain styles trend very quickly in this market and the customer follows. After a period of time, they want to move on to something new. Brands such as Nicholas Kirkwood and Charlotte Olympia are very well-established with our customers. That’s why a lot of brand partners love working with our markets. There is an immediate response to their design approach.

What areas of the market have shown the greatest growth over the past few years?
PH:
Footwear in general has boomed in the last five years. In building our business model, we’ve tried not to confine our growth to any one particular [category]. When you shop our floors, you will see equal investment between design and contemporary. We actually locate our contemporary business adjacent to our designer business. The area we would like to explore more is new-generation designers. Asia is a global market and there is a young and edgy customer. A brand like Alexander Wang [works for us]. We just started a very interesting business with Sophia Webster and are bringing her back for the second season. We’re working with Phillip Lim and Kenzo. But we would like to find more within that category.

How important is fresh design talent in general?
PH:
We are absolutely always looking for new [brands]. Our merchandising team is constantly in the market. One of our objectives for 2014 is to explore more talent within Asia. [In terms of global brands], Tabitha Simmons joins us this spring and that’s a business we would like to grow further. Paul Andrew and Aquazzura are relatively new labels we have identified over the last two or three seasons, and we are building much stronger relationships with them.

How close are you to your brand partners?
PH:
We have very intimate relationships. We are globally unique because in a very large percentage of our portfolio, the brands are exclusive to the Pedder Group. That’s a huge responsibility.

Outside of your retail floors, you’ve worked with several top labels to open standalone stores. How do you manage the different parts of each business?
PH:
There is a designated team member who works solely on the development of each brand and ensures it has the required attention. We spend a lot of time getting to know each of them in their home base and then we [develop] a very clear roadmap for growth. Stuart Weitzman was an incredibly successful partnership that resulted in freestanding stores in Singapore and Hong Kong, as well as an agreement for e-commerce for all of Asia.

What is the biggest piece of advice you would give to brands entering China for the first time?
PH:
China is as diverse as Europe in terms of culture, climate, language, the physical look and size of people — and wealth. Therefore, it requires a region-specific approach. In terms of advice, you need a long-term mindset and investment plan. [You can’t] be distracted by the size of the market and the fear of missing out.

What is your strategy for expanding into diverse markets across Asia?
PH:
Having our business based in Hong Kong, which is very central to the whole Asian region, puts us in a very good place to assess the total market around it. The word mobility is extremely important. Asian people travel across regions, and there is an incredible linkage. For example, Chinese customers are wealthy and doing business in Hong Kong and shopping at our stores. [Looking ahead], we will open Lane Crawford in western China to pioneer that divisional market.

Would you ever consider venturing outside Asia?
PH:
Greater China and Southeast Asia present a wealth of opportunity for us and that is our focus, but we also are open-minded about opportunity further afield. Because of our base in greater China, we are a destination for regular global business travelers and visitors, so there is an awareness of our brand. The platform we have built can certainly expand beyond our current markets.

After reflecting on the past decade, where do you see the company 10 years from now?
PH:
I see Pedder Group maintaining our leadership position and unparalleled expertise in greater China and Southeast Asia. The growing importance of customer connectivity through technology will require a strong omnichannel approach. We have grown tenfold in 10 years and will approach the next decade with great enthusiasm.

 

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