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”

Bloomberg Businessweek (North America) - - Contents -

“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.” �Stacy Per­man 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.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.