Massimo Piombini on his novel strategy to build Balmain into a half-billion-euro brand
Mar 7, 2019
Massimo Piombini has a dream: building Balmain into the next half-billion-dollar fashion house – a rarefied clubhouse that very few runway brands ever actually penetrate.
Half an hour with Piombini makes you realize that this should happen pretty soon, by 2022 as it happens. If one scrolls through the calendars of the past four weeks, ranging across London, Milan, New York and Paris, one realizes that out of the 400 or so houses that staged catwalk shows, barely 30 of them have broken through that barrier.
But by carefully exploiting the energy and talent of Balmain’s creative director Olivier Rousteing; and using the vast resources of Balmain’s owner, the royal family of Qatar, Piombini’s goal should be realized. We caught up with Piombini for a freewheeling conversation inside Balmain’s new Paris flagship, where he explained his vision for the brand’s future. He is planning a rather novel approach, compared with many luxury labels which have focused very heavily in the past two decades on rolling out scores of boutiques, basing growth on retail expansion.
Like the label's latest Paris store, his plan is not by the book. The new 600-square-meter, two-floor boutique on rue du Faubourg Saint-Honoré blends the classical – parquet, Haussmann moldings and wrought iron – with the contemporary – giant digital screens, sleek mirrored desks, walls and ceilings, and Occulus Rift headsets. Previously, the space was a Zara store, which seemed completely lost on a block that includes Giorgio Armani, Alexander McQueen, Tom Ford and the famed Hôtel Costes. The result is an original Parisian hôtel partculier, and yet modern and rock and roll.
Balmain inaugurated the store last month with a couture show, though that collection did not exactly receive rave reviews.
Pierre Balmain founded his house in 1945 and at one stage hired Karl Lagerfeld for his studio. He was known for his sophisticated sense of elegance. Gertrude Stein eulogized Balmain, and the Duchess of Windsor was a client. After his death in 1982, the house drifted, though he is forever immortalized in the giant international Pop hit Where Do You Go To My Lovely?, whose heroine’s clothes are all Balmain.
However, under the creative direction of Rousteing, the house’s new super sexy, haute-glam aesthetic has won fans like Beyoncé, Rihanna and Jennifer Lopez.
Mayhoola (meaning "unknown" in Arabic) for Investments, a fund owned by Qatari royalty, acquired Balmain in June 2016 for an estimated €460 million, or roughly four times its annual sales – a reflection of the rarity value of high-profile Paris couture houses for international investors.
Piombini became Balmain’s CEO in April 2017, joining from Valentino – another Mayhoola-owned brand – where he served nine years, ending as worldwide commercial director.
Born outside Milano, Piombini studied at the city’s top private university, Cattolica; followed by a masters in Bocconi, before joining Procter & Gamble. He is a cousin of Antonio Belloni, the Cardinal Mazarin of LVMH, and comes from the same town, Gallarate.
After working in merchant bank mergers and acquisitions, he joined Bulgari, first as head of wholesale for Europe, then head of retail in America. He then spent four years at Gucci until 2004, but "felt he had to leave" when Domenico De Sole and Tom Ford were edged out by the new French owners. This led to a stint at Texas Pacific Group, which in turn bought Bally, where he was worldwide sales chief, until the Swiss brand was sold to Labelux. That led to nine years at Valentino, the gateway to his current job at Balmain.
A self-confident 59-year-old, Piombini looks more like the commando of a SWAT team than a luxury CEO. Not so surprising, as he personally owns several gyms through a license in Italy and France for Barry’s Bootcamp, with two in Milan and one about to open in Paris.
Married for 31 years with one 28-year-old daughter, who is the GM of his gym, like a good Italian, he likes to holiday at home in the charming Tuscan resort of Punta Ala, reached from Milan in his other love – a Porsche Turbo S, with 580 horsepower.
FashionNetwork.com: Tell us, what was your goal with this boutique?
Massimo Piombini: It’s our first real flagship. We developed a new concept that we tested in a few locations; Milan, Miami and Vegas. It’s our blueprint for the future. Paris is our city and heritage. Every brand has to have a major store in its own town, now we do.
FNW: Define the DNA of Balmain.
A powerful French brand with a very strong ready-to-wear business and a very modern and talented creative director. It went through major ups and downs but now with our new shareholder we can really develop the brand to the extent that the awareness of the brand deserves.
FNW: How does your work here differ from Valentino?
The biggest challenge at Valentino was to manage the transition from Mr. Valentino’s departure to the new designers. As you remember, the first successor was Alessandra Facchinetti and that didn’t work. But afterwards Maria Grazia Chiuri and Pierpaolo Piccioli did a fantastic job repositioning Valentino. But here it is not a question of repositioning, but of positioning Balmain. It’s kind of a sleeping beauty that has never really been developed. If you think about it, it doesn’t have a retail business, or an accessory business; and doesn’t have a presence in Asia. So when Olivier came he brought his vision, new ideas and a dynamic approach. Now with our plan we can really make up ground.
FNW: What sort of capital investment are you planning?
We are investing in Capex; as you see in this boutique. Investing in people and structures. We have new regional offices. We now have SAP (business software). When I joined there was no reporting structure. If you wanted to know how much you sold in a certain store, you had to phone them! Now with SAP throughout the whole organization, we have a different life. Consider this: in the past two years we have doubled the number of employees to almost 500, from 200.
FNW: You have a new headquarters on rue Pasquier in Paris. Did you take a long lease?
The building is owned by Qatar! But it’s not for free. They treat us well, but not that well. They want money. But, obviously it is a very convenient location, since we have everyone in there, from the studio down to the showroom.
FNW: To whom do you report?
To the board of directors, and to a gentleman called Mr. Rachid. He is the front man of the Emir and chairman of Mayhoola.
FNW: Given how well Mayhoola have done with Valentino, one imagines they are very ambitious for Balmain?
Absolutely, even if Valentino was a different case. They bought Valentino when it was on its way to being successful, after four years of management by private equity firm Permira. Signor Valentino had left the company in 2007. Then in 2008 came the appointment of Pierpaolo and Maria Grazia. So, when Mayhoola acquired Valentino in 2012, it had completed the first phase of its business plan.
But in the case of Balmain, Mayhoola jumped in at the beginning when the company was really small, and basically not growing. Now, we have grown 50% in the past two years. Our target for 2019 is to have annual sales of around 200 million euros. When I joined they were 130 million euros. Today, 80% of business is in wholesale, the rest retail. Eventually, it will be more like 60/40 for wholesale/retail. But I don’t want to grow retail too much. Because A, the market is changing and B, consumers are shopping in different ways. We believe that wholesalers will be very important, especially those strong online players. I mean Net-a-Porter, Mytheresa, LuisaViaRoma and Farfetch. They are the new channels. Consider this: our first customer in the world is Net-a-Porter. But Balmain has always been a digital brand, as Olivier is such a great social media communicator.
FNW: So, what percentage of sales are digital?
They are now 25% if we put together all our wholesale players, a lot when you remember we haven’t really developed accessories. It’s all pretty well high-ticket fashion items.
FNW: Signor Sassi (CEO of Valentino) once told me that capital expenditure at Valentino was 100 million euros a year! How do you compare?
It’s not about the exact amount. Theoretically, given our investor, our resources are unlimited. The reality is to finalize and fine tune the retail format. In all my life I have opened almost 500 stores all over the world. So, the challenge is not to find the right location, but to make them work. And, in order to make them work, you have to have retail culture, a shopping experience, a customer experience. That’s the issue, not spending 50 or 100 million dollars a year.
FNW: How many boutiques do you have?
We have 25 boutiques, and are in 350 wholesale doors. We are not yet in duty free, as we still don’t have an accessories business.
FNW: Olivier is a social media genius, with 5.3 million Instagram followers, more than any other living French designer. How do you distill that reach into business?
That’s a good question. Look, we have and he has an audience. We are now trying to monetize this audience, working on more democratic price points, developing new lines like sneakers, shoes and bags. We are a digital company and we talk to our customers digitally.
We have also developed a new business unit purely for sneakers, with a new GM, team and marketing budget. We design in house and we produce near Hong Kong. This is counter intuitive. Producing in China is a plus. Ten years ago you went to China to save money. But China now has such an amazing technique they can develop ideas that Italians or Europeans cannot. Just to give one example, this sneaker (he says, pointing to his own black leather Balmain high tops) was designed at the beginning of November and on shelves by the beginning of December.
In accessories, we have an office in Scandicci with 40 people working for us. Our building is next door to a Valentino building, even if we use different suppliers. Scandicci is the leather making capital of Europe. Now accessories are growing quite fast. The rapport with ready-to-wear right now is 90/10 and we want 50/50 by the end of 2022.
FNW: In five years’ time where do you want Balmain to be?
I would like to hit the half-billion-dollar mark in the next three years. That’s our goal. Let’s say 2022.
FNW: Why did you add couture last month?
It was a one-off collection to celebrate the opening of the store. It was not part of the strategy. We have other priorities. We do demi-couture for our celebrities.
FNW: When will you take Balmain on the road with a catwalk abroad?
There are many requests. But we have to be careful. Because Olivier is working like a dog. He is really doing so much: cooperations, limited editions, special capsules. So we have to use and manage him. A show on the road requires a lot of energy and effort. The real business is the showroom collection.
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