LONDON – “Trade fell off a cliff the day after Lehman’s went under. It just stopped,” recounted Lulu Lytle, co-founder of Soane, British furniture makers, as we sat together on a supremely comfortable handmade sofa in their handsome London showroom a few days ago.
I gave a little mournful nod at this, something at which I have become quite practised. We have all become accustomed to getting by on a diet of bad news from the moment the alarm goes in the morning.
But this was not, by any means, the full story. In fact, since Christmas, Soane’s trade has been up like-for-like, with the greatest boost coming from that epicentre of the economic tsunami, the United States. Interestingly, every week I come across a similar positive snippet amidst the negative reports.
At this point I should perhaps make a confession; a strange one at that for a luxury professional. For the last few years I have been somewhat of a luxury bear. Not that I have ever been less than optimistic for the long term future of the industry or its underlying commercial fundamentals. But, I did feel we were slowly strangling our golden goose with a lowered standard of workmanship, an obsession with the magnificence of our brands and a disinterest in our customers. In short, I sensed some of us were in danger of believing our own glossy PR, and that we were riding for a fall. I believed the Aegean stables needed a clean out long before the subprime tremors of August 2007.
But now? We seem to be running the risk of going the other way. The never-ending drip drip of gloom seems to be draining us of perspective. Things will get better. And, perhaps they aren’t as bad as they seem at the moment.
Which brings us back to Soane, and my cup of tea with Lulu Lytle
For those who haven’t come across it, Soane is a small London-based company dedicated to making the very best quality furniture. Everything is made to order by English craftsmen. As Lulu says, “I don’t care if we could make things cheaper in China or wherever. We source from workshops in this country that are best at woodworking, leather-making, upholstery, metal-working or whatever we need to make the longest lasting and most beautiful objects of their kind.”
So surely a small business like this, serving the highest end of the market, must be in the eye of the storm? Their customers, the very wealthy, have been on the front line of the crisis, hardest hit right from the start. For when the markets plummeted and the unimaginable happened (let no one tell you they truly foresaw the recent confluence of extraordinary events), the wealthiest of the wealthy saw the value of their investments plummet dramatically.
However, as is always true in recessions, the affluent are best placed to benefit. It isn’t that they can no longer afford Soane’s beautiful pieces, even with the holes in their portfolios — it is that they don’t feel like it. The combination of the damage done to their investments, the significantly lower value of their properties, and the uncertainty about the future all combine to make them feel poorer, taking the pleasure out of spending. Likewise, putting a halt to planned spending is a form of action, which, even if not strictly necessary, consoles in times like these.
All this by way of explanation that the drop off in trade Soane experienced in October was neither unusual nor inexplicable. But then, in Lulu’s own words, “So far this year has been our best ever.”
So, during a crisis of historic proportions, a small, niche luxury business has been doing well. Why?
One major reason is the weakened sterling. However bad things are, wealthy Americans and Europeans can buy Lulu’s beautiful pieces for 25% less than they cost a few months ago. And, as each piece is made to order, the exchange rate benefit is immediate. Soane’s policy of only using British craftsmen is paying dividends, because their costs are primarily denominated in pounds.
Second, there may be what I call ‘The New Year Luxury Lag Effect,’ which I have noticed in a few other instances. The events in the last quarter of 2008 were so sudden and shocking, that customers just stopped buying. And maybe they didn’t want to be seen to be buying. Yet, whatever the reasons, some did still ‘need’ what they had planned to purchase before Christmas. As regards to Soane, perhaps they still have a new house to furnish. Those purchases are being made now, more discreetly, in many cases, at lower prices. What we don’t know is whether trade will dip again, once this backlog has been addressed.
We must consider a third explanation, which I believe to be the most important driver, if the most difficult to prove. To Lulu’s customers, Soane offers true value — not because of short term exchange rate fluctuations but because her products deliver solid tangible benefits. They will last almost forever, never go out of fashion and are demonstrable evidence of good taste.
The Bear Sofa
There are two other crucial things that Soane is getting right.
This is not a business whose brand pushes itself forward and expects homage from its customers. It is the very opposite. It is low-profile, thoughtful, substantive and lets its products and their facture speak for themselves. This is not to say that Soane lacks passion in what it does; it is passionate in a determined, if understated, way about producing the best possible English furniture and never lowering its standards.
Finally, Soane also believes in putting the customer first. Yawn. How often do we hear that, you may say? Yet, in this case not only is it true — it is at the heart of what they do. Like luxury businesses a century ago, Soane treats customers with respect, as partners in the process of designing a piece of furniture tailored to individual clients and their homes. They do not dictate, they advise. This is not high-pressure sales, or worse, cascade sales, where a glossy advertisement is expected to do all the work while bored, poorly-trained shop staff simply take your money. This is a dialogue in which trust and respect lead to loyalty and repeat orders.
In a nutshell, I see Soane as a great example of a business that understands the essential luxury principles important in good times or bad. (For more on this, see my previous article, Back to Luxury Basics
Soane’s story shouldn’t be over stated, for it is not an isolated example of positive news amidst the gloom. It is, most importantly, a timely reminder of what is best about luxury and why this remains a great and important industry that has lived through many booms and busts.
Guy Salter, Guest Contributor
