The Business of Fashion is on the road. Our first stop is in Nassau, the capital city of The Bahamas, an archipelago of islands which has long been a stopping off point for people cruising around the Caribbean. San Salvador Island is where Christopher Columbus first set foot in the New World in 1492 to trade with the Lucayan people. When British loyalists came over in 1717, the islands fell under British control and did not gain full independence until more than 250 years later.
Today, the Bahamas is a rich country, with the 3rd highest GDP per capita in the Western Hemisphere and an economy driven primarily by tourism and offshore banking. A recent mega real-estate development called The Atlantis, financed by Sol Kerzner, the titan known for his over-the-top casinos and hotels in South Africa's Sun City, has further boosted the Bahamas as a tourist destination, primarily for sun-seeking Americans with money to spend and gamble away in the cavernous casinos.
With more than 5 million tourists visiting the islands every year, it's not surprising that many of the luxury brands have set up shop to entice these visitors to do a little shopping. What is surprising is that some of them have allowed their brands to be diluted by haphazard merchandising, market-style bargaining, and poorly-outfitted stores under the control of local franchisees. That said, there are still signs that the luxury industry in Nassau is alive and well.
The centre of the action is on Bay Street, where stores like Gucci, Fendi, Coach, Breitling and Rolex are nestled in between discount duty free stores in creaking old buildings. Nearby, cruise ships unload thousands of passengers who flood the streets looking for places to spend their cash.
Walking into the Gucci store was like walking into a time warp. Newer bags and accessories were mixed in with relics which appeared to be from the Tom Ford era. There was a discount table in the back with shoes scattered haphazardly on a table covered with fabric which aimed (unsuccessfully) to hide the sorry state of the table underneath. Some of the merchandise appeared to be damaged or worn out because it was so old. In the background, employees were bickering with each other about something. A friend who lives in Nassau has been able to bargain with the employees, making the store more like a market-stall than a luxury goods emporium. Since the store opened 20 years ago, my guess is that this is the result of an old franchise agreement that may not yet have expired. Either way, this store is doing no favours for Gucci's brand image or sales.
But all is not lost. A sparkling new Breitling store was fitted with modern, clean fixtures and staffed with knowledgeable employees who have managed to sell 4 watches retailing at more than $150,000 since the store opened in October, including 2 models from the diamond-encrusted, blingy Breitling for Bentley collection. A saleswoman told us that 80% of their customers are tourists, but there is also a significant local population that comes into the store. This was the first time I had been in a Breitling store and I was impressed. If a customer doesn't leave with a product in hand, they should at least walk away with a positive impression of the brand.
The lessons for luxe companies are clear. Working with partners who understand the local market is often a natural strategy for global expansion. However, hasty decisions and poor oversight of franchised stores may do more harm than good. These stores won't end up selling much merchandise due to poor management and may also damage the brand's goodwill with globe-trotting customers who will take poor impressions back home to New York, Milan or Tokyo. On the other hand, a well-chosen partner and clearly defined processes for ensuring consistency of the retail experience can make all the difference in drawing a good hand in the gamble of working with franchisees.