Why Matchesfashion.com’s chief executive Ulric Jerome is on the way to world fashion domination
Matchesfashion.com’s French-born chief executive Ulric Jerome has grown up surrounded by fashion since the time his designer label of choice was Pampers. His father ran a family business in haute couture while his mother used to work at fashion bible Vogue.
But when the founders of the luxury retailer Matchesfashion.com, Tom and Ruth Chapman, approached him in 2013, it was his expertise in technology and digital retailing – rather than high fashion – that put him right on trend.
The economics graduate and serial entrepreneur is a self-confessed tech geek. At the age of 19, he set up his first company – an options trading business – while completing his studies in Canada. He went on in 2002 to set up Pixmania, the French electronics retailer, which, despite later running into financial trouble, grew to sales of €890m (£676m) in 2010. It was sold to Dixons in 2006 before being sold again to Germany’s Mutares in 2013.
Jerome parted ways with Pixmania and was planning to move to New York to head up a flash sales website when he met the Chapmans through their private equity backer Scottish Equity Partners. They convinced him to join the business.
After 30 years running the Matchesfashion.com, the husband and wife team wanted to step back and hand over the reins to someone who could press ahead with its online expansion.
The retailer started as a single shop in Wimbledon village in 1987. It had exclusive licences to brands such as Prada thanks to Ruth’s connections in the industry and quickly expanded to 12 stores, including two Max Mara franchise stores and four Diane von Furstenberg franchises.
But it wasn’t until 2007 that the group made the leap online. The luxury industry was slow to embrace e-commerce and MatchesFashion quickly became the go-to website for the fashion world’s elite brands.
Over the next five years, they transformed their bricks and mortar business into one that generated 50 per cent of sales online. And since Jerome joined in 2013, online sales have grown to 85 per cent of the business thanks to a complete overhaul of its online platform, which included hiring a small army of tech engineers.
The heavy investment in staff, logistics and technology resulted in a £5.5m loss before tax in the year to 31 January 2015. However, Jerome said it traded profitably last year, with a 40 per cent rise in online sales helping to drive total revenues of £130m in the year to January 2016, compared with £100m a year earlier.
Matchesfashion.com has also expanded internationally, with 72 per cent of sales now coming from overseas markets, where delivery times range from next-day delivery for Europe and the East Coast of the US and two days for Asia.
Jerome is unabashed about his ambitions for the business. He wants to turn it into the world’s biggest luxury online retailer. He admits it is what motivated him to take the job: “I was excited to have that shot at becoming the world’s top luxury destination.”
And with just Yoox Net-a-Porter in the lead, it is not far behind. “We are already the second largest online luxury player. Our average basket spend is now £442 compared with £430 the previous year, and £600 when not including items bought on sale,” he said.
Around 70 per cent of sales come from loyal customers who buy on average four times a year and increase their spend with each visit.
“Usually, the more you grow the harder it is to grow your basket size. But we have done the opposite and are also expanding into more luxurious brands. If you look at other companies, the trend is to become more mainstream as you expand.”
Although he avoids saying their name, Jerome believes that the merger of two of the world’s biggest online fashion retailers Yoox and Net-a-Porter, and their expansion into the more mainstream luxury market, has created an opportunity for a niche luxury player to grab a greater share of the market both at home and overseas.
The luxury goods industry was valued at €253bn in 2015, but just seven per cent – or €17bn – is currently online. Jerome predicts it will double to 14 per cent by 2019.
Its growth has also attracted the attention of several suitors. And although Jerome concedes an IPO or sale could be an option in the future, he insists there are no current plans on the table: “Anyone who knocks on our door, we listen in a gentlemanly manner but there are no current plans to sell.”
Matchesfashion.com is still 70 per cent owned by the Chapman family, while venture capital firms Scottish Equity Partners and Highland own the rest.
For now though, Jerome is focused firmly on keeping up with the pace of its expansion, which he admits is one of the key things that keeps him awake at night.
Last month the group made its ambitions clear after announcing plans to move its 550 staff from Clapham to shiny new offices in the Shard this year. Jerome believes the move will be key to attracting much-needed talent to drive growth: “It provides extra visibility.”
Hopefully, with clear views of the skyline, Jerome will sleep soundly.