The world still looks to Britain as the market leader in the area of super luxury goods such as bespoke guns, footwear and speaker systems. Can the astronomic prices charged be justified?
Alongside a woman sleeping in a glass tank, a pair of lasts, carved to the shape of Robert Maxwell's feet, featured in a recent London art exhibition. The lasts were on loan from John Lobb, the shoemakers. However cavalier the late tycoon may have have been in other areas, Maxwell was obviously a man who cared about his footwear. Lobb shoes cost over a thousand pounds per pair.
Lobb belongs to a select group of companies which operate at the very pinnacle of their market, in one of the few areas where the world still looks to Britain for the best: the market for super luxury goods. The goods these companies produce are far beyond the reach of the ordinary consumer and resemble their everyday counterparts in the way that caviar resembles cod's roe. Other notables in this sector include James Purdey & Sons, the gunsmiths, whose firearms retail at prices more normally associated with small houses, and ATC Loudspeaker Technology whose flagship range costs something in the region of the average annual salary.
Companies operating in these rarefied niche markets are bound to differ from those producing run-of-the-mill products. Volumes are, by normal standards, ridiculously low and prices correspondingly high: Purdey, for example, produces in the region of 60 guns per year. Quality control has to be almost impossibly tight and attention to detail is everything. Taking any kind of assembly-line approach to products is out of the question: when the customer is paying this kind of money, every order is a special order. So what does it take to be a company who produces nothing other than the very best?
Lobb's premises confirm any stereotypes one might have about such places. The St James's Street shop resembles more a gentlemen's club than a conventional retail outfit. Acres of gleaming wood-panelling covers walls adorned with numerous testaments from the great and the good. Its history is as charming as might be expected. In the mid 19th century the first Lobb, newly returned from Sydney, rather audaciously presented the then Prince of Wales with a pair of shoes on spec. So impressed was his Highness that he awarded Lobb his warrant, and with royal patronage came the custom of the aristocracy. The rest, as they say, is history. Purdey, as befits a firm of craftsmen, has a similarly lengthy pedigree; of the three, only ATC, founded in 1974, is a relative youngster.
Common to all three companies is an attention to detail which, to a normal manufacturer, would seem both obsessive and pointless. ATC remills the wire used in its speaker coils to make them flatter and denser. At Purdey, the stocks of the guns are oil-polished rather than varnished in a laborious process that takes weeks. Likewise, the leather used in Lobb's shoes is allowed to gain its shape over a period of time unimaginable to normal footwear manufacturers. As all the products are handmade, there is a flexibility and bespoke approach which is probably unrivalled anywhere. What is possible is limited only by a customer's imagination and finances. Describing the 'extras' that customers can elect to have, Brian Howell, Purdey's factory manager, points out that 'Engraving can add £25,000 to the cost of a gun.' A catalogue showing some of the possibilities reveals mini masterpieces - each taking hundreds of hours - usually executed in multicoloured golds. Though these typically depict the fauna the gun will eventually be used against, there are a few unusual requests. One such flight of fancy, a naked woman in a Playboyesque pose, serves to remind that great wealth is no guarantee of good taste. It would be nearly impossible to buy any of these items on impulse: only ATC's speakers are available in conventional shops and even these are specialist hi-fi dealers. A customer ordering a shotgun today might expect to take delivery of it in 1997. Fine craftsmanship is nothing if not time consuming.
In this sector, customer service is an area in which the astronomic prices charged seem, if not exactly justified, to reflect what you get. Rather than the standard 'flog it and forget it' attitude, something approaching a lifetime commitment is the norm, and the point of sale is the start of a relationship. As ATC's Billy Woodman says, 'Products should be engineered to last a lifetime.' This is echoed in a tour of the Purdey factory. Howell glances at the serial number of a gun which is in for an overhaul: 'That'll be around 75 years old.' One further down the bench has passed its century. Clearly a Purdey is not just for Christmas. Put in this context, the vast initial outlay these products require makes a little more sense: what price a gun which is likely to outlast its owner?
All three companies keep meticulous records of their customers' purchases. Lobb, in the form of a vast library of lasts has moulds of every one of its customer's feet; Purdey keeps long records of patrons' relevant measurements; and ATC records the unique frequency responses of each speaker that it sells. Should a customer require a speaker component replaced 10 years down the line, ATC will be able to match it almost exactly.
Although these companies, especially Lobb and Purdey, exude an air of all that is British, the lion's share of their sales go abroad. Howell puts the export figure for new guns at 90%, while Lobb sells about 75% of its output overseas. The equivalent figure for ATC is 63% - China is currently its largest growth market. Japanese awards also decorate its reception. It is hardly surprising that these firms' export orders are the stuff of DTI dreams: the home market is neither big enough or, more importantly, rich enough, to sustain them. As Howell notes, 'There's a lot of new world money.' This independence from the home market has meant that recent recession has left these firms relatively unscathed. A company with a customer base which includes wealthy Americans, Arabs, and Japanese is unlikely to be scared of a little domestic austerity. Nonetheless, it shouldn't be imagined that these firms make vast profits on the back of their expensive wares. None of the three is massively profitable, least of all Lobb and Purdey whose net profits over the past few years have been virtually nil; ATC has fared better, but its figures are respectable rather than remarkable.
Expansion opportunities are sharply curtailed by the marketplace. When a company operates at the top of the tree, the scope for growth is limited, and the easiest route is down. Yet diversification downmarket has the effect of destroying the mystique, cachet, and reputation that are such a company's main selling points. Expansion abroad is one way forward, but even this has its limitations. Lobb and Purdey, by their own admission, operate in fairly static markets. But although there may be a very limited pool of new customers to draw from, hanging on to existing ones does not appear to be a problem: customer loyalty is something these companies engender in spades. With some of Lobb's and Purdey's customers allegiance has become an almost hereditary trait, passed from father to son. Though ATC has not been around long enough to experience this inheritance, Woodman boasts a retention rate along the lines of 'once a customer, always a customer'.
Despite the similarities which come from selling in what must be one of the most discerning and demanding markets in the world, there are significant differences between the three firms, particularly between ATC and the other two. While many of these are due to the mantle of tradition that Lobb and Purdey carry with them, those who run the companies clearly have their influence. John Lobb is an eminently clubbable, dapper Englishman: the company reflects this, exuding tradition and class. Woodman of ATC is a native-born Australian, who wouldn't look too out of place playing opposite Clint Eastwood. By trade an engineer, his heroes include Victorians such as Brunel. He sees the company very much in terms of those values: 'We're a secure engineering company with profit margins of six to ten per cent a year.' That they happen to produce goods of such a singular nature is almost a by-product of a quest for engineering excellence.
The companies operating in this sector can be categorised into two types. Purdey and Lobb are heirs to a long tradition of excellence. Owning their products involves buying quality and reputation, but also a sense of history, tradition and continuity. While it would be unfair to say these firms are going nowhere, stasis is the order of the day. The techniques and materials used in manufacture have reached a plateau and are unlikely to change. The markets are static, and while demand may slowly fluctuate, radical change is unlikely - the two firms are charming anachronisms from a bygone age.
ATC is a very different kettle of fish; here there is change and dynamism. But it should not be forgotten that the other two - as the Prince of Wales anecdote demonstrates - were probably like this in their early years. A kind of perfection, preserved in aspic, born of longevity, is the hallmark of companies in this rarefied sector. It will be interesting to see where ATC is in a century's time.