BY BOF TEAM 19 MAY, 2014
BEIJING, China — Timothy Coghlan is an expert working at the intersection of real estate and the fashion and luxury retail sector in China. As director of luxury retail for Savills China, he has advised some of the world’s most iconic fashion and luxury brands on their China retail strategies and has successfully negotiated flagship store deals with LVMH,Kering and others, including Dolce & Gabbana and Tiffany.
BoF: Please describe your current role.
TC: I act as an agent and consultant for international luxury brands and shopping mall developers across China to advise on retail strategies and bring the two sides together with the goal of opening new stores.
On the brand side, we offer a range of consulting services for retailers looking to expand their China store presence or even enter the market for the first time. Our services range from creating market entry strategies to identifying target cities and target malls, and all the way through to leasing negotiations with the malls and ensuring the store fit-outs and openings all proceed smoothly.
On the shopping mall side, we advise landlords on all aspects of developing their real estate projects, including design requirements for luxury malls, market positioning, ideal tenant mix, façade designs, rental rates, marketing materials and luxury mall management and operations.
BoF: What attracted you to the role?
TC: I was witnessing Chinese consumer tastes developing and the market opening up, so I knew it was just a matter of time before international brands en masse would hone in on China. From personal experience, I also knew that China was a tough place to do business and even finding an apartment could be quite an ordeal, let alone finding retail space, so I sensed there was an opportunity.
I was also attracted to the role because it gave me direct access to the most senior global decision makers inside the brands and this was a surefire way to learn firsthand the retail side of the fashion and luxury business.
BoF: What is the most exciting project or initiative you have worked on?
TC: One of the most exciting projects I worked on was Galaxy Mall in Tianjin, China. It is a new large-scale shopping mall that acts as the commercial hub of an even larger city re-development project initiated by the Tianjin municipal government.
We worked with the local government, mayor’s office and investment companies to advise on all aspects of the project including design, marketing, trade positioning, flagship store mix and leasing.
Over four years, I watched the site come to life as a patch of dirt first turned into a huge hole in the ground and, then, within 12 months, a completed shopping mall with some of the best hardware in all China. Meanwhile, during leasing, I was constantly taking global brand CEOs through the construction site and leading tough negotiations between the mall and the brands. Finally, after four years of hard work the mall is completed and has a first rate mix of global luxury brand flagship stores.
BoF: How is your role changing? What are the forces driving this change?
TC: Perhaps the most significant force driving change is technology — e-commerce, omni-channel retail, social media and mobile payments across all segments (not just luxury) are affecting retail in China.
With these changes we have greater opportunities to offer more comprehensive retail solutions to our clients, such as helping retailers to create both on and offline strategies for China that they can execute simultaneously. We are also advising landlords on developing their O2O [online-to-offline] capabilities, whether that be including omni-channel hardware or software for retail tenants, creating their own social network accounts or partnering with mobile payment providers.
BoF: Tell us about a time you failed and how you learned from it.
TC: In one case, a store deal had already been completed on paper with contracts signed, yet the brand had an unexpected delay with their merchandise and they missed their store opening deadline. The brand couldn’t open without merchandise and so requested postponing the store opening for six months until the next season. The landlord wouldn’t agree and, as neither party was willing to back down and lose face, the deal fell apart and the store never opened.
From this I learnt firsthand how many different elements come together to make up the global fashion and luxury retail ecosystem and how a small materials issue or customs delay in Europe can have a major ripple effect on stores in China.
When doing business in China, I deal across multiple languages and cultures where the habits and expectations of doing business can vary greatly between parties. As an intermediary, it’s my role to be diplomatic and mediate effectively between both sides. Learning from my past mistakes, these days I’m much better at pre-empting unforeseen problems and ensuring the store contracts include clauses that allow room for compromise so that each side can find a solution without losing face.
BoF: What advice do you have for people who are interested in doing what you do?
TC: I recommend the role for anyone with a strong interest in brands as it delves deep into the core retailing side of the fashion business. Prerequisite personality traits include having a high degree of entrepreneurship to go and develop a new business, maintain networks and be a marketer, strategist and salesman all in one.
Knowledge-wise, while a lot can be learnt on the job, it definitely pays to know the brands and luxury groups inside and out, including ownership structures, distribution networks, market position, brand equity and their store design practices. Then it’s also vital to understand market conditions, consumer trends, new technologies and building regulations. This means a lot of reading and being curious, but also keeps the role interesting and ever-changing.
In China, with hundreds of new shopping malls in the pipeline, a lot of my work is on new shopping malls that require three to five years for project completion. Therefore people considering the role must have the stamina to manage long projects and persist with set goals while everything else around you is changing.
Finally, the job has both glamorous and gritty moments and everything in between. On a ‘glamorous’ day I may fly to Europe or the US to meet clients and present new shopping mall projects, or accompany landlords to a brand’s fashion show. On a more ‘normal’ day I could travel to multiple cities in one go, visit dusty construction sites in the snow and struggle to find a decent coffee while spending hours discussing something like the location of a fire exit.
This interview has been edited and condensed.
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