Dusting off Savile Row

6106 Industry Clusters and Firm Competitiveness

Corinna Gross (41296) Oscar Holm (50276) David Schlicht (41150) Jaroslav Tran (41303) Inez van der Sande (41280) Executive Summary

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Page 3 - 9 London shows significant micro-economical strengths, particularly relating to FDIs, access to capital and demand sophistication. There are, however, also weaknesses and challenges to be Regional framework conditions addressed, including tax policy, barriers and uncertainty surrounding Brexit and an all-time high in global competition.

Savile Row is the world’s most renowned cluster for bespoke Page 10 - 23 tailoring. While the cluster was very dynamic the first half of the 20th century, it is rather static today and is endangered to drift into the museum stage. Overall, there are several major Cluster analysis macroeconomic as well as cluster specific challenges that are being faced (e.g. expensive rents and business rates and a lack of young tailors).

Page 24 - 28 Henry Poole & Co., was established in 1806 and is considered to be the first one to set up shop in Savile Row. Though they are internationalizing, they seem to do little to stay competitive. Firm strategy However, compared to the other tailors, Henry Poole has established itself somewhat better in the cluster.

Page 29 - 33 To sustain the long term success of the cluster and tackle the identified challenges, three recommendation blocks were Recommendations for the cluster developed. Exemplary action steps include setting up an International Talent Program and incorporating new technologies such as virtual fitting rooms.

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion In order to conduct the cluster analysis, the Funnel model was applied

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Regional framework conditions including London’s legacy, economic conditions and competitive challenges

Cluster analysis including mapping, history, performance, competition and the Diamond Model

Firm strategy including firm overview and business model canvas

Recommendations for the cluster

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion London is a region described by a long legacy of cluster development1

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8.7 mil inhabitants

London grew Continuously through In the early 2009 Old Street became the UK’s prominence 1837 marks the start of the Victorian attractive to start-up tech due to recent in trade. In the early 20th century, era with vast industry growth. London recession and cheap rents. Thanks to Oxford street became an early was not only the trade capital, but also government subsidies, the area grew shopping cluster starting with a trendsetter through aristocrats and from 200 to 5000 tech companies, Selfridge’s and Harrod’s but today rich business men, one of whom was including Facebook & Google. Beau Brummel, the first dandy containing flagship stores from almost and inspiration to Savile Row all the global retailers. Great fire of 1666 razed most of the tailoring. city, this was the modern starting point for London as we know it, with roughly Hatton Garden Jewellers was started in 630 000 inhabitants at the time the 16th century and is still a cluster today. th In the 18 century London became a SoHo Post-Production for the film industry trade capital of the world. With a vast starting with Warner Bros in the 1940s 630 k inhabitants fleet and widespread colonies, goods Billingsgate Fish Market was the were brought to the city from all over formed in the 17th century because of the world. This was the foundation of London’s trade-route-centrality the London Financial cluster.

London clusters are largely a result of its legacy as the world’s trade hub UKs prominence during colonial times meant London became the trade capital of the world, and in turn the home turf of the times’ most fashionable sectors. Over centuries London built what can be referred to as an enormous “Business Cluster”. However, the foundation of these sectors are based on old merits, is the climate competitive today?

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion UK´s macroeconomic environment ranks 8th place on the global competition index, down from 7th2

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The highlighted data gives an overview of the UK’s economic landscape relative to the 75th percentile and top performers. The environment will then be further mapped using the diamond model. Top performer 75th percentile UK

Budget balance % GDP Quality infrastructure Basic 82% 81% -3,1 85

Corporate tax rate (%) Trade tariffs (%) 86% Efficiency 79% 30,9 1,1

Patents per million R&D % of GDP 84% Innovation 76% 99,1 1,7

The UK’s business landscape is characterized by comparatively low public investment rates3 noticeable in infrastructure, very Competition 84% sophisticated financial markets attracting FDI4 and a limited rate th Index th 8 of innovation seen in patents and R&D. This makes the UK 8 in Total score 79% the world in terms of competitiveness.

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion The strong microeconomic landscape of London is threatened by the Brexit and increasing competition

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v Subject to UK decision- Chance making incl. tax policy Government v BREXIT and immigration

v Infrastructure below competing countries (low v Openness of market has historically been a great advantage: compromised public investment) through BREXIT? v Labor force skills very strong in support services v Labor market regulations complicated by EU with primary fields in banking and insurance, v Competition intensified by presence of global actors however declining within manufacturing Firm strategy, v Tax incentive shrinking compared to other similar regions v Strength through financial markets (capital structure and rivalry availability) v R&D investments are quite low compared to others which is also reflected in patents filed Factor condition London Demand conditions

v Extremely broad, well educated and international Related and demand v High number of renowned education institutes v High sophistication levels pressuring suppliers, v Financial cluster providing high availability of VC supporting industries however beneficial demand climate may cause v Tourism: museums, shopping cluster generating revenue inertia in terms of innovation v Seemingly few cluster-supporting organizations outside of dominant fields v UK ranks 12th in the world in terms of demand (finance, insurance etc.) conditions in GCI, slightly below overall rank2

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion The strong microeconomic landscape of London is threatened by the Brexit and increasing competition

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London Diamond (detailed)

The openness and accessibility has been a regional advantage11 Infrastructure and public investment2 v This could be threatened by Brexit, creating barriers for international firms v In terms of infrastructure and public investment UK ranks relatively low, and talents to enter and intensify competition especially if compared to other regions with similar historical development v Brexit could also have a positive impact on simplifying regulations v Relatively high debt % of GDP undermines heavy future public Importance of global rivalry investments v Globally competing companies constitute a very significant share of Strength is in financial markets and capital accessibility5 business in London, which is vital for long-term competitiveness of the v The financial cluster in London provides an almost unparalleled area. An important challenge is to make sure they stay Firm strategy, Firm strategy, accessibility to funding which can be the ignition for new clusters 5 Factor Factor conditions Incentives such as low taxes are no longer as prominent structure and rivalry and structure v 10th lowest in 1999, 20th lowest in 2010, mostly other regions changing

London contains some of the world’s top universities6 Broad and well educated international demand v The city is especially prominent within economics, science & technology v Very diverse and high-skill population creates significant pressure on and health sciences competing actors in the region v High access to a skilled workforce through these institutions, but high Sophistication of demand is high living costs lead to decline in more low skill labour7 v London has a history of being the city where you can get anything, e.g. v A large share is made up of international students, giving talent diversity Harrods. This is a position which is threatened by the accessibility that E- Traffic from tourism and business clusters commerce supplies. UK ranks 12th in the world, lower than their overall2

industries v 1,37 billion annual tube passengers providing immense retail traffic8 v Threatening because it makes London’s business less unique but could v 31,5 million annual tourist visitors to London, a figure which is growing9 also be positive as it further increases demand sophistication 12 One of the worlds top financial clusters conditions Demand Government environmental incentives to suppliers is average

Related and supporting supporting and Related v Provides high accessibility to capital and high FDI-attraction v Below top performers which could become more significant in the future - v London was very anti-Brexit but the decision in the end is made by the London has strong influence on governmental decisions entire country and the emerging uncertainty has an effect on exports, v Due to national government being based in London, the region naturally

investments and talent generation to mention some10 ment has a strong impact in terms of lobbying which can benefit decisions Chance Govern v Conservative party likely to reduce tax but also spending on incentives

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion The Brexit will provide new uncertainties and limitations to existing regional barriers2

8 Regional barriers5,13,14

Corporate tax rate Personal tax rate à Talent Short term uncertainty over legal frameworks and Complexity of tax regime Employment regulation economic outcomes Immigration barriers Losing FDI shares

Living quality and costs Leads to caution which impacts investments, consumption, trade as well as attractiveness to intl. talent GFCI rating trends since 2007 Long term limitations of four freedoms: People, goods, services and capital

v GDP growth impact v Trade barriers v Immigration impact, less talent v Previously EU-funded ventures now funded by government v Difficult to predict productivity impact, see short term

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion While London’s position is threatened compared to the past, there is a strong base which could propel it in the future

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Strengths Weaknesses

v Openness to international trade v Aging physical infrastructure, need for public spend v Share of global FDI remains high, although dropping v Low R&D investments as well as patent output resulting in v Extremely developed capital markets suffering levels of innovation v Historical strength provides a steady foundation which v Very high costs of living – The average 1 bedroom is $200315 generates high visiting numbers still today v High personal and corporate tax rate compared to competing v International traffic in and out has been increasing regions, such as Dublin

Opportunities Threats

v BREXIT gives certain political freedom v BREXIT currently causes uncertainty which has a v Increasing level of wealth brings growing tourism negative effect on investments and growth interested in unique London clusters v No longer the sole supreme financial capital, high v Access to funding and capital is a valuable asset which amounts of competition from the east (see slide 8) has provided a base for e.g. Silicon Roundabout, given v Increasing competition in terms of cost benefits for the right circumstances this could expand further clusters business from other regions

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion In order to conduct the cluster analysis, the Funnel model was applied

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Regional framework conditions including London’s legacy, economic conditions and competitive challenges

Cluster analysis including mapping, history, performance, competition and the Diamond Model

Firm strategy including firm overview and business model canvas

Recommendations for the cluster

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion Savile Row is the world’s most renowned cluster for bespoke suit tailoring

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What is Savile Row?16 What products/services are offered?17,18

Savile Row is the most renowned bespoke suit There are three different types of products/tailoring at Savile Row* tailoring cluster worldwide v Bespoke v Bespoke tailoring is the process by which a suit is cut and build for an v Made-to-Measure individual person v Ready-to-Wear v Savile Row is a street in Mayfair London, but the cluster incorporates more than just this street and rather describes a While bespoke tailoring is the product category the cluster small area players are leading in, several of them decided to change v Long history of more than two centuries tracks during the last years and widen their product range. v Presence of tailoring businesses today: v 44 tailoring businesses in Savile Row Savile Prices for bespoke suits start at 2000 Pounds but there is no v 116 tailoring businesses in Westminster Row limit and prices up to 60000 Pounds exist overall *Details can be found in the Appendix

The Royals Jude Law

v Wealthy and predominantly male customers Winston Churchill v People from all over the world come to London to get their bespoke suit from Savile row Charlie Chaplin v Some houses do international visits to serve their customers (e.g. Richard Andersen in Hong Kong) David Beckham v Customers come to Savile row not due to advertisement but due to the reputation and tradition Businessmen £

Who are the customers?19,20

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion Tailors are the heart of the cluster but there are various other stakeholders

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Consumers Buttons/zippers/yarn/padding Marketing Equipment: sowing machines, steamers, irons, etc. Tailors Fabric: silk, cotton, wool, etc.

Supporting clusters Organizations for collaboration Tools: scissors, needles, pins, etc. Tailored shirts

Education

Banking Public/government Capital

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion Tailors are the heart of the cluster but there are various other stakeholders

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Tailors are highly vertically integrated and have There exist various education programs tailored to the everything from design to after sales in-house16 cluster21,23-25

Design Production Sales After Sales London College of Savile Row Academy* SRBA Apprenticeship* Exemplary tailors21 (street number) Fashion** v Gieves & Hawkes (1) v Huntsman (11) The tailors of the Tailoring certificate Offered in conjunction BSc Bespoke Tailoring v Kilgour (5) v Henry Poole & Co (15) cluster are highly courses: with Newham College v The only BSc in that v Hardie Amies (8) v 39 more (…) agglomerated v Men's Pattern Cutting & Merchants’ Livery field worldwide and Fitting SRA Company Exemplary suppliers21,22 Certificate Course v Richard James Weldon (London) Most tailors source v Savile Row Bespoke v Dormeuil (French, store in London since 1871) from London Tailor Course v Dugdale (Huddersfield, store in London) based suppliers v The Button Queen (London) exclusively

v There is not much research in Savile Row CAPITB An independent charity providing support and v The products and services offered are based on tradition Trust*** funding for (future) employees in the UK clothing industry26 “Savile Row is a comedy, a melodrama lost in the past. It’s so old it should be in black and white. They don’t research or develop or innovate. There is no room in v There is no local capital support for the cluster and the businesses their head to expand into something new.” encounter increasing financial difficulties – Giorgio Armani19 v Current trends: mergers and foreign investors acquire firms

*local; **regional; ***national

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion Tailors are the heart of the cluster but there are various other stakeholders

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There exist four bridge builder organizations in the City of Westminster cluster

Following protests after the non-bespoke retailer Abercrombie & Fitch Savile Row Bespoke Association opened a store on Savile Row , the Special Policy Area (SPA) v Formed in 2004 by 12 tailors to protect their specialist knowledge from imitators28 guidelines were introduced in 2016 for Savile Row in order to v Manufacturing standards, authenticity label, government connections, network events v Protect existing tailors v Foster new developments to complement the bespoke tailoring The Bespoke Apprentice Savile Row Style London Fashion Week v Regulate that retail in the area must sell bespoke, one-of-a-kind or v Fashion magazine v Resource for unique products with a focus on v Savile Row tailors prospective tailoring v Regulate that retail units cannot be larger than 300sqm Savile Row, participate in a number apprentices29 available to tailors of events, both shows v Organizes yearly The policy is the first and only government protection given to the and their and other projects31 27 competition cluster customers30

There are two other clusters in central London that relate Tailors going international to Savile Row Some tailors visit international markets every six months v Bespoke shirts on Jermyn Street, London: complementing product to the to take measurements of clients all over the world, so bespoke suit they can order suits even when they are not in London.32 v Banking in London: the labor force with high income creates demand for Savile Row’s bespoke suits

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion Savile Row has a long tradition in bespoke suit tailoring

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1720s 1960s Lord Burlington is forced to 1860s – 1880s 2000s Nutters of Savile Row sell parts of his land, on 1800s More tailors, like Dege & Kilgour launches Savile opens and designs the which Savile Row is Tailors set up shop Skinners, Davies & Sons, Row’s first ready-to-wear modern Savile Row suit, established a few years surrounding Savile Row33 and Kilgour & French open collections. More and more making it popular to later. Noblemen and military up shop on Savile Row34 other tailors follow.38 wear suits36 officers take office.33

1700 1800 1900 2000

1990s 1760s 1900s – 1950s Alan Bennett buys Davies & Hat makers, embroiderers, 1846 Savile Row continues to Sons, and incorporates lace manufactures, etc. are The tailor Henry Poole grow, creating suits for three other tailors.37 establishing themselves in & Company moves to royalty, aristocrats and streets surrounding Savile Row34 higher ranked Acquisitions continue to Savile Row33 military officers35 take place on regular basis

The value of Savile Row lies within the years and years of experience it has in the bespoke tailoring of suits. The timeline shows that, even though there has been change in ownership, there has been little change in technique, research and types of products offered.

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion Savile Row passed the growth stage and has to act in order to avoid drifting into the museum stage

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18th century 1846 19th and 20th century 21st century Emergence of bespoke Savile Row cluster kickoff Cluster growth Current stage tailoring in Westminster v Since the early 18th century, v Key event: Henry Poole & v Savile Row became the place v Key events: buyouts of tailoring businesses Co. moves to Savile Row to be for tailors and more and traditional tailors increased presence in the v While many tailors were more firms moved there v Limited dynamism in the area of Westminster around the area already v The cluster became more cluster, static diamond* v London was the centre of an before, the “official” kickoff of dynamic* v Firms face financial struggles empire that covered a third of the cluster was when Henry v In the 19th century, sewing and many get acquired by the world’s population. This Poole & Co. decided to machines are commercially foreign investors19,40 à only led to a huge amount of traffic create a second entry to the used and ready-to-wear is large firms survive, small as well as money going store at the backside in order introduced42 ones have to leave through the city, bringing high to be on Savile Row39 v Early 20th century: the cluster v Lack of rivalry in the cluster demand for luxury products had its peak in terms of which limits innovation and high fashion performance, sales, demand39 v Firms’ strategies based v Late 20th century: no further around bespoke products and development, cluster remained services that are declining in in a static agglomeration39 demand

v Museum stage or reinvention? Lock-in that might prohibit the cluster form moving on v If nothing changes, Savile Row will likely drift into the v Evolution of rigid institutions can hinder a change museum stage What’s next? in technology/strategy in a cluster41 v Action is required in order to regain dynamism and enter v Tailors have developed a certain degree of self- the path of reinvention restraint due the norms present in the street: everything stays based on tradition, no innovation * For details regarding the development of the cluster’s dynamism, please refer to the diamond model (p. 20ff)

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion Savile Row’s decreasing success is partially caused by the weak links with other actors, especially research

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1. Firm-to-Firm: 7 Gap Model for Savile 4. Firm-to-Capital: Row’s Bespoke Suits v Tailors are in close contact Cluster v Savile Row tailors having with each other issues with paying the increasing rent, not getting extra v Firms usually have certain help from the banks19 expertise within a specific section of bespoke tailoring 8. Firm-to-World: v Almost no gap present between the firms on v International consumers not Savile Row 2. Firm-to-Research: 3. Firm-to-Education: recognizing the brands on Savile Row, but only Savile v Extremely little connection to v Links to universities limited to Row itself research, as Savile Row is the London area v Little use and development of 5. Firm-to-Public: referred to as a museum different channels, such as multiple times38 v Tailoring apprenticeship usually v Specific area regulations put in done in-house, so firms have social media, e-commerce, 29 mobile apps place by the Westminster City v No joint R&D facilities little connection to begin with Council only very recently27 v Very limited store, workshop 6. Bridge builders: 7. Firm-to-Clusters: Key takeaways and office space v Important bridge builders (like v No active and continuous v There is a significant amount of v Little help from public bodies to the Savile Row Bespoke contact seems to be happening gaps present within the cluster keep rent affordable and for Association) not leveraging full with the two related clusters: v The biggest ones are firm-to- Savile Row tailors to be able to potential, such as lobbying for Bespoke shirts on Jermyn retain and extend their lease37 protected classification37 street and Banking in London research and firm-to-education

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion The current trends show that Savile Row is failing to capture shares of the growing luxury menswear market

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Global luxury menswear is growing Savile Row businesses are getting smaller

In recent years, the global luxury menswear market E.g. Henry Poole employed 300 tailors and made has grown at almost double the rate of the 12,000 garments in 1901. Now,100 tailors employed womenswear luxury market. However, Savile Row is and 10,000 garments are made in the whole of Savile unable to profit from this opportunity due to Row.19 scalability.38

Focus on top-to-toe solutions Some businesses launch ready-to-wear

Businesses now wanting to be Britain’s most famous E.g. in 2003, Rigour launches their ready-to-wear menswear brand instead of Britain’s most famous line. It got killed when they were acquired, but was tailor.37 relaunched in 2014. Today, it is even sold through the luxury online retailer Mr. Porter.37

Due to limited availability of performance data on the financial performance of the tailors on Savile Row, we have chosen to focus on general trends to provide insight into the cluster performance.

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion Clusters of premium fashion brands are Savile Row’s major competition

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v Bespoke service is offered around the world, like Oliwer & Rowan (USA) and A. Caraceni (Italy). No competing bespoke However, these are all individual tailors and are not clustered.43 tailored suits cluster v The one location that stands out in terms of bespoke service is Savile Row

The major cluster competition Savile Row faces are streets with international fashion brands

Why? Who? Where? More and more tailors start v Tom Ford v Bond Street, London selling ready-to-wear suits, v Gucci v P. C. Hooftstraat, Amsterdam either to compete globally or to v Yves Saint Laurent v Rue Saint Honoré, Paris cater to the changed lifestyle of the customers. v Alexander McQueen v Via Sant’ Andrea, Milan v Entering the market of ready- v Burberry, etc. And many more to-wear suits means the tailors v Over half of these brands are now competing with the have production agreements 44 high end fashion brands. with the Zegna Group

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion The cluster of Savile Row was very dynamic the first half of the 20th century but is rather static today

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In order to analyze the development of the cluster and its dynamics over the years, the Diamond model was used to create two snapshots of the cluster conditions. Supporting the previously given life cycle analysis, it can be observed that Savile Row lost its dynamism along four of the six dimensions and has to be described as being rather static today.

Diamond model then Diamond model now v The bespoke suit cluster of Savile Row was very dynamic v The bespoke suit cluster of Savile Row is static v There was a strong local demand for bespoke suits and supporting factor as well v Demand shifted away from bespoke suits and businesses are struggling with as chance conditions worsened factor conditions as well as disadvantageous chance events v Established businesses were family owned and in strong competition to another v Businesses conglomerate and include new product offerings v The were no bridge building parties existent and the government did not v There is first governmental action in the cluster and an increasing development intervene of bridge builders and other cluster actors The following pages provide more details on the performed analysis

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion Govern- Firm strategy, structure of the 20 half first the dynamic very was Row Savile of cluster The Demand conditions ment and rivalry Introduction No government policies in place Majority of the demand is local v No fashion alternative v v High demand for bespoke fashion v Family owned businesses Local competition only v cluster the within competition direct Strong Wear gained momentum in the market It was only later in the century that Made A bespoke suit was a standard item for people of upper class peaks that could barely be managed before WWI Savile Row was producing uniforms for the and military had demand families for many decades Most of the bespoke suit businesses were traditionally owned by order to gain their customer share Tailors were pushed to differentiate themselves from each other in th century but is rather static today static israther but century First half 20First Regionalanalysis 39 th century - to - Measure and Ready Clusteranalysis - to - v v guidelines Area Policy Special v More international demand v Less demand for bespoke suits R2W and M2M for demand Increasing v Made of Introduction v v conglomeration Ownership v v Dense network of cooperation For details please refer to slide 14 Introduced by the City of Westminster in 2016 Europe 30% Exemplary sales data from Henry Poole & Co: 40% America, 20% UK, during peak times, entire Savile Row sells this amount now While Henry Poole & Co alone produced around 12.000 suits per year Leads to new cluster competition (clusters of premium fashion brands) Hawkes Hong(Trinity, Kong) Examples: Huntsman (French hedge fund investor) and family Trend: giant oversea conglomerates buy traditional tailors, only two supportive to each other In times of increasing financial pressure, the existing tailors are very 42% of the businesses have been at Savile Row for 20+ years - owned houses left HenryPoole 16 - to - Measure (M2M) and Ready 19,40 16 Today Recommendations 39 - to - Wear (R2W) Gieves & Conclusion Trend 21 Related and supporting of the 20 half first the dynamic very was Row Savile of cluster The Chance Factor conditions industries Introduction v Brummell’s friendship with the King No bridge builders present in the cluster v nearby industries related of Presence v only viaapprenticeships tailors future of Education v Aristocracy Tailor was a well regarded profession v Centrality of the British empire v gentlemen English the of Popularity King King was a customer of Savile Row himself, gave fashion advise to the Brummel, on of the most popular British gentlemen of the time who Industrial Revolution Britain had developed towards a strong textile manufacturer as of the There were no external education methods Row which significantly supported its status The members of the Royal family became key customers of Savile among wealthy businessmen and powerful leaders The central location of Britain made it a hub for trade and interaction traditionally very affiliated to tailor made fashion Heavy expansion of gentlemen clubs whose elite members were à start of business with the Royal Family th century but is rather static today static israther but century 45 First half 20First Regionalanalysis th century 46 Clusteranalysis v Brexit v associations Supporting v v Specialized education in collaboration with external organizations v Aristocracy v Low status of tailor profession v Decreasing relevance of geographic centrality v v rates business and rents Expensive however, it is likely that exports suffer will It is uncertain what exact impact the Brexithave will on Savile Row crucial bridge builder within the cluster Especially the Savile Row Bespoke Association developed into a tailors since they have problem covering the associated costs Direct apprenticeship education at the tailors is not feasible for most courses available that support the training for future Savile Row tailors As depicted on slide 13, there are various educational programs and Members of the Royal family remain loyal customers of the cluster Tailors face difficulties in attracting young talent channels Location is less relevant due to improved mobility and communication Tailors feel restricted in the floor space they occupy which is a reason why many tailors face increasing financial difficulties It is very expensive to conduct business in London and on Savile Row HenryPoole Today 16 Recommendations à lack of junior staff 16 Conclusion Trend 22 From the previous analyses it can be concluded that Savile Row is currently facing several issues

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The tailors of Savile Row face several issues that threaten the cluster. These issues can be groups into threats resulting from the macroeconomic conditions and cluster specific threats.

Expensive Drift into rents and Lack of young Non-bespoke Too little Brexit museum business tailors16 on Savile Row protection16 stage rates16

v The entry of non- bespoke brands such as Abercrombie & Fitch v London is famous change the face of the v The average of tailors v It is a changing industry for being a center v There is high street on Savile Row is 4047 and there is overall less for bespoke uncertainty about v It is becoming v Bespoke tailors are v There have been slight demand for bespoke tailoring, yet it is not the impact of the increasingly expensive concerned that this will improvements but the suits protecting it Brexit and less viable to dilute the prestige and tailors still struggle a lot v The question for Savile sufficiently v It might have a conduct business essence of the Street at finding new talent Row is whether it can v Tailoring needs to negative effect on v Many small tailors had v Concern after v Most fashion students reinvent itself or will be protected as key export rates of to leave already introduction of M2M prefer waged, design drift into the museum cultural and Savile Row and R2W: customers based work elsewhere stage historical part of might mistakenly think London of it as bespoke and be disappointed of the quality

Threats resulting from macroenvironment Threats resulting from cluster environment

Section 4 of this report (pp. 30-33) will draw upon these threats and propose possible action steps in order to overcome them

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion In order to conduct the cluster analysis, the Funnel model was applied

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Regional framework conditions including London’s legacy, economic conditions and competitive challenges

Cluster analysis including mapping, history, performance, competition and the Diamond Model

Firm strategy including firm overview and business model canvas

Recommendations for the cluster

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion Henry Poole & Co was and is one of the key firms in the cluster

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Facts Figures

v Bespoke tailor established in 1806 by James Poole48 v 7th generation currently in charge of the business v In 1846, the grand entrance is moved to Savile Row v 38 employees (of which 30 are tailors or cutters)16 v Angus Cundey and his son, Simon, co-own and maintain v Total floor space is 386 m2 16 v The tailor has been owned and managed by family v Clientele is approximately 40% American, 30% European and 20% British16 v Creators of the tuxedo

Value Chain

Design Production Sales After sales

v Other design for every client v Fabrics are almost all v Store on 15 Savile Row, v Each suit is numbered, produced within the UK49 London enabling the tailor to source v The client selects the fabrics materials for future repairs49 v Bespoke process all v Online store (for pocket v Detailed measurements in-house, on Savile Row49 squares, scarves, etc.) v Takes place in-house v Includes pattern cutting, v Licensing agreements for trimming, fittings, marking, MTM and RTW suits in and creating the final piece49 Japan and China43

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion Its business model represents the classical way of doing business on Savile Row

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Key partners Key activities Value proposition Customer relations Customer segments v Network of suppliers of v Designing v Suit specifically tailored v Savile Row store v Sophisticated buyers with fabric, e.g. wool, silk, etc. to client’s measurements (especially during the a clear preference for v Bespoke tailoring and way of moving bespoke tailoring high-end British design v Suppliers of buttons, process) zippers, thread, etc. v Retailing v 100% customization v High income, as bespoke v International visits32 suits come at a premium v Savile Row v Extremely high level of price point Bespoke Association customer service Key resources Channels v Customers include: v Other tailors on v High status brand, as it’s Savile Row recognized to be the first v The Royal Family v Luxury brand identity v Savile Row store tailor on Savile Row v International licensing v Celebrities v Years of expertise v Online store partners43 v Long history of v Business men v Savile Row as tailoring expertise v Chinese and Japanese international center of department stores bespoke tailoring holding a license43

Cost structure Revenue streams v Fixed costs: rent, utilities, v Variable costs: materials, v Sales of bespoke suits v Sales of accessories marketing labor v Sales of MTM and RTW v Licensing43

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion Henry Poole’s current strategy is tapping into the international market through licensing and e-commerce

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1806 – 1960s 1960s – 2000s 2000s – Now

Establishment and national growth European market development Further expansions through licensing and e-commerce v Established in 1806 with the focus on the v In 1964, Henry Poole enters the Japanese bespoke process of creating suits for the market with the licensing of ready-to-wear v In 2013, Henry Poole updates its website to royals, aristocrats, military officers and and made-to-measure suits43 become fully responsive and make its business men online store easier to use. Social media v During the same time, Henry Poole’s tailors presence started a year earlier50, 51 v In 1865, the Tuxedo is created54 start traveling through Europe and the Americas to take measurements of v In 2017, Henry Poole collaborates with v First try to expand to other countries takes international client32 Adidas in the creation of two pairs of place in 1906, but fail shortly after sneakers52 v Henry Poole starts doing trunk shows in v Main channel: store on Savile Row Asia and the USA about 30 years later53 v Main channel: store on Savile Row, licensing and e-commerce v Customers primarily from the United v Main channel: store on Savile Row Kingdom, especially the London area, with and licensing v Overall, Henry Poole appears to do little to the exception of some international royals sustain their competitiveness and innovativeness

National Competitiveness Multinational Competitiveness Increased Multinational Competitiveness

Little change in Henry Poole’s strategy over the past 70 years shows that the firm, along with the rest of Savile Row, might drift into the museum stage.

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion The overall fit within the cluster is strong for education and organizations for collaboration, but weak for all other factors

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Research Organizations Education Organizations v As mentioned before, there is very little research happening in the v Together with other tailors within Savile Row, Henry Poole bespoke suit tailoring cluster, which also applies to Henry Poole & Co participates in the SRBA apprenticeship29 v Thus weak connection to research organizations v Participating in projects at London College of Fashion55

Capital Providers Public v Henry Poole & Co seems to have little direct v Henry Poole & Co has little to no direct relationships with banks or other capital relationship with the municipality or other providers public bodies v The firm is one of the only ones that is still v Most of this is done by the Savile Row owned by the family that established it58 Bespoke Association28

Organizations for Collaboration Other Clusters v Henry Poole is member and very active in initiatives of Savile Row v Henry Poole has no close connections to other bespoke suit Bespoke Association: the SRBA apprenticeship, exhibitions, etc.56 clusters, primarily because there are not as strong as Savile Row v The company also participates in London Men’s Fashion Week57 v Strong connection to British manufacturing of cloths, fabrics, etc.49

Compared to the bespoke suits cluster in general, Henry Poole has positioned itself fairly well. It bridges the gap with education better than other firms. However, for the remaining gaps, they perform about the same as the other tailors. Especially the weak connection to research is apparent.

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion In order to conduct the cluster analysis, the Funnel model was applied

29

Regional framework conditions including London’s legacy, economic conditions and competitive challenges

Cluster analysis including mapping, history, performance, competition and the Diamond Model

Firm strategy including firm overview and business model canvas

Recommendations for the cluster

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion There are three issues the cluster should focus improving on in order to gain back dynamism

30

Expensive Drift into Lack of young Non-bespoke Too little Brexit rents and museum tailors on Savile Row protection business rates stage

The identified issues cover areas from the European macro-environment to cluster specific developments and issues. In accordance with Porter’s ideas on competitiveness and innovation, improving some of these issues will help developing the cluster long-term by focusing on improving its dynamism. However, a heavy focus on protectionism is likely to put the cluster in a Trabant-situation, making it more static rather than dynamic. Therefore, the suggested focus areas are chosen for their long-term impact and strategic significance for improved cluster dynamics.

Issue Issue Issue

Expensive rents and business rates Lack of young tailors Drift into museum stage

Recommendations Recommendations Recommendations

v Lobbying for rent caps and possible v More collaboration with general implementation of variable sales rents v Utilize new technologies fashion/design schools v Move production away from showrooms and v Engage in discrete marketing activities v Include faces of tailors in the story of the develop exposure in prime location v Design limited editions for other high end brand v Improve tax environment for the SME fashion brands v Set up program for international talent segment in London

R R R F D F D F D C C C

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion The issue of business rates should be faced both within and outside the firms to improve the situation

31

It was recently revealed that Savile Row’s neighboring street, Bond Street, has the world’s third most expensive business rent.59 This trend in central London is driven by global luxury brands who use the location for showrooms. For Savile Row tailors, who rely heavily on the location but cannot produce to scale, the rates are becoming unbearable. Additionally, the UK’s tax rates are becoming less favorable in comparison to other regions. Unable to pay costs and stay profitable, this leads to conglomeration and a diminishing share of SMEs.

Lobbying of supporting organizations Scaling up Savile Row production capacity Improving tax environment

v Lobbying to slow down the alarming v In order to not only survive but actually transition v Lacking tax incentives for SMEs leads to development of business rates in the area into a renaissance stage the cluster firms have to emerging firms choosing other regions create a bigger supply to leverage higher costs v The development of business rates is market v Important to promote the entry of innovative controlled leading to only giant luxury brands v Basically every successful retailer uses start-ups which would provide competitive surviving showroom model, Savile Row should too energy to the region

v The whole regions is likely to suffer if traditional v There’s no real reason to use prime exposure v Help sustain SMEs who are important to London London clusters disappear space for production tourism but suffer in current climate

Recommended action steps Recommended action steps Recommended action steps

v Support organizations from many clusters (see v Production of garments should be moved to v VAT-relief on certain products deemed page 4) should work together to showcase the more cost efficient locations, while fitting and “sustainable”. This would promote sustainability effects of conglomeration showroom capacity remains the same levels in the city and incentivize sustainable start- ups and innovation v Implementation of variable rent (% of sales); that v This could allow them more (inexpensive) room way property owners and tailors work together for high production, and it would leave more v Savile Row should be included because of the to improve sales in the region prime space for customer display quality and manners of production

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion The cluster has to work towards becoming more attractive to young tailors

32

As the previous performed analysis of the cluster has shown, one of the gaps present is the one between the firms and education. While the average age of tailors has decreased from 60 to 40 years old, finding young people who want have a career in tailoring has proven to be hard. In order for the tailoring firms to grow and innovate, they need to attract young talent.

More collaborations with foreign schools Include tailors in firm branding International Talent Programme

v In order to have the next generation of tailors take v To improve the status and reputation of Savile v While there currently is the SRBA Apprentice over from the current ones, the firms need to look Row, it is important to increase the awareness on Scheme to educate future tailors, this is not further than just the UK. Collaborating with foreign their craft. Giving them a voice and incorporating focused on international talent.29 The new, or schools will increase Savile Row’s exposure. that in firm branding will do that. improved, programme focuses across the border.

v Goal: increase the pool of talented young v Goal: increase the awareness and interest in v Goal: have talented international students learn students that could potentially work at Savile Row becoming a tailor at Savile Row the craft of tailoring at Savile Row

Recommended action steps Recommended action steps Recommended action steps v Do research on which educational institutions fit v Put more emphasis on the tailors that actually v Develop a new or improved educational with the kind of students the tailors are looking do the work by publishing their stories on the programme that offers extremely talented for. Suggestions are the Amsterdam Fashion websites and social media, providing more student from anywhere in the world the Institute (NL), Parsons (USA) and Polimoda (IT) exposure to them and their craft chance to improve their craft at Savile Row v Set-up long term relationships with the v Create short movies or series on the tailors of v Use the first recommendation we made, educational institutions by, for example, doing Savile Row, which can be published on the collaborating with foreign schools, to draw yearly projects, setting up company visits and Vimeo page of Savile Row Bespoke attention to the programme and create 60 organizing master classes to increase the Association demand awareness Savile Row

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion Savile Row has to act in order to avoid drifting into the museum stage

33

As the analysis of the cluster diamond and especially the life cycle analysis indicate, Savile Row faces the danger to get stuck in the museum stage. There is action required in order to make the transition towards the reinvention track instead.

Design limited editions for other high end Utilize new technologies Engage in discrete marketing activities fashion brands

v There exist various new technologies that can v Currently the cluster players do not put a lot of v Some tailors remain convinced that R2W help Savile Row to expand its business focus on traditional marketing and rather build collections do not match their values and geographically as well as horizontally by on their tradition tradition designing product categories of the future v In order to increase cluster/brand awareness v Designing limited editions for luxury fashion v Goal: protect tradition craftsmanship but among the younger generation, engaging in brands will allow them to expand their product encourage visions for changes and innovation discrete marketing activities should be line without sacrificing the traditions of their own considered business and positively influence brand awareness and demand

v Also it will allow them to work with less Recommended action steps Recommended action steps traditional designs and patterns v Set up virtual fitting rooms in order to be able to v Increase the presence at London Fashion Week get measurements from clients around the world and expand to other well suited Fashion Weeks without personal visits such as the one in Milan to close the gap to Recommended action steps international markets v Invest in and develop wearable technology in v Screen the market for potential collaboration collaboration with tech companies (there has v Actively tell the story of Savile Row via partners (suggestions: Tom Ford, Hugo Boss, been a prototype development, Project Jaquard, documentaries (e.g. Netflix cooperation) Dolce & Gabbana) with Google by one Savile Row tailor61) v Formal wear collaborations with sport teams v Negotiate and set up partnership

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion Conclusion

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Regional Framework Conditions Cluster Analysis

v London has a long history of cluster success, v Savile Row is the world’s most renowned cluster for fundamentally based on its centrality in the world’s bespoke tailoring leading empire v While the cluster was very dynamic the first half of the v The city still shows significant micro-economical 20th century, it is rather static today and is endangered to strengths, particularly relating to FDIs, access to capital drift into the museum stage and demand sophistication v There are several major macroeconomic as well as v Weaknesses include UK tax policy, the barriers and cluster specific challenges that are being faced uncertainty imposed by Brexit as well as the threat from up and coming global financial centers

Firm Strategy Recommendations

v Henry Poole is relying heavily on its reputation of being a v Act against expensive rents and business rates: lobby for traditional tailor with years of history better terms of business rates in central London, scale v They’re positioned a little better in the cluster because of up firm productivity and improve UK tax environment their relation with education v Become more attractive for young tailors: collaborate v Even though they’re currently internationalizing, they do with foreign schools, include tailors in firm branding and not do much else to improve their competitiveness and set up an International Talent Program innovativeness v Act towards reinvention: utilize new technologies, engage in discrete marketing activities and design limited editions for other luxury suit brands

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion List of References

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(1) A) The Guardian. (2014). The Evolution of London. Retrieved November 17, 2017: https://www.theguardian.com/cities/2014/may/15/the-evolution-of-london-the-citys-near- (33) British History Online (1963) Cork Street and Savile Row Area: Savile Row. Retrieved November 21, 2017 from http://www.british-history.ac.uk/survey-london/vols31- 2000-year-history-mapped 2/pt2/pp517-545 and Savile Row Bespoke Association (N/A). 17th & 18th Century. Retrieved November 21, 2017 from http://www.savilerowbespoke.com/about- B) London.gov.uk. (N/A). Population by borough 1939 to 2039. Retrieved November 17, 2017: https://data.gov.uk/dataset/a78316c0-7c99-472a-bb9a- us/history/17th-18th-century-history/ b4fa16b09473/resource/e8e0eac9-5c8e-4a6c-bfcf-98dd9e18613a (34) Savile Row Bespoke Association (N/A). 19th Century. Retrieved November 21, 2017 from http://www.savilerowbespoke.com/about-us/history/19th-century-history/ C) Pearl-Coutts. (2016). Types of London business clusters. 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Competitiveness Report. Retrieved November 24, 2017: http://londonfirst.co.uk/wp-content/uploads/2012/09/Competitiveness_report_-_FINAL.pdf https://www.businessoffashion.com/articles/intelligence/row-opportunity-part-2 (6) Study London (N/A). Best universities in the world. Retrieved November 24, 2017: http://www.studylondon.ac.uk/why-study-in-london/best-universities-in-london (38) Mellery-Pratt, R. (2014). Business of Fashion, A Row of Opportunity (Part 1). Retrieved November 21, 2017 from (7) Simon Caldwell. (2016). London living costs could lead to shortage of qualified workers. Retrieved November 24, 2017: http://businessadvice.co.uk/business- https://www.businessoffashion.com/articles/intelligence/row-opportunity-part-1 development/business-planning/london-living-costs-could-lead-to-shortage-of-qualified-workers/ (39) Meredith, M. (N/A). Bespoke Tailoring on Savile Row. Retrieved December 16, 2017 from https://www.seamwork.com/issues/2015/10/bespoke-tailoring-on-savile-row-2 (8) Transport for London. (N/A). Facts & Figures. Retrieved November 24, 2017: https://tfl.gov.uk/corporate/about-tfl/what-we-do/london-underground/facts-and-figures (40) Chesters, L. (2013). Pattern Changes for Savilde Row. Retrieved November 27, 2017, from http://www.independent.co.uk/news/business/analysis-and-features/pattern- (9) The Guardian. (2016). London record visitor numbers of 31,5 million 2015. Retrieved November 24, 2017: https://www.theguardian.com/travel/2016/may/20/london-record- changes-for-savile-row-8562866.html visitor-numbers-2015-31-5-million (41) Sölvell, Ö. (2015). On Strategy and Competitiveness. (10) BBC News. (2016). EU Referendum: The result in charts. Retrieved December 18, 2017: http://www.bbc.com/news/uk-politics-36616028 (42) Jean L. Druesedow, Fashion History: Ready-to-Wear: http://fashion-history.lovetoknow.com/fashion-clothing-industry/ready-wear (11) Porter, Michael E., and Christian H.M. Ketels. (2003) "UK Competitiveness: Moving to the Next Stage." (43) Sandell, L. (2017), Henry Poole & Co.: How a 200-Year Old Bespoke Tailor Have Managed to Stay Modern. Retrieved November 27, 2017 from http://hb.diva- (12) Yale. (2017). Yale environmental performance rankings. Retrieved December 18, 2017: http://epi.yale.edu/country-rankings portal.org/smash/get/diva2:1148621/FULLTEXT01.pdf (13) Institute of Directors (IoD). (2011). Policy paper: Regulation Reckoner 2011:Counting the Real Cost of Regulation (44) Amed, I. (2013). Business of Fashion, The Business of Being Tom Ford (Part 2). Retrieved December 12, 2017 from (14) CBI. (2017). London Business Survey, September 2017. Retrieved December 18, 2017: http://www.cbi.org.uk/cbi-prod/assets/File/CBI_London-business-survey-2017.pdf https://www.businessoffashion.com/articles/people/the-business-of-being-tom-ford-part-ii (15) CNBC. (2017). Cost of living breakdown between London and NYC. Retrieved December 18, 2017: https://www.cnbc.com/2017/04/13/the-cost-of-living-breakdown-between- (45) Wikipedia. (2017). Textile manufacture during the Industrial Revolution. Retrieved December 17, 2017 from london-and-nyc.html https://en.wikipedia.org/wiki/Textile_manufacture_during_the_Industrial_Revolution (16) City of Westminster. (2006). Bespoke Tailoring in London’s West End. (46) George Brummel. (2017). George Brummell History. Retrieved December 17, 2017 from http://www.georgebrummell.co.uk/history.html (17) The Idle Man. (2017). Everything You Need to Know About Savile Row. Retrieved November 20, 2017 from https://theidleman.com/manual/advice/savile-row-suits-tailors/ (47) O’Ceallaigh, J. (2012). London: the tailors of Savile Row. Retrieved December 17, 2017 from http://www.telegraph.co.uk/travel/destinations/europe/united- (18) Chan, C. (2017). Q&A: Savile Rows Richard Anderson explains why made-to-measure is not bespoke. Retrieved November 20, 2017, from kingdom/england/london/articles/London-the-tailors-of-Savile-Row/ http://www.lifestyleasia.com/529747/qa-savile-rows-richard-anderson-tells-us-why-made-to-measure-is-not-bespoke/ (48) Henry Poole & Co (N/A). Our History. Retrieved December 17, 2017 from https://henrypoole.com/hp/history-of-henry-poole-tailor-of-savile-row/ (19) Independent. (2008). Savile Row: Slipping out of style?. Retrieved November 20, 2017 from http://www.independent.co.uk/incoming/savile-row-slipping-out-of-style- (49) Henry Poole & Co (N/A). Bespoke Process. Retrieved December 17, 2017 from https://henrypoole.com/hp/bespoke-tailoring/bespoke-process/ 5463109.html (50) Gosling, E. (2013). Design Week, News in Brief Round Up 112. 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Retrieved November 20, 1017, from https://www.newham.ac.uk/course-listing/abc-intermediate-certificate-in-fashion-and-textiles-bespoke- (53) Henry Poole & Co (N/A). Timeline. Retrieved December 18, 2017 from https://henrypoole.com/hp/history-of-henry-poole-tailor-of-savile-row/timeline/ tailoring-adults-1.html (54) Henry Poole & Co (N/A). History: The Tuxedo. Retrieved December 18, 2017 from https://henrypoole.com/hp/history-of-henry-poole-tailor-of-savile-row/the-tuxedo/ (25) London College of Fashion. (2017). Retrieved November 20, 2017, from http://www.arts.ac.uk/fashion/courses/undergraduate/ba-bespoke-tailoring/ (55) London College of Fashion (N/A). BA (Hons) Bespoke Tailoring. Retrieved December 20, 2017 from http://www.arts.ac.uk/fashion/courses/undergraduate/ba-bespoke- (26) CAPITB Trust. (2017). Funding Fashion Training. Retrieved November 20, 2017, from http://capitbgrants.org tailoring/ (27) City of Westminster (November 2015). Special Policy Areas and Policies Map Revision, Publication Draft (Regulation 19) Revision to Westminster’s City Plan: Strategic (56) Henry Poole & Co (2015). The Savile Row Bespoke Association Exhibition, Savile Row and America: a Sartorial Special Relationship. Retrieved December 20, 2017 from Policies. https://henrypoole.com/hp/the-savile-row-bespoke-association-exhibition-savile-row-and-america-a-sartorial-special-relationship/ (28) Savile Row Bespoke Association (N/A). About Us. Retrieved November 21, 2017 from http://www.savilerowbespoke.com/about-us/ (57) Henry Poole & Co (N/A). London Collections. Retrieved December 20, 2017 from https://henrypoole.com/hp/london-collections/ (29) Savile Row Bespoke (N/A). The Bespoke Apprentice. Retrieved November 21, 2017 from http://www.savilerowbespoke.com/2016/05/the-bespoke-apprentice/ (58) Henry Poole & Co (N/A). A Family Business of Tailoring. 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Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion Appendix

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Explanation of the different product categories offered on Savile Row17,62

v Machine made model without any alterations v Bought off the rack in cut and style determined by Ready-to-wear the designer (RTW) v Prices: no clear price range identifiable but for all tailors, RTW prices are significantly lower than the prices for the other categories

v Machine made model on which alternations are made Made-to-measure v Not “purely you” (MTM) v Main difference: not hand made v Price range: 1000-6000 pounds

v Individual pattern cut for every customers à made just for you v Exclusively hand work v Approximately 10 weeks and 60-100 hours of work Bespoke v Entails 3-4 fittings to ensure the perfect fit v Min. lifetime: 10 years but often much longer v Average price: approximately 5000 pounds but prices can reach up to 60.000 pounds

Introduction Regional analysis Cluster analysis Henry Poole Recommendations Conclusion