TLDR;
Mytheresa has been consistently reporting profit for years while competitors struggle to reach profitability in a highly competitive environment.
Here’s how:
I sell clothes on my website
‘We don’t compete for aspirational customers’
I know how to make my people feel special
By Invitation Only
Truly, only at Mytheresa
Selling to China, with elegance
Mytheresa reported an 18% sales growth in its Q3 FY24 earnings report.
If ever there was a question about who might emerge as a leader in the shaky world of luxury e-commerce… I think we have our answer now.
In the first edition of this mini-essay series, I wondered whether Mytheresa, even though it was the only luxury e-tailer not obviously floundering, would see a weaker business year.
In the world of management consulting, we are seeing much more cautious spending from our retail clients, who have taken a hit to their bottom line amidst an unstable global economy. It makes sense. Retailers are very close to their customers, so naturally their business will take a faster hit when, in an economic downturn, those customers’ purse strings tighten.
I guess when your customer's’ purses are regularly Bottega, though, you don’t have the same issues as the rest of us ¯\_(ツ)_/¯ nah jk, to put Mytheresa’s success down solely to the wealth of her customers is unfair, and doesn’t explain why her competitors are going down like dominoes.
Here is a short missive on What Mytheresa is Doing Right and what that may say about success in the business of shopping…
LASER FOCUS
1. I sell clothes on my website [crystal clear identity]
Michael Kliger, Mytheresa’s CEO, knows what his business is about: he. sells. clothes. He buys them from brands, and sells ‘em on his website. He is not a tech solution, nor is he responsible for any design and manufacturing.
The simple discipline to stay true to who they are and what they do, is an important differentiating factor for Mytheresa’s continued success. When you are crystal clear on what you do, you can direct all of your focus into figuring out how to do it damn well.
In times of abundance, I have observed that diversification presents as more of a temptation than opportunity for a business. When you have the means and the ambition, you want to do everything, be everything. It is a pitfall that FarFetch fell into. Its over-expansion eventually became one of the main contributing factors to its problems - graphic here for the seven different businesses FarFetch was trying to run at once.
Mytheresa never floundered in their vision, not even so much as to attempt a traverse into physical retail.
2. ‘We don’t compete for aspirational customers’ [cut-throat customer segmentation]
Mytheresa is going to leave you on read if you are poor, sorry.
Are your pockets bottomless and made of vicuna wool? Aspirational customers in luxury referring to those of us who may splurge on a chanel bag once every couple years, say, as an ‘investment’. ‘Aspiring’ to an idealised life of luxury, though we may not necessarily have the means (yet) to make a £400 tank top part of our everyday wardrobe rotation.
A measly 2 percent of luxury customers drive 40 percent of overall luxury sales. While competitors raced to attract new customers with heavy promotional discounting and expensive advertising, Mytheresa stayed focussed on customers whose business they already knew could be relied upon.
And how do they sell to their own 2%?
3. I know how to make my people feel special [immaculate customer-centricity]
By Invitation Only: What more can you possibly offer to people who can already afford anything? Answer: something money can’t buy.
Truly, only at Mytheresa: On top of events, they offer a regular rotation of exclusive capsule collections with the most coveted names in luxury
Collaborating with brands to create a genuinely one-of-a-kind product offering that isn’t available anywhere else, who can resist really? These collections also help Mytheresa reduce reliance on discounting / promotional activities for customer retention / attraction - which is one of the biggest problems in the luxury retail market.
SELLING TO CHINA
Western businesses have woken up to China and east-asia’s untapped spending power. FarFetch made headlines some years ago when it announced a USD 1.1 billion partnership with Alibaba & Richemont, to launch FarFetch on Alibaba’s Chinese luxury platforms.
In an arguably more tasteful move to get its foot in the door of the Chinese market, Mytheresa last year launched the China Designer Program by Mytheresa in Shanghai, an incubator aimed at raising up emerging Chinese talent.
*applause*
There is a certain resentment and weariness amongst asian circles towards western brands who see us only as an ‘opportunity to capitalise on’, and push themselves onto us without much effort to learn and understand what might be appealing to the Chinese buyer.
Mytheresa’s investment into nurturing local talent shows at least a sensitivity and appreciation for China and her people.
As a business strategy, it is elegant.