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As the Trinity Forum attendees look on, Sungjoo Group Chairperson & Chief Visionary Officer Sung-Joo Kim presents The Moodie Report Founder & Publisher Martin Moodie with a box of chocolates to celebrate Valentine’s Day |
German luxury brand MCM is targeting sales of US$450 million in 2012 and plans to open up to 100 stores in China under its brand owner Sung-Joo Kim.
In an illuminating, frank and often poignant interview with The Moodie Report Founder & Chairman Martin Moodie on 14 February 2012 during the Trinity Forum in Seoul, Sungjoo Group Chairperson & Chief Visionary Officer Sung-Joo Kim told conference attendees that China – and Chinese travellers – are driving the brand’s business.
“When we acquired the MCM brand in 2005 it was a US$100 million business, and now we are going for sales of US$450 million this year,” she said.
Korea-born Mrs Kim, whose self-made father founded the Daesung Group chaebol or conglomerate, began by telling attendees about her own unique and personal approach to business.
“I am mission-driven, not money-driven. People may think I’m crazy – and of course my business must make profits – but I was disinherited by my parents and I wanted to set out in business to prove that women can do it. Out of my 600 employees, 500 are women.”
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“Our total travel retail business will reach around US$100 million this year” – Sung-Joo Kim |
The advancement of women in society is one of the issues uppermost in Mrs Kim’s mind. Having been disowned by her parents for not obeying the normal rules for a dutiful daughter by marrying into an equally powerful Korean family and focusing on raising children, in line with Korea’s rigid Confucian tradition, Mrs Kim decided to forge her own path in the business world.
“My personal motto is “˜Succeed to serve’. I am always thinking about how I can contribute and transform society for the future generation through women’s leadership,” she said.
“We live in a knowledge-based economy, where half of the world’s brain power is made up of women. I call it the “˜emotional quotient’. It matters so much that we harness this brain power, especially in e-commerce. The consumer market is dominated by women; we make up 80% of consumer market decisions.”
Mrs Kim’s early career began in the mid-1980s in New York with legendary retailer Marvin Traub, the CEO of Bloomingdale’s, where she mastered the arts of merchandising and marketing.
Having returned to Korea in 1990, she launched and acquired exclusive franchise rights for several renowned brands, including Gucci, Yves Saint Laurent, Sonia Rykiel, Marks & Spencer and MCM for the Korean market.
Gucci’s Korean franchise went on to become one of its most profitable and largest worldwide under her leadership. But by 1998, the Asian financial crisis had hit hard, and Mrs Kim was forced to sell the Gucci business back to the company.
Earlier, in the 1980s, Mrs Kim had seen how Gucci had fallen out of favour and was considered to be “damaged goods” at that time, but its renaissance in the early 1990s proved to be a useful lesson when she acquired MCM in 2005.
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“Travel retail and domestic markets overlap now; there has been an evolution in the sector over the past few years” |
China expansion strategy: 100 stores envisaged
A few years on, and the position of MCM could not be more different. Talking about the brand’s DNA, Mrs Kim told the Trinity Forum delegates: “MCM is a German brand that stands for German precision and practicality, Italian design – many of our products are made in Italy – and Asian know-how.”
The brand’s current strength is due in no small part to the Chinese market. “The Japanese consumer came to the fore when I ran Gucci, and the same thing has happened with China. In the next five years I can envisage 100 MCM stores in China. If we succeed in China, we can succeed anywhere,” she said.
Speaking of the complexities of the China market, where MCM currently has 17 shops in key locations, Mrs Kim added: “China is in fact five countries under one umbrella. The Chinese respond very differently to the same brand in different regions. Hong Kong and Macau are very advanced markets, like Korea, but the second-tier cities are five to ten years behind Korea. We are expanding fast in the second-tier cities, both with our own shops and via franchise collaborations.
“For the Korean and Chinese markets combined, I see 200 stores with a total of US$1 billion gross revenue in the future.”
Turning to the near future, MCM will launch a “brother brand”, she said, similar to Miu Miu, Prada’s younger fashion line. Male consumers are also being aggressively targeted for future growth.
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MCM’s sponsored lunch on the second day showcased a video for MCM’s Spring/Summer 2012 campaign |
Travel retail sales set to hit US$100 million
Asked about how important travel retail as a sector is to MCM, Mrs Kim explained: “I see travel retail as important for both turnover and brand enhancement. Travel retail and domestic markets overlap now; there has been an evolution in the sector over the past few years. My Korean travel retail business is US$65 million and our total travel retail business will reach around US$100 million this year. Productivity per square foot is the highest in travel retail.”
This huge productivity is being fuelled by the Chinese traveller, according to Mrs Kim, because of the price differential in the high-tariff China market. “Asian customers are very young and dynamic,” she noted. “Young Koreans, like my daughter for example, are movers and shakers and cool-hunters. They’re hot.
“China is definitely the future.”
So what improvements could be made to the travel retail environment? “I travel very frequently, like many women. We need a resting area at the airport – somewhere to relax.
“I find that cosmetics and fragrances dominate the footage, but I would ask for more variety in the types of goods carried in travel retail shops. Also, cultural experiences, like at Incheon Airport, where travellers can learn about a country’s traditions. This would also have a Corporate Social Responsibility function, supporting local handcraftsmanship. By doing this at the airport, we can support local small businesses. Not just souvenir shops but something different.”
Mrs Kim also noted the rise of “smart travellers” who are comfortable with e-commerce and want to pre-order their goods, collect them at the airport or have them delivered at home.
Sungjoo Foundation: humanitarian activities
Mrs Kim’s personal goal and motto ‘Succeed to serve’ has resulted in the creation of the Sungjoo Foundation. Some 10% of company profits go to the organisation and Mrs Kim donates 10% of her personal earnings to the foundation.
Among its many activities, the foundation supports global women’s leadership training, which links with different cultures, and humanitarian initiatives in North Korea, providing medicine, education and food.
Speaking poignantly and powerfully about the North Korean situation, Mrs Kim concluded: “This North-South divide is not an internal war; it is one imposed by the superpowers. They should focus less on how they can profit [from this “˜war’] and more on reparation. Leaders should be more responsible. I just want our future generations to inherit a peaceful society.
“I have a message of hope for North Korea. I have pledged all my wealth to be used for North Korea’s re-development when it opens. Some people ask me if my future is in politics, but my future aim is to be a missionary in North Korea.”
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Martin Moodie and Sung-Joo Kim in a lighter moment at the Trinity Forum conference in Seoul |
About Sung-Joo Kim
Sung-Joo Kim is the Founder of Sungjoo Group, comprising Sungjoo Merchandising Inc and Sungjoo Design Tech & Distribution Inc. She is also the Chairperson of MCM Holding AG.
Internationally known and respected for her achievements in business, she has been involved in the fashion industry for over 20 years, beginning her career at Bloomingdale’s in 1985 under the direct supervision of legendary retailer Marvin Traub. Since 1990 she has launched and acquired exclusive franchise rights for several renowned brands, including Gucci, YSL, Sonia Rykiel, Marks & Spencer and MCM for the Korean market. In 2005 the company acquired German luxury leathergoods company and operates in 30 countries.
Mrs Kim holds BA, MSc and MTS degrees. She has been awarded honorary doctorate degrees by Amherst College in 2000 and by the Business School of Lausanne in 2011.
One of the world’s most celebrated businesswomen, she was selected as a Global Leader of Tomorrow by the World Economic Forum in Switzerland (1997) and was chosen as one of The 20 Most Powerful International Businesswomen by Working Woman (1999). In 2001 Asiaweek selected her as one of the Seven Most Powerful Women in Asia and she received the Enterprising Women Hall of Fame Award in 2008.
Other accolades include the Special Entrepreneur of the Year Award from Ernst & Young (2009) and the Ethics in Business Award from the International Association of Human Values (2009).
Visit www.kimsungjoo.com and www.mcmworldwide.com
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