The Future of Luxury is Digital with Michael Kliger, President & CEO, Mytheresa

Speaker 1:
Welcome to Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds, who are influencing our global sectors.
Oliver Chen:
Thank you for joining us. My name is Oliver Chen. I'm Cowen's retail, new platforms and luxury analyst. We're excited for you to tune into our seventh episode of our retail visionaries podcast series, where we discuss the future of retail and luxury with key industry and thought leaders. Today, I'm joined by Michael Kliger, CEO of my Mytheresa, ticker MYTE. What is Mytheresa? Mytheresa is a leading global luxury e-commerce platform for a high-end luxury fashion consumer. By way of background, Mr. Kliger has served as Mytheresa's CEO and as a member of the management board, since 2020 of September. He has served as president and CEO of Mytheresa.com since March 2015. And he was previously at eBay and Accenture, and holds an MBA from the Kellogg School. Michael, thanks for joining us.
Michael Kliger:
Happy to be with you.
Oliver Chen:
So our take is Mytheresa differentiates itself through the finest service and finest edit and luxury. On the service piece, what does the finest service mean to you and how exactly is Mytheresa's customer service differentiated from competitors?
Michael Kliger:
The whole journey and the whole proposition of Mytheresa always starts with the best understanding we can have, what our customers want. Service can mean many things and you really need to understand what does it mean for our customers. And in online luxury, it is really, let's call it the dichotomy. On the one side, excellent service means inspiration, surprise, instilling emotions, creating the desire to buy a product. So that's definitely one part which our customers would call a service. Surprise me, present new product ideas to me.
The dichotomy is once the customer has decided this is the product I want to buy, then it becomes really a matter of efficiency. It then becomes, make it frictionless, make it seamless, make it fast. And so what we try and we believe that we are differentiated is to really bring this together. So inspiration on the app, but a simple way of checkout, no frills, no whistles and bells. We run focus and we heard a couple of times the statement, "I like your app because it allows me to shop at one red traffic light." And that is one part of the formula. And so we really take that seriously. And of course, to our top customers, we try to give even faster answers, faster responses, even faster shipping. And so combining this and knowing when is the customer shifting from emotional inspirational desire to real efficiency and convenience. And I think we are pretty good in combining these two.
Oliver Chen:
Michael, that's very helpful. At Cowen, we definitely believe in this idea of magic plus logic and logic being a very important factor in driving convenience and speed and a frictionless experience. So what about the magic? What about inspiration? What about surprising the customer? One of your strengths is curation as well. What does that mean to you and how and why can curation drive a competitive advantage?
Michael Kliger:
Again, it is actually tied to what you just said. It is emotional logic. Curation on the one hand means that we actually do the heavy lifting. We take on an important job as retailers, it has nothing to do with digital. A retailer's job is to go around the world and find the best product, trim down the endless aisle of opportunities of skews of styles and bring it down into a irrelevant set, not too small so that the customer feels, "Oh, I don't have a choice," but not too broad that it feels tedious. And actually, you lose the efficiency and the convenience. So curation means trimming it down, but the other part is making it relevant and relevant means don't show me product I'm not even faintly considering. So stay in luxury. That's our belief. That's why we curated, it was a very limited set of brands, much more confined set of brands than other platforms, but relevant also mean... well, I've never thought about buying homeware from Gucci, but now that you show it to me, that's inspirational.
I didn't know that Antico also now designed swimwear, but now that you have the exclusive pre-launch, that's a surprise. So relevance means show something that is the relevant set, but also show something that inspires me. And so curation is it reinforces the role of the retailer to make it easy, efficient, and convenient. But curation also means I feel it was relevant to me. Don't show me products I don't even want to consider. And so we do believe we take some of the core strengths of what a good boutique does and transform it into a digital experience. Because if you go into a boutique, you also know it's not as big as a large general merchandise store, but the owner, the sales assistant, they know me and they don't show me any piece of ready to wear, which I wouldn't even consider. And so it's also bringing the dichotomy together in curation and it's powerful. It's really powerful. The number one answer to why people shop on Mytheresa is we like your edit.
Oliver Chen:
In many ways, luxury can also be about simplify to amplify and helping somebody understand a point of view that's differentiated. Our surveys also underscore the power of your curation. So diving more into curation, exclusive capsules, collaboration. We really feel like that's a fresh, modern approach. And you've had some amazing partnerships with Brunello Cucinelli, Gucci, Montclair, and others. How and why do you do these exclusive capsules and what do you see happening with this in the future of luxury?
Michael Kliger:
I think these capsules, these exclusives, play a very important role in creating the need and the desire to often check in to see what do they have this week? What is the unexpected and what is also only available at Mytheresa? Of course, it does give us a competitive edge. If we can, as last week, present a capsule collection from Jacquemus only available at Mytheresa. In the next couple of weeks, we will have capsule collections from Valentino, from Brunello, from Missoni, from Cecilie Bahnsen, so all the variety of different styles and directions. And it does allow, and that makes it also interesting for our brand partners, to present in a new way a brand maybe to take a bit out of normal approach to the brand. We overlay it with campaigns.
And so it gives the customer reason to look at because fashion is definitely about freshness, newness. And I think we are now in the world where dropping two collections per season is not the frequency of freshness and newness that the customer today wants to have. So this whole drop logic of course also exists in other areas. And so I think the constant need for freshness and newness is well served with capsules while not undermining the core relevance of collections on which designers work for many, many months.
Oliver Chen:
Michael, that dovetails well into the customer and the world reopening and the excitement that we're experiencing in the opulence ahead, in our view. How has the meaning of fashion and luxury changed or evolved? What do you think about behavior post pandemic and what might never change?
Michael Kliger:
Number one, we are so happy to really say it's a post-pandemic moment now. And we are very excited about the early trends we see. There is clearly a very strong desire by customers around the world, very much so already in Asia, extremely so in the US, and hopefully soon in Europe, to go out again, present yourself, enjoy life. It is a kind of an '80s moment again. It's not the innocent exuberance maybe. We are smarter today. We have learned a hard lesson. But still, even though a lot of the lessons about wastefulness and sustainability will remain and are present in the consumer mind, the strong desire to enjoy life, to meet friends, to go out is a fundamental human need. Humans are social animals. And so what we currently see is so strong desire.
I was talking yesterday to a customer and she said they went out, she and her husband, to a normal steak restaurant. But she dressed up if it was a Michelin restaurant, just because of the joy to finally going out to a restaurant. Her husband said, "Don't you think it's a bit out of place?" No, not at all. I haven't been in a restaurant for so many weeks. And so I don't think the hard lessons will get lost. It's not just simply back to where we are, but I think fashion is for people to enjoy life. And it is not something that is a burden. It is not something where you constantly need to be reminded about things. So we will try. And the whole industry will try to combine the elements of reducing waste, the elements of being more mindful of the environment and also of the social aspects of a fashion, not reduce the joy and the fundamental purpose of freedom and fashion.
Oliver Chen:
Michael, on the topic of customers younger versus older customers, what are your thoughts on millennials and gen Z? Your core customer is older and high net worth given your elite curation, how are you balancing execution and evolution and continuing to innovate, to cast the net attractively wide as well?
Michael Kliger:
Very good question. And I think the last 10, 15 years I've actually provided a very positive answer. I would say before that there was clearly a strong hypothesis in the market that luxury runs the risk of dying out because the next generation is not into luxury product, the generation of the '60s and '70s. Why would they pay so much? Why would they even go to red carpet events and operas. And then surprising the young generation of the last 10, 15 years, they have been very strong in the appetite for expensive fashion items. Yes, more on sneakers. Yes, more on what we nowadays call streetwear. But young people are happy, willing, or excited to spend $600, $700 on a pair of sneakers. I think that was still a question before that era, will young people be eager?
And so, yes, it's not yet pumps. It may not be yet gowns and suits, but that is also a question of occasions in life. And 10 years ago, no one imagined to see Jeff Bezos in tuxedo. Now you can see him in a tuxedo. He shows that lifestyle changes and then you do also buy different products. But the appetite for expensive luxury fashion items that make you feel younger, make you feel more successful, makes you just feel good. There's no question that this exists and will continue to exist for many, many more generations. It's more, what is the lifestyle? What is the occasion? Where can you wear these? And we are in an age of a more casual lifestyle than 30 years ago. We are in an age of there is no strict rule of what you wear when you go there.
It's much more freedom, but you can already see that the street regeneration is looking for more elevated looks. For more elevated types, the dress shoe is not yet back, but the loafer. The loafer is the new sneaker and you can see it, whereas Loro Piana, you can see, see it with Prada. You can see it with Tods. The loafer is the new sneaker. And is it again a suit? No, but the lightweight jacket. Yes. And so fashion comes in cycles. Fashion comes in rhythms. But the appetite, not for everyone, but in certain segments, for luxury is always, and will always be there independent of age. That can be very comfortably answered today.
Oliver Chen:
I love the unstructured blazer and loafers can always be new classics. So that's exciting. Michael, what about sustainability and diversity and inclusion? What do those factors mean to Mytheresa? And what are some company initiatives to highlight that address these topics?
Michael Kliger:
This is what I referred to before. We are not going back to the '80s, carelessness and negativity. These are with us for real. And of course also because they are fundamental tool, humankind survival. As a retailer, as a platform, we see our role in number one, not engaging in anything that is against ethical, legal standards. And we need to clearly communicate that inside the company, but also with our brand partners, with our stakeholders. Beyond that, we believe we need to be as good as we can to help our consumer make informed decisions so that they really know, "If I buy this brand, if I buy this product, what is it that I do? But also if I buy from an e-commerce platform and I have my product shipped, what does it do? What is the carbon footprint of having a parcel ship?"
So we have initiatives to really provide much more information to support informed choice. And then we of course, want to provide options, options to the consumer. So yes, we will tell you, what is the carbon footprint of having a parcel shipped, but we will also provide you with an option to offset that. We will provide you with options to buy upcycled or recycled product. The Missoni capsule we were launched is from upcycled fabric. We have just announced a partnership with Wistia collective to begin here in Europe, so that our customers can also engage in selling pre-owned products, putting them to a new home, finding a new owner for these products. So this is not because this is our main purpose, but we want to provide this option. And in the same sense, provide options for fully sustainable products. Be it from Stella McCartney. Be it from Gabi Hearst.
So absolutely stick to the those goals, provide much more information so customers can understand what does my action imply for the environment. And then also provide more options. And we group it into planet. We group it into product and we group it into people because all of that also has responsibility for people. And we set up last year a diversity and inclusion committee in our company to really put ourselves constantly to the test. Are we doing enough? And the answer generally is there's always more, you should do. You could do. There's never an end state in this, but we definitely feel and want to take on that responsibility as a player in the industry. The one additional element that I always want to stress is, but still we want to do it in a way that the customer feels good, that the customer can enjoy the purchase. We don't want to hide anything, but we also don't want to put a burden on participating in consumption.
Oliver Chen:
Thank you for that, Michael. At Cowen, we believe in something called STAR sustainability, transparency, authenticity, and re-commerce. And it really feels like you're executing across a lot of these tenants with transparency being a very important key trend. So Michael, taking a step back. Luxury goods as an industry is very physical and flagships matter too. But how has digital disrupting luxury and why is luxury going online and how has Mytheresa helping fuel this disruption and driving modernization at luxury brands?
Michael Kliger:
I think this comes back to where we started our conversation, which is understanding consumer needs. And if it is on the one hand emotion and on the other hand logic, then digital does provide for many, maybe not all, but for many customers, very strong answers, provides very strong benefits. So on the logic, it's time efficient, it's convenient. You may save a trip through to five stores. You may have a much wider selection, much deeper selection in the brands you really like. So for many consumers, that is a driver to go online because it's so efficient, so convenient, and you can do it out of your home. But also on the emotional part, and that I think was for a long time a challenging discussion because the stores, the flagship stores, the department stores that you find in luxury, are just amazing pieces of architecture and they provide an amazing experience.
And there was a question can digital also provide such an amazing customer experience? And I strongly believe it can, but in a different way. So going into a fantastically designed boutique, having amazing service, but by well-trained shop assistant is a fantastic customer experience. But having the ability at the leisure of your home to engage in video, engage in music, engage in gamification. This is also amazing customer experience, and you can see how many luxury brands are actually active in sports games. And gamification, it is inspirational. It is emotional. And so the customers are discovering this touchpoint and why, because it is across all our life, this touchpoint. It's not only cinema, it's also live-streaming at home. It is digital dashboards in your car. So many apps have entered our life, have either made it more efficient or convenient, but also more entertaining. And I think that's why digital is catching on and luxury because we are addressing a consumer need and a growing consumer need. And it is in that sense, of course, disruptive. It is disruptive.
Oliver Chen:
Michael, you're hitting on some really hot, interesting topics. What about live streaming and multimedia as well as personalization and or other technology that you may think will impact luxury profoundly in the next five years?
Michael Kliger:
I think there are a lot of technology out there that has the potential to do that. And we are engaging in those to understand how are customers reacting? So we recently launched a capsule collection with Christian Louboutin and we actually enhanced the campaign was an AR campaign so that you were able to look at the different shoes that were flip-flops and sneakers in a virtual reality, quickly changing colors, quickly turning around the shoes. It is an additional AR element. We actually saw great reaction to that, great response. We have done in the course of the pandemic live-streaming sessions. We invited our top clients to meet designers. Previously, we always did it in dinners and cocktails. Now there were virtual sessions meeting design us like Johanna Ortiz or Stella McCartney. And again, luxury is not an isolated part of the world.
If live streaming takes on and Zoom takes on in your professional life, then it also takes on in your shopping life, in your entertainment life. And so I do believe, and some brands are more advanced and some platforms are more advanced. Part of what we do as also something of a media outlet, of an entertainment component and 3D AR personalization. Being able to see the product on yourself, because you can implant your picture, voice search. There are many aspects. There are many aspects that it's hard to tell which ones will catch on because in the end, the consumer decides. And therefore the role of us as a player in digital is to test a lot of things, to try out a lot of things, because instead of spending months figuring out what will work, put it in front of the consumer and have her or him decide. That that is much better and faster and that's the only real test.
Oliver Chen:
The opportunity and the test read and react is part of having agility and being innovative. Michael, what about experiential retail? What does that mean to Mytheresa? You have a history of hosting really compelling, curated events with brands. So what about those in real life events?
Michael Kliger:
What we strive for is to provide to our best customers experiences. We call them money can buy experiences. This is a very aspirational term, but we really strive for that. And what do we mean by that? Our customers are not in need for fancy dinners. They definitely don't need Mytheresa for fancy dinners. They definitely don't need Mytheresa to go to fantastic exotic locations. But what of course, as they are not only financially well off, but so engaged in the luxury fashion industry, they're very much excited about meeting designers. We had experiences where we had top customers visiting the factory of Gianvito Rossi, only to receive at the end of the factory visit and bespoke pair of shoes signed by Gianvito. We had events with Montclair.
So things where as a fashion and luxury lover, you really say, "Wow, that's exactly. I want to attend to show in the first row. I want to meet Victoria Beckham." And that is what we try to offer to our customers because in the end, we do want to have a special bond with our customers and experience is that customers and people and friends that have attended those events, the relationship with them is at a different, more deeper, more emotional level. We spend time together. The top customers spend time with the personal shoppers at these events. And that's also so exciting about entering the post-pandemic era, because we did not have a single event the last 16 months with the exception of two events in China, in Beijing and Shanghai, those were the only two events we were able to execute over the last 16 events. It's incredible.
Oliver Chen:
Michael, international expansion is a major growth driver for Mytheresa and the company has recently announced a new north America president. Could you give us more color on the US strategy and are there learnings from Europe that you may want to adopt or any learnings from the US that you may want to apply to Europe or Asia?
Michael Kliger:
I mean, to start with, we are of course, privileged to work in a segment in an industry that is truly global. The top brands on our website are globally desired, globally attractive. This is not a product category that needs to be adjusted or adapted to different cultures, to different languages, to meet different electronic standards. So our fundamental offer is attractive and is desired across the globe. Going into new regions, you still need to adapt to the lifestyle, to the ways of how to engage clients. Coming back to what we just discussed about experiential aspects, you want to be as close as possible to your customer and they want to feel this proximity. So you're actually right. As of June 1st, we established a new role, the role of president of Mytheresa North America.
We are very pleased to have Heather Kaminetsky in this role and her main task, her main remit is really to number one, raise awareness for Mytheresa by being present in the right media, in the right events, in the right circles, creating customer intimacy by organizing a lot of events, be it styling suites, be it dinners with our top customers, be it dinners with designers, strengthening our personal shopping network, so really provide to those customers that like to have that service, a personal touch, someone they can call for whatever they want, fashion advice, concierge type services. And so her team will consist of person shoppers of PR and events and also of content affiliate management and influencer management. We of course also have some operational tasks to improve the service to the level that we have in Europe in terms of shipping time, customs processes, availability of 24/7 staff in the local time zone. We are working on that.
We are improving that. This is not where we are as good as we are in Europe. Still the net promoter score that is fundamental KPI in our business and which we track weekly across geographies, across types of customers, it is in the 80's in the US so we do a pretty good job, but not a perfect job. And the learnings is always... customers lead the different lifestyles. The social lifestyle in the US is different. The level of involvement in charities is different from Europe. In Europe, if you go to evening events, cocktail dresses are standard. In the US and many events, long gowns are standards. So there are these differences. There are differences also in terms of media channels, the importance of SMS is for European digital experts, still surprising. Messenger is much more important in the US than it is in Europe, where email still accounts for a much larger proportion of how you engage with customers, influencers, micro-influencers brand ambassadors.
I think it has a bigger role in Europe, maybe comparable to what we see in Asia for consumers. So there are all these nuances and, and it is very clear running a US business out of Munich we are missing, and we will miss those nuances. So having a local team, a local team living in the country, living in the region already creates a difference. And then when we talk about the US you also have to, of course, recognize that even the US is a country of big differences, west coast, east coast, the southeast, Florida. So also there, we want to have teams in these different geographies in the US to really make the customer feel Mytheresa is for me. Mytheresa is relevant for me. And I like they have these European brands, but they speak to me in my way.
They respond to my needs. And I think as the company gets bigger, we can not only afford to play to these nuances, but we also need to play to this nuances. So of course we constantly reevaluate. Europe is Europe, but what about Italy versus Spain versus Germany? And Asia is a fantastic market, but Korea, Japan, China, is there more commonality, or is actually much more differences that you need to recognize as a player from Europe? So this is an ongoing theme, but the US is an immediate growth opportunity for us that we are strongly pursuing, strongly pursue with so far very good results.
Oliver Chen:
It's very exciting, Michael. Thanks for sharing that. Michael, on the topic of supply chain, what's your advice to the industry as you work with so many brands? What do you see happening and what should be more urgent as supply chains really get reinvented across retail?
Michael Kliger:
My strong opinion is that we need to be much more integrated. The supply chains still seem very much... This is where fabric is happening. This is where clothing is produced, and this is where retail or platform is happening. So any supply chain experts will explain to you, if you don't connect the demands at these different parts of the supply chain, you create inefficiency. You create enormous spikes. You cannot smooth out the inventory that is built at each step in this chain and inventory spikes not being in sync with the final demand, which is created by the customer, of course also creates waste. The Japanese lean experts call it [muda 00:35:59], and you don't have that under control if you cannot connect the final need of the consumer with the production.
And there are many ways of doing this other industries have been more advanced than this. And so we believe integrating the final consumer point with the production is a must. And to be much more agile in reacting to changes in consumer need. I think luxury will always be an industry where you present something that the consumer may not have imagined that they want. We don't produce green because the consumer wants green, we decide that green is now something. But still there are inefficiencies in each step of fabric of dying of cutting and the supply chain today is still very much fragmented. There are a lot of family businesses at the start of the supply chain, a lot of family business in Italy that produce for the major luxury brands in the world. They're huge warehouses that support wholesalers, retailers, platforms. And if we can luckily use IT, we can likely use process to be more integrated. And I think that will make us more reactive to consumer needs, but also less wasteful.
Oliver Chen:
A connected, faster experience, and trying to match supply and demand as best we can and leveraging the technology. Michael, our final question is what part parts of the job are the hardest? Which parts are the most fun for you? And do you have any closing remarks as well?
Michael Kliger:
The most fun is clearly interaction with customers, be it in focus groups, be it at dinner, be it at fashion events because our customers are remarkable people. They're successful in what they do. They are, I think, fashion people always are more outward in their character, or they have things to tell. So I always enjoy that and I learn a lot. Customers are an amazing source for ideas how to improve the business. So I enjoy that. Things I don't enjoy, let's face it there are these parts which are more administrative and you need to do them, but I will never complain about it because that's like saying, "I don't like to train. I only want to win." If you don't train, you don't win. So winning is joyful training is necessary.
And if you're not aware of that, don't even start to compete. And closing remarks, I'm by nature a super optimistic person. This optimism, I must say, has been a bit tested over the last 12, 16 months. I have seen a lot of challenges in the world, in my lifetime. Not as bad as my parents will have experienced in their life, but still. But the last 12 months have been challenging and have been literally life threatening. So my closing remarks mark is I'm back to my full optimism. I'm not purely talking about our business, this is too narrow. I really talk about the amazing news is the crisis that we had over the last 12 months, only 10 years ago it would have been a disaster for humankind. Without our technological advancement in terms of keeping the economy going, even sitting at home, being able to invent and produce powerful vaccines in just 12 months.
Impossible 10 years ago. So in a very bizarre way, it couldn't have happened at a better time in humankind. And so while we should be mindful of the learnings, we should definitely not be depressed. We should be extremely positive. The way the world has managed it and I'm fully aware that in many parts of the regions and many parts of the world, vaccination levels are still low, so I'm not... but there is a vaccine and the rich countries are donating more and more vaccines to third parties and we will get over it. And so I believe we should be super optimistic and there are many challenges, climate change and air pollution. But the answer to all these challenges is innovation, technology. Technology is not the enemy. Technology and innovation is the solution for our challenges. And innovation, that's the success of the human race. Without innovation, we would still be sitting in caves. I prefer my lifestyle today.
Oliver Chen:
Yes. And the interplay between fashion and innovation and culture and fashion serving a purpose and a reflection of how society feels or wants to feel is very interesting too. So we agree the best is yet to come and disruption presents opportunity and we're witnessing some profound shifts in luxury in the way that consumers consume luxury and think about it and the purposes that we all need and seek and feel as communities too.
Michael Kliger:
And these changes are challenges, but the outcome will be super positive. I'm fully convinced of that. I'm not naive, but I'm fully convinced that the future is positive as you just said.
Oliver Chen:
Well, Michael, it's been great to spend quality time with you. Thank you for briefing us across many fascinating topics. And we loved having you. Thank you.
Speaker 1:
Thanks for joining us. Stay tuned for the next episode of Cowen Insights.

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