Tamara Mellon is taking a second shot at smashing luxury rivals, and retail tradition, with her own brand
Tamara Mellon does not do modesty well. “I think we could be one of the giant luxury brands,” she purrs while telling me about her new footwear label. “That’s my hope, anyway.”
Mellon believes she is single-handedly turning the world of luxury fashion on its head. The old order is dying, insists the fashion editor turned designer. Department stores are history and seasonal collections are so last century.
“There is total heads in the sand here,” says the 49-year-old, who helped transform Jimmy Choo from an East End cobbler into a British luxury powerhouse before leaving amid much acrimony five years ago, with a reported £85m payoff.
“Technology is eating every industry. Fashion will be just like music. Executives don’t acknowledge that change is coming and then they get slapped in the face.”
Mellon is more than ready to dish out some slaps. Last week she relaunched her business in Britain with a collection that viciously undercuts the prices charged by the brands she sees as rivals — names such as Manolo Blahnik, Christian Louboutin and, most important of all, Jimmy Choo. How is she doing it? The shoes are available only online, so there is no wholesale margin for retailers. Mellon says she can sell the “same standard” as the top-end brands for “literally half the price”.
Cutting out the middleman is nothing new. It is how Amazon became a $338bn (£268bn) business. Yet conventional wisdom suggests that such tactics do not work for luxury goods. Shoppers want to try on a pair of £1,000 shoes before buying them. (Mellon’s collection ranges from just under £300 to more than £1,100.)
“I’m definitely the first luxury brand to do it,” she says with undisguised pride.
It is not, however, the first time Mellon has tried such a strategy. Last year her three-year-old company filed for bankruptcy protection in America. It was meant to be the first “buy now, wear now” luxury brand, a high-quality version of H&M or Zara, that does not keep women waiting for the latest trends.
In essence, the idea makes perfect sense. Designer collections often take six months to translate from catwalk to shop, despite being available to view online immediately. “By the time we get it there, there’s fatigue around it, it’s not exciting, everyone’s been looking at it for too long and they’re onto the next thing,” she says.
But Mellon’s first attempt to bring fast fashion to the jet set flopped spectacularly. Investors, including Carphone Warehouse co-founder David Ross, Icap boss Michael Spencer and Tory grandee Lord Marland, lost millions of dollars on the venture. They sued the designer — who says she lost $4m herself — in a Delaware court, accusing her of “wasteful expenditure”. It was alleged she employed a life coach on the company’s payroll and spent $100,000 on tickets to New York’s Met Gala.
Such excess should perhaps not have come as a surprise. Mellon grew up in a wealthy family and went to finishing school in Switzerland. Her father, Tommy Yeardye, helped build the haircare giant Vidal Sassoon. Before moving her home and business to Los Angeles, her Instagram feed was filled with pictures of her daughter, Minty, riding horses in the Hamptons.
Mellon’s accent, much like her life, flits back and forth across the Atlantic — part Sloane Ranger, part New York yummy mummy. Every T turns to a D, with her vowels dragging behind her.
Executives don’t acknowledge that change is coming
Mellon won the Delaware case, and restructured the business under chapter 11 of the US bankruptcy code. She claims the original investors’ refusal to stump up more cash hampered her chances of success. “I’m standing there saying, ‘Guys, we’re about to hit a wall. The industry’s gonna, you know, hit a wall. We need to transition, we need to adapt to the digital revolution.’”
Clearly there is no love lost between Mellon and her former backers. Her lawyers called them “bitter and recalcitrant”. They hit back, saying she failed to deliver on creating an “entirely new aspirational lifestyle brand” because she was not willing to put in the hours.
But it is not the City veterans who she blames for the failure of her first attempt to launch a business under her own name. Her real ire is reserved for the company she co-founded in 1996 after working as an editor at British Vogue.
“The chapter 11 really came from what Jimmy Choo did,” she says, referring to the company as a whole, rather than the Malaysian shoemaker himself. “They basically boycotted me from all the factories in Italy. They went to the supply chain and threatened that if you work with Tamara we’re going to pull out our business.”
Those accusations are the subject of a lawsuit filed by Mellon against her former employer in September. Jimmy Choo said the court action would be contested vigorously.
A row is never far away for Mellon. She sued her mother in a dispute over the ownership of Jimmy Choo shares worth £6m. She described her former husband, Matthew Mellon, scion of the US banking dynasty, as “a hopeless addict”. Mellon herself struggled with cocaine addiction.
But it is Jimmy Choo — again — that elicits the most anger. She was forced out after frequent bust-ups with private equity investors, condemned by her as “ruthless opportunists who want to cash in, no matter what the cost to the business or the people working in it”.
That makes the financing of her relaunched business intriguing. The eponymous company was rescued by a $10m investment from New Enterprise Associates (NEA), an American venture capital operation. At first glance, NEA does not look so different from the private equity firms that Mellon once derided. That, she insists, is not the case.
“They’re pretty amazing. They invest in a lot of consumer and tech businesses. They really understood what I was talking about.”
The presence of supportive investors is one reason she believes the relaunched brand will succeed. Another is timing. When she tried to introduce buy now, wear now in 2013, the world simply wasn’t ready. “It was too ahead of the curve. No one really understood what it was.”
Three years later and upmarket retail has changed dramatically. Tom Ford and Burberry, two of the biggest names, have their own versions of the buy now, wear now model. Online luxury retailer Net-a-Porter recently started selling watches costing €50,000 (£44,000) and more. Evidently consumers are increasingly willing to pay big money without actually holding the product first.
The shift is changing how brands do business. These days Mellon hires more “tech people” than designers. She says it is no longer possible to build a fashion label in the traditional manner, via wholesale and retail. “Michael Kors is the last one to get in there on that old system.” Instead, prices will have to drop to attract a new generation of shoppers who buy online only.
She is doing that by cutting out a seemingly crucial part of selling expensive clobber: shops. “I pay the same factory cost price [as my rivals], but by selling direct online I don’t have to put a wholesale margin on my product.”
This, Mellon says, risks blowing wide open one of the sector’s biggest secrets: “Mark-ups were a secret in the luxury business. A secret we had to keep.”
She is scathing about the traditional retail model. Department stores ignored her when she tried to tell them women wanted to buy summer dresses in the summer, not when the collections reached the shops in February. “It’s not rocket science, is it?”
As usual, the anger comes back to her former employer. “I often think that if I owned Jimmy Choo today, what would I do? If I had hundreds of millions of dollars stuck in a wholesale channel, but I’m sitting watching decline every year.”
Jimmy Choo is, in fact, reducing its proportion of sales through wholesale. Last year, the channel accounted for 31% of its £318m revenue, according to the analyst Liberum, down from 40% in 2011.
Time has obviously not healed the wounds of her departure from the shoe designer that, at its peak, was valued at nearly $1bn. In her memoir, she accused its former boss Robert Bensoussan of masterminding a plot against her and creating an atmosphere where “there seemed to be a complete absence of goodwill and certainly no trust”.
When Mellon talks, it is difficult not be swept along with her. Her knowledge is deep and she undoubtedly did much to make Jimmy Choo a global success. But following the failure of her first shot at launching her own label, she still has it all to prove.
That’s not how she sees it. “Now I’m really executing what my original vision was,” she says, drawing out one final vowel.
The life of Tamara Mellon
Vital statistics
Born: July 7, 1967
Status: engaged to American businessman, investor and philanthropist Michael Ovitz. She has one daughter from her marriage to Matthew Mellon
School: Heathfield School, Ascot
University: attended finishing school in Switzerland
First job: shop assistant at West End fashion store Browns
Home: Beverly Hills
Car: does not own a car
Favourite book: Originals: How Non-Conformists Move the World, by Adam Grant
Film: Bad Moms, starring Mila Kunis, Kathryn Hahn and Kristen Bell
Music: old school hip-hop
Gadget: iPhone
Last holiday: St Barts, in the West Indies
Charity: the Elton John Aids Foundation, of which she is a patron
Working day
Tamara Mellon wakes at 6.30am for the school run with her daughter, Minty, 12. Mellon used to control her business from offices above Barneys department store in New York, but recently moved to Los Angeles. “We’re completely set up here, we have the team and we’re ready to go,” she says.
No two days are the same, but her time is typically taken up with website meetings, photo shoots and design and candidate interviews. Mellon now concentrates as much on technology as she does on fashion and her office is full of data analysts and engineers.
The former fashion journalist keeps in constant contact with the factories in Italy that manufacture her footwear. “It’s taken me three years to train them, to get the pattern cutters to understand my hand, how I like to do things.”
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