Luxury Brands Rely on Tradition and Value

to Weather Economic Storms


Phyllis Chen, SPHR, HRMP, is the HR and general service manager at BVLGARI Taiwan, where she provides full-function HR generalist expertise. Her past experience is in training and development, staffing, employee relations and HR policy and procedures establishment in a variety of industries including mobile communications, retail and hospitality. She earned her master's degree in Human Resources Management in 2006 from National Sun Yat-Sen University in Taiwan and holds a master's degree in Business Administration from Florida International University.

In this stabilizing economy, businesses continue to move forward providing products and services to loyal customers and reshaping strategies to acquire new ones while individuals scale back spending and bolster skills for when the economy becomes secure and consistent again. One industry, however, that seems untouched by financial tumult is the luxury fashion and accessories sector. The high-end luxury shopper appears not to miss a step in a shaky economy.

What keeps this market strong and vibrant through the turmoil and uncertainty of a recession and post-recession recovery? Some say it is adopting new strategies and diving into the blue oceans of the industry: Many luxury brands have created new market spaces to reach new customers or have become more accessible to existing ones. For example, Dior and Louis Vuitton began selling some product lines in department stores, which places them in front of a different audience than the ones to which they have traditionally marketed. A few brands have entered the world of flash sales by offering a time-limited online sale to exclusive customers. This lactic draws in the customer who can t pass up a good deal — especially when it is a short-lived one.

At the other end of the spectrum, some attribute the luxury fashion market's strength to traditional good old brand loyally and the power of the brand itself. Phyllis Chen, who is a Senior Professional in Human Resources (SPHR®) and a Human Resource Management Professional (HRMPSM), is the HR manager at BVLGARI Taiwan. She talks through her HR journey to the luxury industry and how impactful this industry is to its customers.

Chen began her career in hospitality. She earned her master's degree in that field in the United States and upon graduation returned to Taiwan to work at the international hotel Grand Hyatt. She was in front-line operations and found herself involved in the training and development of new staff. Chen managed and conducted orientations, training and other initiatives to help acclimate employees coming on board. This was her first exposure to human resources, and Chen fell in love instantly. "I quite enjoyed this interactive sharing process. When I trained and coached the staff and felt the achievement and saw the people changing their behavior which led to growth, I knew I was making a difference," Chen says. She loved the feeling of helping others develop into the people they were seeking to become. Chen decided she wanted more of this world. She became a trainee manager and worked in several different industries before entering the world of luxury.

Chen began working for BVLGARI eight years ago and had her first opportunity to truly be engrossed in human resources. At first, she took on more of the administrative functions within the department and has since moved into a more strategic HR realm. Today, Chen oversees human resources for BVLGARI Taiwan and manages all of the company's HR general services — everything from staffing, compensation, performance management, training and development to public relations. She credits this role as giving her a seal at the organization's table. "Over the years my scope increased and I have become more of a business partner. I understand the business and can provide suggestions and solutions to our managing directors."

Chen remembers that when she started working at BVLGARI she often wondered why individuals paid so much for the products. "I mean, a watch is a watch!" she exclaims. She was determined to learn more about the brand and customers to understand what made them so loyal.

She found that BVLGARI customers did not buy just a product — no, they bought much more: lifestyle and value. "It involves more of the psychological factors," Chen explains. "They are buying the image, the prestige and the glamorous feeling that the product alludes to."

BVLGARI and other luxury brands create a lifestyle that is only for the elite. It is refined and for customers who want to be perceived as a certain kind of person, someone who seeks the best or a better life and is willing to pay to for it. "You can buy a Swatch or you can buy a BVLGARI watch. What's the difference? A sense of luxury," says Chen.

She also feels that design comes into play in regard to customer loyalty. Many luxury brands offer signature designs that cannot be replicated. The design catches the eye and everyone who encounters it knows which brand it represents. Luxury shoppers admire the products they buy and appreciate the design as well as the tradition of the brand. Chen admits, "I myself became a big fan of BVLGARI after getting to know the products, understanding the brand image and heritage. I developed an appreciation of the product design, which is so unique and different." Customers of the luxury industry know their brands. For them, products must meet more than simple functional needs; it's more about meeting emotional and lifestyle needs.

Employees of this industry must be top class just as the customers they serve are. Chen describes the HR role in the luxury sector as different from other industries she has worked in. One of the unique factors is the way in which recruitment is done — it is an art and very competitive, and the talent pool is limited. Employees who work for BVLGARI must be very experienced because the company caters to an exclusive customer group, customers who do not focus on price. Therefore, BVLGARI does not participate in campus recruiting or hire entry-level workers. Recruiting takes skill and persistence to acquire the best talent in the industry. Chen spends much of her time out of her office looking for talent and scouting the competition to ensure there isn't someone working for another company who should be with BVLGARI. The talent wars can be brutal. "Today I can recruit someone from Cartier and tomorrow Tiffany will approach and steal them."

This battle for employees keeps Chen attentive to retention. She researches benefits packages, market rates and other employee incentives extensively to ensure that competitors' offerings aren't more attractive than BVLGARI's. The company must have the tools in place to keep employees engaged, satisfied and happy; otherwise, talent might leave for a better deal elsewhere. Human resources must be flexible in the luxury industry, and the HR team must be willing and ready to change policies instantaneously and brave the executive team to prove the need for any such changes to keep their top talent.

According to Chen, the role of human resources in the luxury industry is, at all limes, to know the customer and know the products. To be a true business partner, human resources must understand the needs of employees and how they align with the business. Retail is a big part of the luxury industry. When HR managers gain intimate knowledge of the product, they achieve a clear understanding of the perspective of the retail employees, who deal and engage with customers directly. "I attend retail meetings not just to understand the business, but to understand my salespeople's conflicts and issues. I can then provide my suggestions and solutions to solve them and ensure they are happy employees who will meet our customers' needs," Chen says.

For luxury brands such as BVLGARI, it is all about the customer. The value and quality that the luxury brand offers are immeasurable to customers, who don't put a price tag on that value. The industry can weather the storms of the economy by staying true to customers, both external and internal. These companies continue to provide remarkable products to unique customers via exceptional brands. Human resources is there to help grow, develop and sustain the business elements vital to this industry.

CERTIFIED Summer, 2013