The Sacrifice Of Building A Brand

By Matt Pillar, chief editor

I wasn’t familiar with Hammitt when I sat down with Tony Drockton at SuiteWorld, NetSuite’s annual customer conference, last week in San Jose. A minute hadn’t passed before I ascertained that Drockton lives up to the “Chief Cheerleader” title printed on his business card. The guy is a juggernaut, hell-bent on reinventing the way women shop for and enjoy their high-end handbags.

Drockton’s backstory is an unlikely one. He grew up bagging produce and canned goods in his dad’s independently run grocery store. After earning his MBA, he went on to make piles of money in the pre-recession mortgage boom. Today, he’s CEO of a bustling luxury accessories brand that sells handbags, clutches, and duffels ranging in price from $125 to upwards of $1400. More importantly, he’s the undisputed captain of the brand’s destiny, a commitment that just a few years ago left him nearly broke and homeless.

Drockton joined the company in 2008, inspired by loves of architecture, aesthetic, and childhood memories building relationships with customers in his dad’s grocery store. The bags Hammitt Los Angeles was designing and building were top quality from the leather to the stitches, worth every bit of an Armani and then some. Drockton loved the product, but he had a problem. A few problems, in fact. Hammitt’s distribution deal with major department stores like Bloomingdales was putting constant pressure on the company to discount it prices. It also kept him degrees removed from his customers.

That’s when Drockton made an entrepreneurial decision that would sting, especially in the finance department. He yanked his distribution deals, took full creative control of the product, and went direct.

In effect, Drockton tore the business down to its foundation—a bag and the woman who loves it—and started from scratch. From the general ledger’s point of view, that was a low point. From Drockton’s, despite the cash flow disruption the decision caused, it was the dawn of something greater

“We’re a luxury brand, and luxury brands sell at full price,” explains Drockton. Today, the company’s product distribution is tightly controlled and limited to specialty boutiques, hammitt.com, and a company store in Las Vegas. But, there’s another wrinkle in the story. If Hammitt was going to ask its customers to pay a premium, Drockton was going to give them what they wanted, and service the sale for life. “Many of our sales are made to order,” he says, “which means we don’t build the bag until it’s sold.” Meeting demand expectations in a made-to-order business presents a lot of inventory and fulfillment risk, especially when that business sources fine materials from all over the world. Women who spend this kind of money on accessories can’t afford to wait six weeks to take possession of their Hammitt. Drockton contracted a host of cloud solutions from NetSuite, but inventory management and demand planning are, pardon the pun, clutch systems in the Hammitt sales model. So is reverse logistics—also managed by NetSuite—given the lifetime warranty offered on Hammitt products. “In the luxury category, it used to be standard practice to turn repairs around in a couple of months. We committed to doing it in a week.”

Central access to enterprise-wide inventory and immediate access to KPIs and reporting are also must-haves in Hammitt’s multichannel business model. Asked how often he uses his business reporting tools, Drockton pulls his phone out of the vibrantly colored jacket he’s wearing. “I can run my whole business from this, anywhere and any time,” he says.

That’s an abbreviated version of the new reality in fashion retailing. One day you’re sleeping on a friend’s couch, lost in an Excel Spreadsheet, and bootstrapping to cut checks for the three people on your payroll. The next, your cross-body bags and satchels are draped across the shoulders of Angelina Jolie and Paris Hilton, every woman wants one, and you’re running the show with little more than the cloud, an iPhone and a dream. Stay tuned to IRT for a deeper dive into Drockton’s world.