Bloomberg Businessweek (Europe)
Adding theater, fun, intrigue, and urgency to the slow-moving world of luxe shoes
M.Gemi peddles luxury footwear on a fast-fashion schedule
“E-commerce has been about search, convenience, and price”
“Give a girl the right shoes, and she can conquer the world,” goes a saying often attributed to Marilyn Monroe. M.Gemi, a 15-month-old e-commerce startup, has taken this proposition one step further: Sell beautiful, well-crafted, high-end shoes online without the luxury price tag, and you can conquer the girl.
Armed with a team of data scientists, 15 Italian factories, and $32 million in venture capital, Bostonbased M.Gemi wants to shake up the luxury shoe market much like Brooklinen unmade the posh world of 1,000-thread-count bedsheets or Warby Parker upended the business of fashion eyewear. Global sales of highend shoes total $18 billion annually,
according to consulting firm Bain. But the major players operate the way they have for decades, says M.Gemi’s co-founder and chief executive officer, Ben Fischman: “They haven’t leveraged technology or analytics, and they haven’t leveraged a modern supply chain.”
M.Gemi offers the kind of shoes that retail for $500 to $2,000 for $128 to $498, and it does so at a fast-fashion clip. Fischman and his Sicilian-born co-founder, Maria Gangemi, after whom the business is named, spent a year developing relationships with small, family-run Italian cobblers— many of whom had been abandoned by long-established luxe brands in favor of cheaper, Asian manufacturers. Styles are introduced each week and retired after three months. In contrast, heritage brands such as Prada,
Jimmy Choo, and Manolo Blahnik release four to five collections a year.
While Fischman tags his rivals as old-school, he and his partners have clearly studied the playbook of luxury e-tailers such as Net-a-Porter. The photography and product descriptions on M.Gemi’s website are fashionmagazine-worthy, and the company’s buttery leather loafers and strappy suede sandals arrive at consumers’ doors packaged in elegant ecru boxes with cards that bear the shopper’s name. “The mentality of e-commerce has been about search, convenience, and price,” Fischman says. “What’s missing from the entire experience is theater, fun, intrigue, and urgency.” Fischman previously started digital flash-sale site Rue La La and Lids, a retailer specializing in baseball caps and other sports headwear. He calls M.Gemi’s business model post-luxury.
Working out of the old Sears Roebuck mail-order center near Boston’s Fenway Park, the company’s staff can go from sketch to sale in 60 to 90 days. M.Gemi can quickly recalibrate production to match customer demand. Within three hours of going live with its line of summer espadrilles in April, it knew the slip-on style was a hit but the lace-up version was a dud. So it revved up production of one and dialed back the other.
Fischman says demand has surpassed initial projections; he estimates M.Gemi will reach $60 million in sales this year. In 12 months the company’s customer base has grown 500 percent. Half of those customers are repeat shoppers who spend an average of $1,000 a year. “The luxury market is very attractive,” says Harry Nelis, a partner at Accel, a venture capital firm that led an $18 million funding round for M.Gemi that closed in October. “There are high margins, high price points, and it is expanding globally,” he says, “but the market had never had to reinvent itself.” Nelis says he got some real-world proof of M.Gemi’s potential when Fischman gave him 10 sales vouchers to distribute among his female friends and colleagues. When he checked back with them, Nelis says, their responses were uniformly “enthusiastic and wildly complimentary.”
Roberto Ramos, senior vice president at the Doneger Group, a retail and fashion industry consultant, says outfits like M.Gemi are tapping into a shift in consumer attitudes toward luxury. “For a long time, heritage brands succeeded based on aspiration,” he says. “But that’s no longer an option.” Younger consumers are increasingly turning to the web to discover brands that deliver high-end quality at more affordable prices. A 2015 report from McKinsey projects e-commerce will account for 18 percent to 25 percent of luxury sales by 2025, up from 6 percent now.
M.Gemi is expanding beyond women’s shoes. In March it unveiled a men’s line of footwear and belts. “Once we researched it, it seemed obvious,” says Fischman. The company is also looking at Europe and Asia. While e-commerce will remain the priority, M.Gemi will dip its toe into traditional retail this summer, opening pop-up stores in New York and Los Angeles. “We believe you need to exist in all channels where the consumer is,” he says. “Post-luxury is going to be the norm.”
The bottom line Boston-based M.Gemi is making a direct-to-consumer pitch for a slice of the $18 billion market for luxury shoes.