Luxury accessories

Porsche Design changes lanes

  • Why it matters

    Why it matters

    Porsche Design is hoping to achieve sustainable growth by cashing in on the synergies with its parent company, so it is now focusing on men.

  • Facts

    Facts

    • While online sales currently make up “much less than 10 percent” of total sales, new boss Jan Becker is striving to increase this figure to “much more than 20 percent.”
    • Porsche Design was founded in the 1970s by legendary 911 designer and family scion Ferdinand Alexander Porsche.
    • Jan Becker, who took over as head of Porsche Design last July, is the design outfit’s third boss in two years.
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    Audio

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Porsche Design Store in Milan 82154137
Porsche Design is finally steering away from women’s haute couture. Source: Porsche Design.

To the untrained eye, the black watch seems fairly unspectacular. Yet, Jan Becker, Porsche Design’s new boss, likes to point out that the “Monobloc Actuator” was considered one of the only truly relevant innovations at this year’s Baselworld watch and jewelry fair, two months ago.

Its stopwatch innovation, which comes directly from the so-called rocker arm technology used in Porsche’s new 911 RSR race car, has turned Porsche Design’s chronometer into a €7,000 toy for grown men. To be sure, Mr. Becker wouldn’t describe the watch in such a way. For the 46-year-old, the luxury watch serves as an example of the company’s new strategy: “We want to accelerate our cooperation and integration with Porsche,” he told Handelsblatt.

So far, he’s striking a new tone for the mighty carmaker’s design subsidiary, founded in the 1970s by family scion and legendary designer of the 911, Ferdinand Alexander Porsche. This new tone, though, hasn’t come as a complete surprise.

The parent company recently acquired the remaining 35-percent stake formerly held by the company’s founding family and expects improved synergies. In the past, Porsche Design’s managers felt all too comfortable distinguishing their brand from that of the luxury carmaker and following their own lofty plans. In this way, they sought to turn the design branch into a high-end luxury brand in its own right, investing heavily in fashion and building up its own retail network.

Those times are all but over. “This overstretched the brand a bit,” said Mr. Becker, who took over last July, becoming the design outfit’s third boss in two years. “We don’t have to dance at every wedding,” furthers the new chief, who knows Porsche’s business inside and out after 18 years at the company.

“Porsche Design is inextricably connected with the automotive brand and car technology. Luxury fashion for women doesn’t really fit.”

Maximilian Schmid-Preissler, independent strategy consultant

Among other things, he was responsible for the daunting task of marketing the Cayenne, Porsche’s first foray into the SUV market. Porsche purists initially rebuffed the idea of the sporty SUV, but enough eventually came around to make it a success.

In his new position, Mr. Becker is grappling with brand dilution of a different kind. For starters, he’s pulling the plug on the company’s long flirtation with women’s haute couture. His predecessor sought to elevate Porsche Design to the level of Gucci or Louis Vuitton. “Starting in the spring/summer 2018 season, we won’t be offering a pure women’s collection anymore,” Mr. Becker makes clear.

The design company, which has so far made its mark with watches and teardrop-shaped sunglasses, has decided from now on to “concentrate clearly and solely on products for men.” These products include smartphones, watches, eyewear, leatherwear and baggage.

Fashion expert Maximilian Schmid-Preissler calls Mr. Becker’s decision to change lanes a promising strategy. “Porsche Design is inextricably connected with the automotive brand and car technology. Luxury fashion for women doesn’t really fit,” he told Handelsblatt.

The company, which was founded as a privately-held offshoot of the luxury carmaker in Zell am See, Austria, is now returning to its roots – and in a geographical sense too. After leading a kind of wallflower existence within Porsche for years, the design subsidiary relocated its headquarters near Stuttgart, a stone’s throw away from the group’s HQ.

Over the years, Porsche Design’s various managers introduced a lot of different products – ranging from drills to kitchen appliances and corkscrews. Longtime head Jürgen Gessler, who came to the company in 2007, proceeded to clean up shop but in the end set his sights too high: by 2018, he wanted to double sales to €260 million, or $290 million, he said at the time during an interview with Handelsblatt. Falling well short of these figures, he was forced to resign in 2015.

“We’re thinking about common store concepts with Porsche where we’d be able to, for example, present cars and accessories in the same store.”

Jan Becker, CEO of Porsche Design

The former head of the publicly-owned Meissen Porcelain Manufactory, Christian Kurtzke, took over from Mr. Gessler. He did try to reposition the brand as a design outfit chiefly for men, but like his predecessor, he attempted to grow the company by leaps and bounds through heavy investments in marketing and retail stores. Eventually, Mr. Kurtzke stepped down in a surprise move after captaining Porsche Design for a little more than a year.

For his part, Mr. Becker is shifting into a lower gear. The company is checking its network of stores for profitability. “It could well be that we’ll close a store or two,” Mr. Becker said. In total, the design company currently operates 143 retail stores, 24 of which it runs centrally. Throughout the past few years, Porsche Design has followed the model set by many fashion companies like Hugo Boss and Gerry Weber, opening numerous stores.

Instead of investing in retail stores, however, Mr. Becker is looking to expand Porsche Design’s online business. While online sales currently make up “much less than 10 percent” of total sales, Mr. Becker is striving to increase this figure to “much more than 20 percent.”

Mr. Becker wants to use the rediscovered affinity to the parent company to drive sales. “We’re thinking about common store concepts with Porsche where we’d be able to, for example, present cars and accessories in the same store,” he reveals. The underlying idea is that both brands build on one another and create a new emotionality. The carmaker and its design offshoot are currently testing this concept in central Milan.

The new CEO also has high hopes for the watch business. To that end, he’s trying to win over more specialty retailers. This might be a difficult task: the worldwide luxury watch market contracted by 8 percent to €36 billion in 2016, according to consultancy Bain & Company.

A giant leap forward is not to be expected through the course of 2017, according to Mr. Becker. “This year, we want to stabilize our business, enjoy a positive result and then grow continually in the coming years,” he remarks with modesty – a level of modesty his recent predecessors decidedly lacked.

 

Martin-Werner Buchenau reports from Stuttgart as Handelsblatt’s Baden-Württemberg correspondent. Georg Weishaupt covers the luxury and fashion industry for Handelsblatt. To contact the authors: buchenau@handelsblatt.com, weishaupt@handelsblatt.com.

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