22 Oct Tony Drockton, founder of Hammitt: “Our unique business model helps create authenticity and build trust”
Interview conducted in red-hot handbag brand Hammitt’s headquarters in Hermosa Beach, California, USA.
Have you ever taken a moment during a California adventure to stroll through Hermosa Beach? Next to its popular neighbours Venice Beach and Santa Monica, Hermosa Beach is a jewel: a few local walkers meet you saying hello, the shops have remained authentic and the view of the ocean is breathtaking. No wonder Hammitt, the fastest growing American handbag brand in the industry, moved here 11 years ago – against the advice of experts – and plans to stay here.
In the middle of summer, surrounded by a tempting array of handbags, I talked with Tony Drockton, founder and Chief Cheerleader of Hammitt, about leading one of the most rapidly growing handbag brands of our time, which has never fallen into the infernal spiral of promotions and sees itself as a “connector”, encouraging conversations between women who connect over the brand’s signature rivets.
- Hammitt handbags represent a fresh, versatile approach to everyday modern style. Designed in Hermosa Beach, California, Hammitt bags are meant to be worn and loved for a lifetime.
- Hammitt founder Tony Drockton looks up at the European luxury brands not just for their product, but also for their business model of how ”they put quality and design first, which makes the customer love that brand over the long haul.”
- Therefore, having a business model built around price integrity, product integrity and brand integrity allows Hammitt to grow more like a European house than other American brands.
- Founded in 2008, Hammitt is quickly becoming a pop culture favorite. The majority of the online traffic is direct — more than 60%.
- Shoppers can experience Hammitt’s stylish functionality in over 800 American retail stores, including several major department stores.
- This summer, Hammitt opened its first California flagship boutique at South Coast Plaza in Orange County, CA.
- In this interview, Tony Drockton, founder and self-proclaimed “Chief Cheerleader”, explains how Hammitt’s unique business model, featuring non-promotional pricing and Facebook geo-fencing, helps to create authenticity and build trust in a highly competitive market.
:: The handbag market is highly competitive. What make Hammitt distinctive?
Tony Drockton: I think any industry right now is competitive. So, first of all, I don’t look at what the competition is doing to decide where we are going.
I went backwards in time to what great retailers did, in the 40s, in the 70s, in the 2000s, and now. It was always about high quality products, high quality service, and putting the customer first.
Those are basics in business. I think what makes it easy for us to be distinctive is a lot of large handbag brands forget that. There was an opening – and there is still – for a brand to get back to these basics and maintain the quality of products and partnerships.
In the end, our largest salesforce includes our customers and our wholesale partners. The more they love the brand and scream our name from the rooftops, the more people we reach.
In terms of aesthetics, we’ve been inspired by the principle that the Burberry check is recognized all over the world. Why not make our signature rivet the equivalent of Burberry’s check?
It is one way to go. It is not the way for everybody, but for Hammitt, it is a way for us to have a distinct look & feel that a person can recognize from across the street.
:: Hammitt is never on sale, and does not do promotion. How is it possible in this competitive market?
Tony Drockton: Having a business model built around price integrity, product integrity and brand integrity allows you to grow like the great European houses.
We know we are making the highest quality products. We know we want to build a brand for the long haul. The one thing you have to control to do that is the price. In the United States, we have a law that legally protect the price, called MAP (Minimum Average Pricing) So here, at least, it is a little easier than in the rest of the world.
Apple was MAP price for a long time, Lululemon’s core styles are MAP price. There are a lot of brands that never go on sale and are building very large followings as a result.
I’m following those great brands down that path. Unfortunately, it limits our distribution on all sales channels, because there are not a lot of great partners that follow the MAP, especially in the department store world.
But we have some really good ones. We work with a lot of specialties and some great resorts, including the Montage and the Four Seasons. We sell through QVC, and they sell us at the same price as everyone else. There is no discount, no special.
I think as we grow bigger, the other department stores will want to carry us and will agree with our full price policy. In doing that, the competition is then based on the selection that those partners carry. If one specialty store wants to sell more than another, they have to have better products and more of them.
So, it really entices all our partners to carry our full collection, so they capture the sale based on having the right product for their customers, not based on offering them at lower prices.
:: You created Hammitt ten years ago around the idea of a community. Today, many Direct-to-Consumer brands claim to have a community. What made you think at the time that building a community would be important to develop a brand?
Tony Drockton: We live in a community that has been built that way. Hermosa Beach, California, is really the land of people that mostly move here from some place elsewhere. People came to Hermosa in search of community. Around here, everyone says hello, and everyone helps raise each other’s kids. I wanted that spirit to be part of our brand’s DNA.
Even more so, that’s part of our brand’s history. We sold our very first bags at home shopping parties. Women in town shared wine and cheese while browsing our designs, and then they bought some and took them home. From there, locally, the brand spread like wildfire.
The handbag was much more than a handbag. The handbag was a memory of a peaceful, joyful night, filled with friendship and all the finer things in life.
We try to create this type of environment across the country, from our trunk shows to our new retail store. Our goal is to bring people together so they can connect one at a time. My vision in the world is two women walking in the street , seeing each other with a Hammitt bag and saying :
“Oh my god I love your bag!”
“I love your bag!”
“Where did you first discover Hammitt?”
“At the boutique in town! How about you?”
Next thing you know, these two women will probably find they have multiple mutual friends. I had Texan people who sent me a picture from the airport. “Oh my god, I sat here with Maria because we have the same bag and we started talking, and now we’re having cocktails and had to send you a photo.” It is wonderful.
And it has to be authentic. You can’t create the effect of having two people wanting to say hello to each other simply because they are wearing the same brand. You can’t create that. They have to create that.
What we are trying to do is no matter where customers acquire our brand — Retail partner, wholesale, small specially store, the Four Seasons, our own store, trunk shows, our events — we hope they have a wonderful experience. We want our bag to be a reminder of that joy.
Founded by Nick Arquette in 2005, Walk With Sally provides hope through individualized mentoring and community support services to empower children experiencing trauma through a parent, guardian or sibling’s cancer journey.
Every summer, Walk With Sally hosts White Light White Night, a celebration of the region’s best food and experiences that supports WWS’s mentorship program. This year, Hammitt hosted the event’s VIP tent. Attendees were invited to purchase a limited number of Hammitt “mystery” boxes in support of Walk With Sally, plus mingle with our team over sips, savory bites, music and arcade games. Here’s a glimpse at the party!
:: What are your best acquisition channels right now?
Tony Drockton: Today our best acquisition is our four omni channels: in the digital world, a lot of our new customers are coming through our emails, our advertising, our social channels, our influencer marketing, and word of mouth referrals. The majority of our online traffic is direct — more than 60%. It is a big number.
But that doesn’t tell the whole story. I believe all of that is driven in the offline world. I think it is all what we do in the offline world, that is touching the customer so many times, that eventually when they see us on Facebook, Instagram, they eventually say : “Ah I think my girlfriend had this bag at a baseball game”. “I think I see one of them across the street and it caught my eye”.
I think the customer needs to come in contact with a product many times before they even realize they like it. That is suddenly when some products or some designs have a tipping point. Everybody wants that product. Enough people come in contact and it becomes the IT bag.
We’re starting to have those moments. Most recently, we did a small clear Tony bag. We put it online quietly on a Sunday and posted about it on social, and they all sold out within a day. It was a lot of them. We’ve never had that happen. Those are fun moments.
But before we had digital, before we had social, before we had even an email list, our best way to acquire customers was through our wholesale partners. So, we built those boutique relationships one at a time. We earned their trust, and they shared us with the customers who trusted them. Over the first five years, that was 100% how we built the brand, besides having small events and parties locally, from home parties, which turned to gallery parties, which turned to country club parties. Twice a year we bring together twelve hundred friends to share cocktails and food and pick up some Hammitt handbags. That was our best original channel.
Hammitt was honored in New York City on September as the recipient of a Design Excellence Award for their Dillon bag.
“I like to say Hammitt has built capital efficiently”
:: It is a lot of work
Tony Drockton: It is. If you have a hundred million dollars to start, you could do it differently [laughs]. I like to say Hammitt has built “capital efficiently”. That means we had to earn enough money every month to keep the light on, to go to the next month, to the next month, to the next year.
:: You started to work with QVC last year. Is QVC a successful channel for Hammitt?
Tony Drockton: We are very happy with the results. For all our partners, the most important thing is our trust. When you are trying to build the brand in price brand and protect integrity, you have to have a lot of trust, because if a partner does not have those same intentions, there are lots of shortcuts that can hurt you.
QVC has really supported us with price integrity. We sold out last year during our first appearance on air, second appearance we did about 200% the goal, and then this year, they bring me back, in August, and for the launch of Fashion Week in New York — it is called the QVC Runway — and then a bunch of times until the end of the year. This year we brought some exclusives for them, but again, this is at the same price and quality, just special for QVC.
They are great people: they do what they say, they are very straightforward, they are amazing retailers. They know how to sell!
:: Drive-to-Store is key. Hammitt does lots of shows, appearances and pop-up events. How do you make your consumer aware of these events?
Tony Drockton: We have our national marketing. We talk to all our social influencers. We are also in some national airline magazines – in American and Delta – for brand national advertising.
How you bring people to a single store? We do geo-fencing around our stores. So when they are in the area, they are getting served “Stop and Buy’ on Facebook or Instagram. And currently for our new store at South Coast Plaza, it is all around the Orange County area.
We are also doing geo-fencing around our largest partner’s individual stores. We do advertising to drive Hammitt’s fans into our wholesale partners stores to buy the product and it is working very well. I think it is something that lots of brands stopped doing. They used to advertise to support their sales at their wholesale partners and I think lots of direct brands forgot how important it is for all of your channels to be successful.
When economic times get hard, it doesn’t matter how many stores or how many clients will buy from you directly – a lot of brands will make it through it – but if you have really good partnerships around, then you win.
First-ever home-state store at South Coast Plaza in Costa Mesa, California.
In addition, we are doing a lot of activations with some of the local charities we’ve met through South Coast Plaza’s partnership. They have their own marketing and PR team, so they allow us to access their own database and bring their customers into our store.
And of course we have our own email list, where we let people know we opened a store in Orange County and to stop by. So between all of those things, it will bring us more traffic.
Most important, obviously, is having a good location. So it is a combination of driving people in, but also getting people who are walking into that mall to want to come in and see the products.
The design of the store is very light, fresh and clean – it is not cluttered. Aesthetically, I think it is different from many stores in the mall.
:: Do you want to have more stores in the future?
Tony Drockton: Yes. We want them to be not just marketing tools, but profitable doors we can measure with concrete metrics.
:: What metrics do you look at?
Tony Drockton: Number one, we look at the sales in the store. Number two, we look at the last 10-12 months traffic digitally in the area and we compare how that online traffic has changed digitally after the store opened. Does it have an affect on the people who can drive to our store by car?
Third, we look at our digital sales all around the Orange County – even in Los Angeles because people in L.A. will drive there. And also how does our wholesale partners sell? Between online traffic, online sales, our sales partners and key traffic, and the sale at the store, you got some great data to measure if the store is profitable.
I think one of the big mistakes right now is that people try to separate online from the retail store and from the wholesale partners. It all has to work together. If the store drives an increase in this area, versus the total cost, then it is a winner.
I spend money to come buy on my website, it is not free. But I do believe the store itself should be profitable at some point, without those. But at the beginning you have to measure.
Yesterday, we had customers from a big department store who had received one of our bags as a gift online, and they went in our store to return it and bought a different bag right there. That wouldn’t happen if we haven’t had this store. They would have just returned it. They would not bother themselves. She said she didn’t really like the bag, she was not sure about the brand, but since we had a store, they came in, they fell in love with the brand and left with a different style, because it was their own.
“There is a lifestyle in Hermosa Beach that you can replicate”
:: What difference does it make to develop a brand in California – and even better, in Hermosa Beach shore – compared to more traditional fashion places like Paris or Milan?
Tony Drockton: Well, it is funny. When I got in the business, I was told I HAD to be in New York to build a fashion or a luxury brand and if I was good I could go to L.A. and I HAD to be downtown where all the brands are. But I don’t even listen to that. When people say “Everybody is doing it!” I hear : “Wrong!”.
I believe that, especially with technology, you no longer confined to physical location in regard to creativity and great people. So I said to myself, I will stay as long as I can, and If I have to move to New York, I would go.
But what I have found is that people are drawn to work here. We are right next to the ocean. The South Bay is a hot bed for creativity, technology, entertainment, fashion, music. It has just everything. There is a lifestyle down there that you can’t replicate. There is a little brand right next door called Skechers that maybe be people might not know all around the world, but it is the U.S. brand ranked among the top three footwear companies, and they are built from there too. So I am not the first one to think of it! I will stay here as long as I can.
Hammitt designer Jeanne Allen
:: Some department stores are doing radical change because they need to. Have you seen something really great lately from the retailers you visit?
Tony Drockton: Obviously there are a lot of different department stores in the United States, some are struggling, but they do have their positioning.
My opinion is number one you have to get back to the basics. For instance, Saks in New York just finished a gorgeous remodel. It is beautiful, there is a circular escalator in the middle, an amazing footwear floor. And the Hudson Yards : It is gorgeous, it makes you want to shop. The companies that are investing in the aesthetic are, I think, doing right.
I know it is painful, especially when the business is not good, but if you don’t have a beautiful, modern store, you have lost before you have started.
Dillard’s has rejuvenated their 270 stores: they are modern, they are not as cluttered as those old department stores, and they are doing very well. I think in the last 2 years, Dillard’s is the only department store that the stock is up, big. Nobody talks about them, they are public but they don’t get in the press, they don’t have a PR agency, but they are updated stores and they are bringing some great brands because of that.
And they are also not promotional, in the fact that price doesn’t fluctuate daily.
Their philosophy is: it is full price, until it is older, and then they do a markdown, and then it is gone. This is a very simple business model, which I think is the customer’s trust.
The third thing is that their floors are full of staff, there are lots of people ready to help you. This is the basis of good business, right?
:: And what about retailers ?
Tony Drockton: Regarding the retailers that I have seen around here, the Dover Street Market (in Los Angeles, New York, Londres, Tokyo, Singapour, Pékin) (ndlr: The seventh, devoted to cosmetics, opened in Paris this month). There are some very high end cool brands. The way they merchandising the store is interesting, they bring creativity, art. It is fun. They do it right. There is also Chelsea Market in New York that does it right.
There are a lot of B8ta in America. I find it interesting but for me it is a disjointed experience, meaning there are a lot of different owners in the store, and I don’t feel connected to the store. But if they do it properly, where you feel that everyone is from the same team, it could be a very good experience.
:: What are your sources of inspiration?
Tony Drockton: When it comes to design, for something to really catch on, there has to have what Malcolm Gladwell called in his old book “Tipping Point” a “tennis bracelet’s moment”. The reason the name “tennis bracelet” took off is because it refers to the time when Chris Evert broke her diamond bracelet during a 1978 US Open game. Suddenly, everybody wanted to have that one.
Those moments don’t come very often, but if you pay attention, and you are able to see that, that is a great point of inspiration. The first jeweller who say “Oh, everybody will want that tennis bracelet” probably made a lot of money.
My core inspirations are art, architecture, design. Also music festival. I am inspired by big groups of people getting together. It could be the Coachella Festival, or staying around The Arc de Triomphe, The Trevi fountain.
:: What’s coming for next year for Hammitt?
Tony Drockton: We are planning one more store for 2020; an international distribution for a couple of chosen markets with wholesale partners; opening a direct consumer online, internationally in some chosen markets; some really big collaborations with designers, complementaries but not obvious brands and some celebrities. It should be a good year!
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