Michael Kliger, LuxExperience, CEO

27:57And therefore, the newcomers, we have a higher threshold for newcomers because we are so curated also because we have a rule that says if you want to add a brand, you have to drop one Because otherwise the buyers continuously expand because it's their natural tendency. So that brand portfolio fills itself quite easy. What is much more difficult is the SKU selection because also we want to be selective in the items. And then there are some bestsellers, but then it's always the question, okay, if we want to have loafers, which we want to have, which ones? Not every loafer from every brand. So how do we put together an interesting loafer selection from classic to a bit more fashion?

28:47We actually divvy up our logic into luxury, timeless, and fashion. And these are the three subcads that we need to hit. We go into a loafer selection, there's a price point logic, and do we have a good representation of these different styles and not duplicatives of duplicatives? Because I think, you know, I was looking through the website yesterday and it is definitely a much narrower group of brands compared to, I would say, some of the competitors. So, secondly to that, I was a bit sort of surprised not to find a few categories there. So like men's grooming, for example, I would say is growing.

29:27From a SKUs point of view, you only have one SKU. How come you guys are not doing men's grooming, for example? Remember the second law of physics? Item value. Ah, okay, too low. Too low. I mean, to ship globally, that's also on the women's wear side. We don't have beauty. Skin care, also for men's, would fit this law of physics. But you cannot make money shipping around items for 80 pounds. It's not possible. And then going back up to going against the second law of physics, high value things, luxury watches? Would love to have more. That's something which is not easy to get and we are still building up.

30:11We are very happy to have Bulgari. We are very happy to have a partnership with Bucherer. So you can get the Cartiers and the MAPIGs as pre-owned. But there's much more opportunity and that would definitely fill the needs of law number two. so let me ask my last bit and then i'll let you jump in no no no and now just going back right at the beginning we talked about that sneaker boom you know there was this time when it just seemed it was never ending really but it was and now we've gone into i would say last two years ago we would say quiet luxury i think we're still in quiet luxury i think we're still having this um this this this certain style that people are happy to wear from the office to the to social in the evening, you have this data at your fingertips.

30:58You're seeing this in the next collections. What are you seeing trend-wise in menswear? And do you think we're going to stay on quiet luxury for a bit longer? Or is there a particular trend that you're seeing at the moment with the brands that's coming through? I mean, quiet luxury will stay with us because it was always around. I mean, Bonello, Piana, Ketone, these are not up and coming brands. they always have been there. With the absence of a fantastic street sale business, maybe there was more attention on those. I believe, I see and I hope that we are coming back to a more fashion, more sartorial fashion.

31:39The new sneaker is the loafer. There's an amazing, Also, we just finished our trend presentation for our buy in Spring Summer 26. A lot of nice leather jackets, also suede is coming back. And I think we need to bring fashion back. I love quiet luxury, amazing price points, amazing quality, because quiet luxury is only quiet luxury if it is amazing in fabrication. and artisanry, but it would be wonderful to have more buzz. A lot of these quite luxury brands don't even have fashion shows. I mean, Xenia has a fashion show, but Loro Piano has no fashion show, Brunello has no fashion show, Keaton has no fashion show.

32:29So we are missing some of the excitement that we had when the Gucci was so hot, when Dior menswear was so hot. And as a fashion industry, we need that. We need to be talked about. So more excitement, a bit more. More excitement and drive more the desire to go beyond this quiet luxury territory. I mean, go beyond the shades of beige. That's what we are hoping for. Yeah, definitely. I told you you were getting on the beat now.

33:05Michael Kliger:Sorry if I stepped into something. Not at all. nervous. My wardrobe is basically 100 shades of navy and 100 shades of beige. Nothing wrong. No, I did. I actually bought a pistachio jumper when I was in Rome. Out there. Yeah, I've been wearing that quite a bit. Anyway, what I was going to ask is, I know that you talk to your customers a lot, you listen to them, and you're guided a lot of the time by what they actually want as opposed to what you think they want. Where's the balance between listening to what they want, but also guiding them, inspiring them with stuff they might not have seen? And how do you get that balance right, I suppose?

33:47I think you raise a very important point. You cannot sell fashion or that's more dramatic. You cannot create fashion by market research. The best fashion is unexpected. Customers cannot describe what they want. When they see it, they know it. But beforehand, you could ask them endlessly and they could not come up with... It's a creative process. So I think you're right. Where we listen a lot is, how do you live your life? What are the occasions for fashion? What are your needs when you buy something? It's not, do you prefer blue versus gray? I mean, that's useless also because we don't create, we buy.

34:29And so the buyers that we have try to understand what will resonate with our customers in fall, winter 26. But to understand, ski is becoming more popular. And therefore, we should expand our ski offer and also pick up, if there are interesting forays of traditional luxury brands into ski, if we see that resort is booming, that's where I say listen to the customer, understand how they want to be dressing up to the office or not. And then the items, I mean fashion you need to be led. Fashion is, the industry, the brands and to some degree all ourselves define what fashion is. But how is our customer living their life?

35:19That you need to know. Where is he in the summer? Greece? The Caribbean? Is art coming? I mean, we've seen a real boom in art for a younger generation of wealthy customers. And we believe art is a great playground for us, particularly because it is not an easy sector to get in. I mean, if you are interested in art, it scares the shit out of you to go into a gallery because you don't want to look and act stupid. So in the end, you don't go. And so we are working on these. This is where customer feedback is amazing.

36:04Michael Kliger:Yeah. One of the other things I love about my Teresa is the packaging, the way things arrive. A very distinctive yellow, beautiful yellow box. Well, I think a lot of companies, whether e-commerce or not, they forget about those tiny details and how tactile little things like that make you feel. Was that very conscious that the packaging would be striking? Absolutely. I mean, we don't do a lot of market research in the traditional way of fill out this questionnaire, one out of 10. But we do a lot of focus groups or just talk. And this goes back to an early discussion we had. Most people buy online for themselves.

36:47And still, a lot of customers describe, when this package arrives, it's like a gift for me. I know what's inside. But still, this I bought when I felt I needed it. I mean, it's an emotional. And therefore, we said, this is gifting to yourself. and gifting to yourself should be the nicest package because you buy it for your own. And this is where, of course, you then need to translate. Is it yellow? Is it blue? But to understand this is an emotional act. It's not, oh, I was cold, I needed a coat, therefore I went to my Teresa. No, I bought this coat because I wanted to satisfy myself. I wanted to make me look younger, more chic, more fashionable, make a statement about my status, whatever it is.

37:42And that's when it arrives. So we hope that the same ketone jacket in a yellow box is even more emotional than in a different box. That's what we aspire to. And that's where these things come from. There are these amazing cues when I heard a customer say, it's a gift to myself.

37:59Michael Kliger:I know what's in, but still, I'm so happy when it arrives. Yeah, a gift from your past self. That's great. Time machine. Time machine. And how else can you bring, I guess, the real physical, that boutique, where it all started? How else can you bring that into the e-commerce thing? How can we go from the boutique to the screen and share some values there? I mean, I often hear from brands, well, you cannot have this experience in a digital world that we have in our store. I disagree. We cannot have it the same way. But let me remind you, music is digital. Film is digital. People cry when hearing music, laugh when watching a movie.

38:49so digital can be very emotional. I don't have the tactile experience. I don't have the smell, even though we have tried to put smells into the boxes, but very polarizing, I must say. Couldn't work it out.

39:04Michael Kliger:Wow, that's interesting. Okay. But it is an emotional purchase. No one needs luxury. You want it. Yeah. That actually makes it even more exciting for me to sell something that people want because it gives them something. It's not rational. It satisfies emotional needs. And for me, emotional needs are even more important. If I can make someone happy with what we do, it's amazing if we achieve that. But we need to find our own way of creating emotions, of creating an experience, and work with those touch points that we have. Do you think you ever go into the physical? Pop-up, yes. Fulfilling this logic of what you mentioned is being there where our customers are.

39:57But a permanent physical location, I'm very respectful of how hard that is. So I'd rather stick to my online boutique. Okay. Fair enough.

40:08Michael Kliger:Can I ask you about the smells quickly? What was polarizing about the scents? Did people just unexpectedly hit by a waft of... Well, I mean, obviously you want it very, very minimalistic, but I mean, it's almost impossible to find something that is agreeable to everyone without being unnoticeable. And so we thought we had something there, but that's also... I like it. I love the ambition. That's part of what we do. We try. We experiment and we fail as long as we learn. It's all good. I'm just going to ask quick one question on the marketing mix, as you would say, and business studies. But around here in Mayfair, we're surrounded by, as well as big established Bond Street brands, we're surrounded by a lot of independent brands.

41:01With all your knowledge, running one of the biggest e-commerce luxury retailers, What would be your advice now for, say, a smaller brand in terms of their marketing mix? If you had to look at a brand that's, say, between that five to ten million pound mark and something that they should be really concentrating. I know everything's different, but in your view, how would that mix work? I mean, I can give my advice, but with all the caveats, I believe you're coming back to you need to find your customer. And with 5 to 10 million, it's so hard to break through the noise, or the noise, the different messages.

41:45So decide narrowly who you are for and then try to make in that little area an impact, which at least should be easier because you don't try to convince the world. You try to convince a certain audience. and you hopefully will find also by being so focused on a certain audience some organic ambassadors. Because as a small brand, you should imagine, who do I want to see outside wearing my clothes? And that should be the answer to. And how you convince these people or convert these people, there's a lot of work and then combine it with luck. It's funny how you're like, because I guess in e-commerce from old, it was about numbers and millions of people.

42:38But now it seems like there's a much more focus on a smaller group of people that actually make a big revenue target. If you have that person that comes back again and again and again, which is very, very different to what was being talked about 10 years ago. The beauty is in luxury, you do serve the world. So if you have a really clearly defined small group, it's still large on a global scale. And I think, I don't know, maybe it's just me. I do believe, think about the hospitality industry. And one of the big mistakes in e-com was to go down the route of discount. And that gave the e-com sector a really bad reputation.

43:21and I always say, look, describe me your most favorite restaurant. Is your most favorite restaurant the one where you always get 10 % off or is the most favorite one where, even if the food is the same, you get in, the owner recognizes you, calls you with your name, you always get the best table. And don't get 10 % off. Which one do you choose? You want the 10 % off scheme or you want, oh, I'm appreciated. They know me. I mean, any place where they say, hey, Michael, 10 points more already. With that question, just going back to my trees, how do you deal with discounting and sales? And obviously, you have to do some sales occasionally when you have, but what is the philosophy in the company?

44:11Sales have a function, have a role. I mean, there is seasonality. So at the end of the season, to sell at discounted prices, items that have been around for three months or continuously selling products from older seasons, it attracts a certain customer that either can't or doesn't want to spend so much, and they have the role in it. What is stupid? financially, business-wise, marketing-wise stupid is to discount something for winter in September. No one can explain that to me because you are not only giving away margin, you're teaching the customer that this product is actually not valuable. Because, well, it's 50 % off, but this is the suit from two years ago.

45:08There's a logic, but therefore the item is still good. But if in September you can only buy a winter coat at a discount, you actually say, my prices are inflated or this is not worth it. You really harm the psychology of luxury.

45:26Michael Kliger:Yeah. Yeah. Very interesting. How long? How do we do have time? I think we're about to move on to the dreaded word of AI. Yes. It wouldn't be a podcast without talking about AI. It wouldn't be a podcast without talking about AI. Surely this is a thing that everyone in the whole world is looking at. How are you dealing with the word AI in your business? Is it something that gives you sleepless nights? Or is it something that you see as an opportunity? I definitely see it as an opportunity to be better in what we do. It's not a blank check. I mean, you really have to dig into it. Is it working? There has been amazing progress out there, which is fascinating.

46:14And AI comes in different forms. There are ways to automize translations. I mean, it's pretty good already. It's image recognition. We have people that tag all our products. is this double-breasted, rounded shoulder, short sleeve, long sleeve. It's not an exciting job. It needs to be done because otherwise you can't filter, you can't search. Image recognition is getting so good that at some point you can use just AI tools to say, along 50 criteria, what is this item? So there are many, many aspects of image, text. And that's why the latest more text-based, image-based makes such an impact. Even though we had self-learning algorithms for 10 years in the attribution models that we use to identify high-value customers that will most likely return, the latest wave is fascinating and maybe makes it easier to have videos for every product, which customers would love to have.

47:29Today it's prohibitively expensive. So we are looking at it and again we don't look at it as a technology trend, we look at it as what will it do for our customers and in some areas it's it's positive it's very positive yeah wonderful well should

47:47Michael Kliger:we should we move on just before we go to some questions about you and your personal your personal journey but also i guess your life away from the office in some ways i won't ask you what your morning routine is that seems to be the the thing everyone's did you see that video of that chat went viral for his his mouth taping his eyes i've seen the morning routine yeah 3 30 okay Yeah, what time is your alarm in the morning then? Anything between 5.30 and 6. Okay, that's almost civilized, 6. But it's still quite impressive. It's much earlier than me. But we ask these questions intermittently to everyone who comes on.

48:25Michael Kliger:So what would you think you'd be doing if you weren't doing this?

48:31Michael Kliger:And I don't mean this podcast. I mean, this job. No, I understood the question. I mean, I would manage something, what it is. I've been working in different industries, but I like to work with people, create businesses. So something of that sort I probably would do if I wouldn't have stumbled into my Teresa. Great. If you could learn one new skill, you wake up tomorrow and you can do something you couldn't do before, what would it be? Speak fluent Italian. Oh, God, that'd be good. What languages do you have up your sleeve? English, German, Spanish, and then bad Italian and horrible French. What have you done recently for the first time?

49:23That's a very good question.

49:25Michael Kliger:I have to think. Probably my daughter dared me into something that I regretted. What's the best restaurant in the world, in your opinion? In my opinion, I mean, by experience, I won't name it because I don't want to ruin it by being over. There's a Sicilian restaurant in Munich that I just love. Okay, okay. Wow. Not naming it. There we go. Not naming it because it was your reach, with the reach of your podcast. Oh my gosh. I wouldn't get a table. Yeah. It'll be queues overnight.

50:05Michael Kliger:Favorite hotel? Yeah, well, we could ask the hotel one. Favorite hotel? Favorite hotel is the Four Seasons Cup Ferrar. Oh, yeah. It's a good one. It's a very good one. Beautiful restaurant, beautiful view, amazing pool, ticks a lot of boxes. Yeah. The city destination you never tire of? Venice. Okay. We got married in Venice. Lovely. The drink order that never disappoints. The drink order? The drink order that never disappoints. Gin tonic, Tanqueray. Nice. I thought you'd go for a Stein of beer, Munkn beer. I have to tell you, there is no Stein. This exists in the Anglo-Saxon world. Stein is - Just a normal gas.

50:57Michael Kliger:You ask for a Krug. A Krug. A Krug. Stein is in and was probably some Netflix series created this. You can't order a Stein in any Bavarian restaurant. That's, you've saved me a lot of embarrassment. Once I was in Munich in a beer garden when I was 18. Did you get a Stein? Didn't have much money. But no, I saw the beers on the list. And there was one which was like a lot cheaper than the others. And it was Tafelwasser. And I thought, oh, that's some local beer. Tafelwasser, of course, means table water. So everyone else got a pint of beer. And I got a pint of water. It was one of the worst moments of my life.

51:29Michael Kliger:Anyway. I did learn some German. That's about it. The best gift you've ever received. Best gift I've ever received. Man, you'll ask questions. That's a tough one. I don't want to. Because I will name something that my wife didn't give to me. You didn't name that? How about then, in safer territory, the book everyone should read, the book you most often recommend to people? I don't recommend it, but I do like to read often The Hitchhiker's Guide to the Galaxy. You've read that a few times. Yeah, and it always helps because if people ask you, so what's the answer? It's always 42. The person in your career who you admire the most?

52:18I think in a funny way, my father. Because when I told him I will go to university, He was so scared. He said, why? Why do you go to university? Don't do this to you. Because he was probably expecting me to sit on some desk and doing something boring. Because he never went to university.

52:35Michael Kliger:Okay. So he told me, okay, go to university, but make sure you don't do something boring. Okay. You've certainly not done anything boring. The quote you live by, is there a quote that often goes around in your head?

52:49Michael Kliger:Happy to stay, but ready to leave. Okay. What is that? That's good. What does that mean? You should always retain in whatever you do a certain sense of independence. That's very dangerous territory, but you stay together because you love someone. If you have constantly in your mind the idea, I could leave, I don't have to, but it's my choice, then the commitment is deeper. and that's with friends, with a job, with everything. You need to retain a level of independence because then it's your choice. Don't have anyone else decide for you. Yeah, that's really interesting. And finally, should we end on this one?

53:36Michael Kliger:The best piece of advice you've received.

53:45The best piece of advice. Well, don't go to university. Can I just also ask, you mentioned just quickly this last question, you stumbled into MyTeresa. Can you just tell us a bit about that story, that stumble? How did you stumble into MyTeresa? I'm kind of intrigued. I was working at eBay. And I was working in the business that served brands. And then eBay got split up between PayPal and eBay. So the business I was running was split up and that didn't exist. And then I met a headhunter and he said, well, I have something. What is it? My Teresa Luxury Online Retail. And then I saw, I don't know where I saw it, but I saw that only 4 % of luxury was sold online.

54:42This was in November 2014. And I said, I mean, that's brilliant. Because whatever you do, this will grow. It's almost impossible to screw it up. This will grow because there was debate, oh yeah, books, yeah, like digital, oh yeah, shoes, yeah. And so this was one of those last sectors where people still believed you can't sell it online. And it was 4%. And I had my first meeting in November, and I was signed up in January. Because I said, I mean, this is brilliant, because this is for sure to go to 30%. And we are now at 22%. Okay, so you still got some credit. This is what convinced me. And then people ask me, what, it's a small business, it's only 90 million, what do you want to do there?

55:37Make it bigger. That's a good start.

55:41Michael Kliger:Well, yeah, the rest is history. Yeah, the rest is history. No, no, history is still being written. Thank you very, very, very much for your time. That was really interesting. Thank you. It was lovely. Super interesting. Yeah. We've got loads more we could have asked, but that's so good. We could have gone on. Thank you, Michael. Wonderful. Thank you so much.