From the source: Leon Mervis, Montblanc

Leon Mervis started his professional relationship with Montblanc in South Africa in the 1990s, while working in his family’s watch and diamond business.

At the time, the German brand was best known as the maker of luxury writing instruments, so Mervis says it was not the most obvious choice to stock Montblanc in a fine jewellery store. But it proved to be a prescient decision.

“It was the beginning of everything,” Mervis tells IRW. “Richemont had just bought Montblanc, so the brand was still trying to find its feet. I started with the writing instruments and in 1995, they said they were bringing out leather products. In 1997, they said they were doing watches.”

By the time Mervis moved to Australia in the early 2000s, he had years of experience with the Montblanc brand and customer, so the move to become managing director of Montblanc in Australia was not a massive leap.

“My strength really came from a lot of experience running retail stores in this industry, so it was a perfect match for me,” he says. Part of the Swiss-based luxury group Richemont, which also owns Cartier, Van Cleef & Arpels, Chloe and is the largest shareholder of Yoox Net-A-Porter Group, Montblanc today has over 500 boutiques worldwide, including seven in Australia.

In September, the brand opened its latest boutique at Chadstone Shopping Centre in Melbourne.

Inside Retail Weekly: You’ve spent your entire professional life in the luxury retail sector. What are some of the ways that luxury is different from mass market retail?

Leon Mervis: The first thing is the absolute protection and maintenance of image, and the importance of creating businesses in luxury precincts with like brands. You won’t find a Louis Vuitton store in a back alley. A lot of luxury has to do with image and presentation. That’s definitely a hallmark. Added security, better trained staff, proper ranging of products and marketing are all part of it. The most important part is probably after-sales service.

IRW: Why is that? 

LM: Because these are luxury items. They’re handcrafted, handmade. I’ll give you an example. You go buy a nice Bic pen and when you run out of ink, you chuck it in the bin. We don’t work like that. We create lifetime companions. As a lifetime companion, you get attached to your writing instrument, and if you drop it and crack it, there are spare parts that can be changed. People enjoy our products for many years.

I had a client from Sydney come to our service centre [in Melbourne] to get his pen repaired, and I asked him why he came all the way to Melbourne to have his pen restored. He said, “I have separation anxiety”. His dad gave him the pen when he became an attorney, and he has signed countless documents and agreements with it. He signed his marriage certificate with it and, recently, also his divorce certificate with it. He couldn’t be separated from the pen while it was being serviced. You will pass Montblanc customers on
the street all day long that feel the same way.

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IRW: Luxury retail has seen strong growth in recent years. Has Montblanc benefited from this growth? Why or why not?

LM: Absolutely. I’ll give you an example. In 2005, Hong Kong, which controlled this region, we’re talking about the whole of Asia Pacific, was doing around €30 million a year. Now, they’re doing around €350 million ($570.65 million) a year.

What are the reasons? First of all, mainland Chinese people are able to travel. Their whole economy has exploded. It’s been an
interesting thing because China was blocked off from everything for decades, and then in the 1990s going in to the 2000s, it started
to open up. You saw mainland Chinese people going around the world saying, “Wow, look at the French, they’ve been enjoying Louis
Vuitton for the last how many years…we need to play catch-up”. A different culture has developed around that, specifically within
this massive emerging market.

IRW: Are tourists an important part of Montblanc’s business in Australia?

LM: Our local business is roughly 70 per cent, and when I say local, that could be local Chinese, local Australian, just the regular
economy. Tourists make up around 30 per cent of our business, and 90 per cent of [our tourist trade] comes from mainland China. That’s the average across our store network. In Brisbane, it may be more like 90 per cent local business, 10 per cent tourist, whereas one store in Sydney could be 40 per cent local and 60 per cent tourist, and another store in Sydney could be 40 per cent tourist and 60 per cent local.

IRW: How do you cater to tourists?

LM: All our boutiques have to have staff that can speak Mandarin or Cantonese, it’s more important than having somebody who
can speak French or German. We also partner up with Chinese advertisers and publications and participate in events to target our
demographic.

IRW: Since tourists are such an important part of your business, do you find that it impacts your retail calendar? For instance, do you participate in non-Australian holidays?

LM: Definitely. For instance, it was Golden Week last week, which is a Chinese celebration, so we
had in-store promotions where customers got an extra gift if they spent a certain amount. We also
have activities around Chinese Valentine’s Day, Chinese New Year and Single’s Day.

IRW: Experts are predicting that Chinese tourism to Australia is really going to accelerate in the coming years. That must be good news for you.

LM: Yes, but I have to point out one thing. The stats are going through the roof, and if you look at the
past five years of tourism to Australia, it’s a straight line up. But that straight line up hasn’t necessarily translated to more sales for the
whole luxury industry. The first generation [of mainland Chinese] that went touring around the world were often going into France,
Germany and Italy specifically to go shopping. They would land in Melbourne, book into a hotel on Collins Street, and shop the whole
street for a week, then get on a flight and go back home.

The tourists coming from mainland China now are that generation’s kids. They’re a little bit more Westernised, and they’re
not just coming to Australia to shop, they’re coming to see Ayer’s Rock, they’re coming to see what a kangaroo looks like, they’re
coming to drink the wine, they’re coming for life experiences. That has been a major change in the industry. So yes, tourist stats have
gone through the roof, but [luxury] is not the only industry going for that market. The tourism industry is wanting people to stay in hotels and see all the sights. That is what has changed significantly.

IRW: Montblanc recently introduced a new retail concept. What’s it about?

LM: The brand did a lot of experiments around the world to see what would work the
best, and this concept, called NEO, is what our experts came up with. It’s about using
different woods and curves to give that warm feeling and to convey our heritage, which is
handwriting. The look of the store is what you’d expect if you walked into a gentleman’s study or living
room, from the look of the furniture to the way it’s laid out. The furniture was actually
designed to look like something you’d find in a craftsman’s basement, something he
would sit on as he worked on his jewellery or leather items.

We also have a scent that we use in all our boutiques in Australia. We wanted to create something that would evoke that sense of
walking into a gentleman’s study, what would it smell like? So we came up with a scent locally and got permission worldwide to do it

IRW: It sounds like the retail concept was designed with men in mind. Is the typical Montblanc customer male?

LM: It’s about a 60-40 split between men and women. Female customers, of course, also use writing
instruments, but they often come in to buy a gift. We’re one of the few places where you can find something for the
man who has everything. You’ll still find 10 items at Montblanc, whether it’s a belt, another pair of cufflinks, a
writing instrument, new wallet, or new leather briefcase, we have it all.

IRW: How does digital fit into the new store concept?

LM: We have a connected watch which has been extremely successful. We have augmented paper, and it has
gone viral around the world. It’s one of the most successful tech products in the luxury space. You write on
regular paper with a regular pen, and there’s technology that transfers that information digitally onto your phone
or computer. So you go into your meeting, you make your notes, press a button and boom, it goes off to your
assistant, or your own records, so you don’t have to write it twice, and it doesn’t disappear because it’s written in a book.
The tech side obviously goes to millennials and the younger generation, who change their cell phone every two minutes, so
Montblanc has definitely jumped into that arena.

IRW: How do you balance being a heritage brand with going after younger consumers?

LM: It’s about changing with the times. On the one hand, you have the 50- or 60-year-old accountant who doesn’t go
on the internet that much, but still wants the traditional writing instrument, the traditional black briefcase, the traditional
black wallet and what have you. That’s one customer, and on the other end of the scale, you have the millennial customer
who has got the fancy shoes and needs the right pen in the pocket and wants
the more modern briefcases that have camouflage covering, so we have to cater
for both markets. Both markets are equally important. The older guys won’t look at the new stuff, and
the younger guys won’t look at the more traditional stuff.

IRW: Is there a danger in trying to “be all things to all people”? Is there a risk that you end up alienating both groups of customers?

LM: To be brutally honest, I don’t really know. Do I agree or disagree? It’s immaterial. I trust that on an international basis, [Montblanc] has done its research and has embedded its own logic in its marketing messages and the way it caters for these clients. Remember, it’s also cultural. An Indian guy will look at the brand completely different than someone from South America, or
a mainland Chinese person, or an American.

But if you’re speaking about Australia, then you’re absolutely right. We’ve had comments like, “Oh, this is maybe no longer for
me because…” But look at Mercedes. It brings out entry-level cars so it can at least allow people coming in at the bottom [end of the
market] to touch the brand. The person who’s buying the expensive Mercedes may turn around and say, “Hang on, what’s going on
here? It’s no longer exclusive.” But at the end of the day, if you want that Mercedes, you’ll spend that quarter of a million, and if you’re
just starting out, you’ll spend 30 or 40 grand. It’s just the way it is.

But you’re right, the minute the brand starts doing this stuff, it gets some people’s nose out of joint. But I think people love the brand
they buy.

IRW: So it’s about walking that tightrope, and adjusting if you see a negative reaction?

LM: I mean, what do you do? I can tell you now that somebody in their 20s is going to go online and look at everything from their
point of view. She’s not going to get caught by traditional ads in newspapers or magazines. You actually find that they’re in
completely different worlds.

IRW: Right. The ability to tailor marketing and communications to different demographics online would help Montblanc walk that tightrope.

LM: Correct. The older clients are not surfing the net, they’re not following Montblanc on Instagram. They don’t even know it exists
because they’re not in that space that Montblanc is targeting.

IRW: What can you tell us about the company’s new travel line?

LM: For starters, our leather business has exploded over the last two to three years. The ranges have been improved and expanded,
and it’s where the brand is seeing the most growth. It’s staggering. Montblanc has done a lot of travel bags and wheelie bags and
cabin bags in the past, but recently it launched a 90-litre and 60-litre proper full suitcase, so this has become an evolution of the brand’s very successful leather business. It comes off the back of it.

IRW: Do you plan to open more boutiques, or pursue growth in other ways?

LM: We just opened a new store at Chadstone Shopping Centre, so
there’s nothing immediate in terms of new boutiques, but wholesale
is continuously expanding. We break down our wholesale into
what we call departmental – David Jones is our key partner there
– and airports. We partner with most of the major airports around
Australia. For example, in Melbourne, we have a concession with
Dufry, where we put our own staffing and furniture in. And then
there’s the traditional channel, which is your upmarket stationery
dealer, watch businesses and classic jewellers.

IRW: A lot of brands are no longer going down the wholesale route, since there are so many opportunities to go direct-toconsumer now.

LM: You’re right, but David Jones has its own clients who come into
stores, perhaps because they like to be able to swap and return, or
use their David Jones card. They see masses of traffic throughout
the year. We also have approved David Jones as an online partner.
They’re the only partner in Australia that is both a wholesale partner
and an online partner.

IRW: What are your thoughts on the challenges that department stores in Australia seem to be facing right now?

LM: The only thing I can tell you is that our business has gone
more towards them, especially the large leather [items]. All our
new backpack and lifestyle products are just selling. Our biggest
problem is having enough products to supply them. What you’re
saying may be a general trend in department stores, and I can see
why. I can see why a store like that can’t sell a $10,000 leather item,
but at the levels we’re pitched at, we’re actually perfect for them.
Montblanc is actually the perfect partner for departmental and travel
retail. We fit into those environments perfectly.

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