The Road to Luxury

Chapter 10Systems and Operations in the Luxury Business

Due to the growth and expansion of the luxury industry, the way of managing the back-end of the business has changed. During most of the twentieth century, one, two, or three shops had to be managed for each luxury merchant. The craftsmen used to work in their workshops either above the shops or in the basement. The raw materials were processed and stored nearby, and the finished products were brought from the shop floor directly to the stores. The owner could supervise the full value chain from sourcing and procurement to sales. He, himself, was also the designer, and he supervised the operations and manufacturing. When a friend or a friend's friend visited his store as a customer, he would come down, market the product, and sell it himself. He alone guaranteed the service for the specially crafted goods that he made on his shop floor. The customer could in fact visit the shop floor, could see how intricately the products were made, and could even chat with the workers as they sometimes made special made-to-order materials. Gone are those days.

Luxury companies today manage hundreds of stores across nations. The sourcing has to be done from multiple locations across the world. The crocodile skin has to come from a crocodile farm in Singapore or Australia, while the wool has to come from an alpaca farm in Peru or the cashmere from Inner Mongolia. And all the raw materials have to reach the shop floors on time. The processed ...