The Third Growth Option with Benno Duenkelsbuehler and Guests
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At TGO, we understand that success isn't a fixed destination; it's an ongoing journey with twists, turns, and unexpected detours that take us to new places. Those moments are our Third Growth Options, where we throw away binary choices to create our own path.
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The Third Growth Option with Benno Duenkelsbuehler and Guests
Growth by Combining Luxury Reach and Exclusivity with Marty Shapiro
Are you looking for a Third Growth Option ℠ ?
Marty Shapiro, COO of LAFCO New York, explores how luxury fragrance brands can grow their reach while maintaining their special appeal in today's evolving retail landscape. He shares strategies for creating consistent brand experiences across multiple channels while preserving the essence of luxury.
• Consistency across all touchpoints is crucial for maintaining brand identity
• Zip code protection is becoming obsolete as consumer shopping habits evolve
• Product placement should be strategic rather than limited by traditional exclusivity rules
• Context matters when displaying luxury products across different retail environments
• A failed brand extension taught valuable lessons about customer perception
• The product must be amazing, but telling its story is equally important
Email Marty at martys@lafco.com or find him on LinkedIn to continue the conversation on luxury brand growth.
Always growing.
Benno Duenkelsbuehler
CEO & Chief Sherpa of (re)ALIGN
Hey, welcome to the Third Growth Officer podcast, where we talk about all things growth, yes, even and especially those hard parts where you shed some skin and pick yourself up by the bootstraps. Hey, I'm Benno Dunkelspüler, growth Sherpa and OG hashtag growth nerd. We're on a mission to redefine success inside and outside the business, one TGO episode at a time.
Speaker 2:Hi, I'm Marty Shapiro, the COO and one of the partners of LAFCO New York, and I'm joining you today from my home office in Westchester County, new York, from my home office in Westchester County, new York.
Speaker 1:All right, marty, thank you so much for joining us. I am Benno. I have said this 150 times. I am the host of the Third Growth Option podcast. All right, I got that. I am calling in from Mexico City today. Marty, you and I met at an industry event earlier this year a couple months ago, actually, a GHDA conference and you spent the first four years or so after college working in banking and private equity and then in the last 11 years, as you said, coo partner of a luxury. Lafco is a luxury fragrance brand you guys are selling through boutiques, gift stores, key accounts, amazon, direct-to-consumer on your own website. There's a lot of left brain, right brain activity that has to happen to make all of that work right.
Speaker 1:So, what you and I were talking about at that cocktail party at GHTA, up on the rooftop overlooking the Atlantic Ocean, was, I mean, it morphed into the title of this podcast, which is how do you grow luxury, reach the reach of a luxury brand? You know, how do you grow luxury yet remain special, right, we've seen retail channels sort of blurring and flattening, where the term that you used you know where consumers buy, at both Walmart and Neiman Marcus, right, zip code protection becomes difficult when product is available on a bunch of websites your own and Amazon and others, online and offline is sort of melting and you are trying to meet the customer where they are with a luxury brand. That's true, no matter what brand you are. You're trying to meet the customer where they are, which is everywhere. So how do you make the brand shine in each place?
Speaker 1:So let's just kind of talk about touch points. You have touch points, like sales people. You have your own website, other websites, your showroom. How do you help each touch point to shine? Yeah, how do you help each touch point to shine? I?
Speaker 2:think that consistency is really important to us. It's something that as a I was going to say a luxury brand, but as a brand, any brand, regardless of where you kind of fit into the marketplace, I think consistency is important. So we kind of think about Lafco as having three core tenets. Those are luxury, artistry and integrity. And so as we think about the various touch points, whether it's the consumer visiting our website, consumer, you know, visiting our website, laughgocom or a salesperson Nice plug, well done, thank you, thank you. Might be one of my first podcasts, but not my first rodeo. There you go, you know, we approach all the touch points kind of with those tenets in the back of our mind.
Speaker 2:Like I said, our own website, laughgocom, but also when a salesperson is talking to a sales rep or an independent retailer or a point of purchase, piece of sales material, where we're talking about what makes our product special.
Speaker 2:I mean, it's really all about like presenting the brand in the same light so that you know, when consumers see us, they identify us, they know who we are, they know what we stand for, we can piece, they can know that the product that they're buying comes with a certain level of quality. We've done a tremendous amount of quality control, not just in making the product, but also integrity in the sense of the decisions we're making about the product development and how we created it. Which factories do we work with that are paying living wages? I mean, there's so many decisions that go into bringing a product to life and we ultimately try to distill it down into this word that guides our working day integrity. But we want to articulate it to the consumer so that wherever they're interacting with LAFCO whether it's the website or in a store or on the packaging that they can understand that and take that from us and know that if they're buying something from us, that that's what they're getting.
Speaker 1:Luxury and integrity are two of the. What was the third word? Artistry, artistry, luxury, artistry and integrity, and I think there's so much power in distilling things down to their most essential, which is a hard process to do, I'd say it's really hard, I mean we work really hard at it and I think I mean we could do better.
Speaker 2:I feel like we have a lot of work to do. By no means do I think we do it perfectly. But, yeah, it sounds simple to kind of distill a message down to its core elements. But it is not easy.
Speaker 1:I hear, hear, hear, hear. Right. So simple is not easy and simple is super powerful. The more simple you know, you crystallize something. Let's talk a little bit about this nagging problem, I would maybe say, of exclusivity. How do you help a sales rep when the retailer wants exclusivity or zip code protection, right? Just how do you think about that?
Speaker 2:Well, I mean, I think you know, we certainly recognize that our industry, or the gift industry at large, has grown up, so to speak, with the notion of zip code protection as something that people have become accustomed to or used to. I mean, I think today that kind of protection is just simply like, not worth what it once was with the way people shop.
Speaker 1:I mean, it's becoming obsolete.
Speaker 2:It's certainly. I mean I yeah, I do think it's becoming obsolete, but so I think it becomes our job to articulate to our customer you know and I'm not talking I mean I'm talking in this case about the wholesaler who's buying the goods for resale what makes us special and how it's exclusive, even though it's available in other places. I mean the availability of the product in other places doesn't take away from why it's so different and why a customer might want to buy it in their store. I mean, I also think we've done a lot of work on our side and there's so many different kinds of stores and, as we were talking before, what's important to us is meeting the customer where they are and we don't want to place Lotgo everywhere. We want to place Lotgo in the places where it's going to sell, it makes sense, where the customer wants to buy it.
Speaker 2:And I mean sometimes that means there is only one store in a zip code. That makes sense, and sometimes it means there's four stores in a two block radius, where it makes sense. I mean, I think we approach it very granularly. I mean us internally, in conjunction with our sales reps, where to put the brand. But I think we work really hard, also just from an education standpoint, in talking to people about how having the brand be out there builds momentum for the brand, builds recognition for the brands. Two different kinds of stores, where she's not going to walk into a furniture store and expect to buy makeup and so becoming aware, let's say, of Lafco at a furniture store, but seeing it in a different kind of retailer, in a different kind of light, I mean we feel can be really helpful.
Speaker 2:Context matters right Context definitely matters.
Speaker 1:Are there. Let's talk about what. So we talked about these different touch points. Right of salesperson walks into a retail store selling lafco. Retailer looks at your website. Consumer looks at amazon looks at your website. So they're all these different touch points. Have you come across friction points between the different touch points where, like some of them, I think, as you say, are they add or additive?
Speaker 2:right.
Speaker 1:Like even the example you just used of seeing your product in four different stores in two blocks, you know well, one is a furniture store, the other one is a gift store. What have you so, within the different contexts maybe it is additive the way you're touching the customer Are there friction points where different touch points are dilutive?
Speaker 2:right like are like taking away from each other sure I, I think that there can be and I think that's I mean it's our job and it's also I'd be remiss in saying I mean we in the specialty channel, we sell using a network of independent sales reps. I mean we work with more than 60 of them and I'd say we rely very heavily on them to help us make these decisions, help us understand what the right stores are, help us understand if this town can support four retailers but that town can only support one. Help us understand which retailers are additive and which might be dilutive to your point. I mean, we're a relatively small group of people, I mean mostly based in New York City. We can't be experts everywhere and that's why one of the many reasons why the rep community that we work with is so helpful to us and helping us understand how we can successfully grow our brand in a place where, physically, we're just not Right and I mean look, I love your product, I love your website.
Speaker 1:It is elevated is maybe the right word. It has a feeling of there's a merchant and a designer and an artist tree, as you said, behind it, right, and I think that helps a lot to just show up in these different places and remain special. I've been wondering if there are other industries, maybe other consumer industries outside of gift and fragrance, where this luxury fashion element is being made available in a large way and yet remaining special. I mean, are there? Have you guys you know as you're thinking about you go to market strategy and being in you know a variety of channels in a variety of ways online, offline, etc. Have you thought about other consumer products that are doing maybe a better job than we are inside the gifted home and home furnishings industry?
Speaker 2:I think there are probably a myriad of examples like that. I mean, I think the gift industry has its own unique set of circumstances that you know kind of lead us to where we are today. I mean, I can give you an example of a company that's kind of in the gift and home industry actually, but not in the same way, I guess, that we are. That, I think, is a really interesting example like this. I don't know if you're familiar with it. It's a brand called Chilowich have you ever heard of that?
Speaker 1:Oh, yes, yes, yes, yes, they make yeah they, they, they have a fantastic product.
Speaker 2:I mean, I'm a customer of the placemats of some of the rugs.
Speaker 2:And they've done a really, I think, great job of making a product that would be easy to be a little bit, you know, seem a little bit mundane, really special. It's a placemat, it's a placemat a rug, but they've done it with incredible design. But I mean design, messaging, marketing and I think, the way that you know they. They've also thought outside the box in terms of where they can sell it and where they can meet or, in some cases I think, create a customer for their brand, like I learned recently that they make all the floor mats for Rivian cars and I was like that's interesting, wow.
Speaker 1:So I had no idea.
Speaker 2:Yeah, I mean I just think that's an example of a consumer product who's meeting the customer in many different places, working hard at building, I think, brand affinity in a product category that I would be hard pressed to name any other brands really who are playing with them. It's pretty commoditized.
Speaker 1:I love that example. I'm so glad you brought up Chiliwich because I mean, when I asked you the question, I had not, I was struggling to come up with a company. I was like God, I hope Marty comes up with a company.
Speaker 2:and he did Well, I almost paused because I was like, god, I hope Marty comes up with a company, and he did Well. I almost paused because I was like, well, they're kind of in the gift and home industry but I think it's applicable.
Speaker 1:No, I think it's a great example because Chili Witch sells. So I'm not as familiar with their rug business as I am with their placemats, but so I'll just talk about from the placemat perspective. There are hundreds of vendors that have commoditized placemats, right. I mean you can buy placemats at tj, maxx and a million other places and there's a lot of just commodity placemats out there, sure, apartment stores and discount stores etc. And, like you said, I'm hard-pressed to think of a brand name associated with any of them, right? But here Chili Witch has been.
Speaker 1:I mean, they've done also what we talked about at the very beginning. You know when I sort of hats off on your three words, you know very simple luxury, artistry and Integrity. Integrity, thank you was the third one. I almost remember. I better remember them. You better remember Exactly. No, but I think Chili Witch has done an amazing job of creating a very specific point of view around this sort of simple, modern aesthetic around placemats highly functional, highly. Yeah, I mean you just and up at, you know, hotels in different parts of the country or the world, that I end up seeing a chili witch placemat on lots and lots of hotels around the world, right?
Speaker 2:yeah, and I think I mean that that's an example of, you know, hospitality, I'm sure is like an important touch point for them. But I mean they've even I think they have a store in new york city where they have rolls of the placemats on the wall and it's cut custom to length, so it's just like they've. They've thought about it, you know. They've animated the experience in a variety of touch points and unique ways, which I think is successful placemats yeah, successfully.
Speaker 1:Yeah for sure, For sure, we actually use that example. We were doing a project with a tabletop entertaining company a while back and we spent a lot of time talking about this example of chili, which I'm surprised I'd forgotten that as an example of how you can make a commodity product in a commodity category quite special.
Speaker 2:Yeah, yeah, no, it's, it's a, it's a great example, and I mean, you know, it's one of the reasons why I admire so much what they've done.
Speaker 1:Yeah, yeah. And I mean, look, lafco home fragrance and candles and filled candles is an equally crowded category. There's lots of competitors and lots and lots of you know commoditized product Also. Some you have some strong competitors, I would say. But I think the fact that you guys have built a nice business and you have grown you know, I think you were being a little modest earlier, you made it sound like it's just a couple of guys selling a couple of candles.
Speaker 2:Well you know, we're not a behemoth with hundreds or thousands of employees.
Speaker 1:You're not a rule of rubber made. I understand.
Speaker 2:Yes, thank God you're not, thank God, we're not. Yeah, it is hard, it's it's. I think certainly there are people who view a candle as a commoditized product lots of people. And that's why it's so important to us to articulate our pillars artistry, integrity, luxury. Each product has to embody those things and it has to be obvious to the customer why it's different. Why should I buy a Lafco candle instead of one of the myriad of other candles available to them? And that's not to say that there's no other good candles out there. I mean, other brands make wonderful candles and fragrances too. But I mean you know, one of the core tenets of our, of our brand is in our candles, is hand-blown glass. That's just something that's really expensive, challenging, difficult to do. The supply chain is long, like it's a, it's a huge pain in the butt, but like why do we do it? Because it's beautiful, because it's different, because people remember it, because it helps make us stand out. I mean that's that's we put the work in, because we have to.
Speaker 1:It's upset, but it it's obsessing over the details, for sure, in ways that you know. It's funny when I've had a conversation with industry buddy a few months ago about the difference of walking the Atlanta market or high point or Las Vegas markets, you know, these days versus 10 or 15 years ago, and I think as an industry we have gotten a lot better at merchandising and obsessing over details and packaging and visual merchandising, where the experience of walking these trade markets, trade shows, is more like walking a high-end department store and 15, 20 years ago was more like walking a strip mall.
Speaker 2:Yeah, I agree with that, and I think, because of that, it's harder to make your product stand out because, like everybody's doing a good job merchandising, the bar has been raised. The bar has definitely been raised. So I think, in order to stand out, you know, you as a brand or brand owner, I mean have to come to the table each and every market with something that's new. Show the customer why it's new, make it easy to understand and digest what's different about it. Right, because if you don't I mean I think you're right the customer will just keep walking through the department store.
Speaker 1:Yep you're right, the customer will just keep walking through the department store. Yep, if we don't meet the two-second challenge. Right, if you?
Speaker 2:don't get my attention in the first two seconds, you've lost me. It's actually interesting. I mean not to harp on this, but I mean we're a fragrance company, so the most differentiated thing we do is make incredible fragrances. But that's hard to articulate visually, which is why the hand-blown glass aspect of what we do is so important. It catches the customer's eye, it makes them look again. Many of our competitors, all the salesperson and take the time to understand why we're different and if it resonates with them, maybe they'll try us.
Speaker 1:Do you have any examples of where you screwed it up? Like failures whether it's product failures or marketing failures or any? Like nightmares not nightmares, maybe too strong a word, but anything? Look, we all learn more from our failures than our successes, right? I started my business 15 years ago after I had to take a $30 million company through a bankruptcy process, and you know that was certainly. I certainly felt that it was a failure on my part, even though it was during 2008, 2009. And I don't think Steve Jobs and Jack Welch combined could have pulled that company out of the monster fire. But I've learned a ton through that painful experience, sure, so I'm just wondering if there's I mean any.
Speaker 2:I think anybody working in a role like mine in an entrepreneurial type of company like we are at lafkoe would be kidding themselves and lying to you if they said that they didn't have you know a laundry list of failures from which to, uh, to pull from, and we're you know that's certainly the case for us. I can pull out a few. I mean here's an example, just one. Our company is actually 30 years old and started as not a brand, but as a distributor. So we had exclusive distribution agreements with a variety of mostly European fragrance, personal care and apothecary brands. And the business we're in now I mean candles and home fragrance really started as a small side project within this distribution company. And you know it grew and grew and grew and eventually it was the biggest and fastest growing part of our business and it became clear like this is where we need to focus our efforts and energies. So shortly after we transitioned out of being a distributor, we decided, hey, we've got the chops, we understand personal care products, we have the customers. Let's just launch a new line under the LAFCO umbrella and call it LAFCO and people will know because, oh, we're LAFCO. We used to be a distributor and all of that was true.
Speaker 2:I think that the mistake we made is that we made it look entirely different than the rest of the LAFCO line. We thought the name LAFCO stood on its own because we knew how much we knew about the category internally, but the customer didn't know that. The customer knew Lafco as the company that made the beautiful candles in blown glass in the white and black boxes, and so we launched an entire collection of personal care products. The fragrances were great, the packaging was interesting, but I think the miss was that it wasn't LAFCO. People didn't identify it as being LAFCO or what we did, and for that reason it didn't sell.
Speaker 2:It was almost a different brand. That's right, a brand extension gone awry. It was a brand extension gone awry for sure. We called it a collection gone awry. That, or the problem with it, was that we assumed incorrectly that the, the name lafco or the logo lafco or whatever, stood for all those things. And it didn't. It's like the people knew lafco as the company that made these amazing candles and so when they saw this product, that was totally different. It just didn't compute for them interesting, and so you know. That taught us, I think I mean the big takeaway for us in that lesson was like know who your customer is, listen to your customer, understand what they want from you and how they view you, and deliver that to them.
Speaker 1:Compelling promise, delivered right. That's my three word definition of brand. A brand is a promise. If it's not compelling, nobody will you know, it won't break through the clutter, and if you're not delivering that what you're promising, then who cares why we're talking about it? So but yeah, but brand extensions are always tricky. So thanks for sharing that example, parting words of wisdom, that, or or any question that I didn't ask you that you're like burning to talk about in the context of you know, how do you make, how do you grow the reach of a luxury brand and yet remain special?
Speaker 2:I think the only other thing I'll say is that I mean where the product is sold or purchased. You know we were talking a lot about like in what kind of retailer? I mean that's, that's just a piece of it. I mean the product has to be amazing. The product has to tell the story. If the product isn't doing all of those things it doesn't matter if it's exclusive, if it's in five different stores, if it's in every store it won't sell. And so I think we live in a world where you got to have an amazing product. There's no question about that. The quality of the product, the experience of the product has to be top notch, and I think 10 or 15 years ago that might have been enough.
Speaker 2:I think today it's not enough, because we live in such a marketing centric world that being able to tell the story of why your product is different becomes of paramount importance. So when the customer goes to the retailer oftentimes they've done it like from some secret shopping. You know I visit stores and go and look and observe. I mean people so often walk into the store. It's not to buy a candle, it's because there's a 90% chance. Like they've already done the research, they know what they want. They know which brand they want.
Speaker 2:They might smell a few fragrances, but like the decision has largely been made, and so that's why the touch points you spoke about earlier are so important, even for a scented product like Lavka. It's like people are making that decision sight unseen, scent unseen, based on what emails they've received or what articles they've read on the internet. And so I think, when you think about how special a product is or how exclusive it is or how exclusive it isn't, I mean I think contextualizing that in today's world, in this context of people being fed so much information, is important. I mean, that's a big part of it as well.
Speaker 1:Marty, if folks wanted to reach out to you one-on-one, what's a good place to do? They just email you, Do? They find you on LinkedIn.
Speaker 2:You can find me on LinkedIn, or, yeah, feel free to shoot me an email. My email address is martys M-A-R-T-Y-S. As in Sam at lafco L-A-F-C-Ocom.
Speaker 1:There you go. You got your website plug in the first few minutes and at the end of the podcast. Thank you so much for sharing your thoughts and insights on a subject that the answer to these questions has been changing a lot over the last years. You know, with the flattening of retail channels and you know online and offline melting and all the things we were talking about here, and it will continue to change in the coming years even faster, I think.
Speaker 2:I couldn't agree with you more. And when things stop changing, you know day by day, we're both in big troubles.
Speaker 1:That's right, Marty. Thank you so much. Thank you so much for having me, Benno.
Speaker 2:I appreciate it.
Speaker 1:Thank you for listening to this episode of TGO Podcast. You can find all episodes on our podcast page at wwwrealign4resultscom. You can find me, benno, host of TGO Podcast, there as well. Just email Benno B-E-N-N-O at realignforresultscom. Let's keep growing.
