January 12, 2020
VIN LEE “From Mine to Yours”
The cognac-sipping, caviar-culling, art-collecting, cigar-wielding diamond tycoon tells us he’s not even close to being done.
Vin Lee, 49, didn’t inherit a billion-dollar luxury goods empire from his father like his French and South African contemporaries. Over three decades, he built one himself from a single fine jeweller location to a portfolio of over 100 brands.
Lee, whose family office controls Grand Metropolitan, was recently named the “King of Luxury” by Beverly Hills Magazine. In our interview, he explains the company’s acquisition strategy and the luxury market’s appeal to millennials and Gen Z consumers.
Grand Metropolitan is a pure-play luxury goods conglomerate. What is your primary focus when you consider an acquisition? Are there any areas you would wish to get into?
There are several criteria we follow for adding to our portfolio. We have to be able to absorb the target into our operation without incurring any debt. This is why we focus exclusively on distressed debt assets. Taking a page from Warren Buffet on value-added investment. Purchasing undervalued well-established brands that create exponential intrinsic value when vertically integrated into our current operation without the burden of the bloated overhead or balance sheets it took to create that value.
Strategically, our acquisitions have an inherent leading quality in the community or industry that can be built upon. Most of our North American jewellery brands have served clients since the 1900s. Finlay Fine Jewelers isn’t a direct competitor to the glare of high jewellers like Boucheron or Van Cleef, but as local fine jewellers that have served millions of clients earning billions of dollars from thousands of location over the last century.
Our jewellery assets are strong as pertains to North America operating 20 of the top 50 jewellers of the last several generations. Our most recent addition to the portfolio, Samuels Diamonds, once the fifth-largest chain with 200 locations, will complete the 17-year cycle of industry roll-up for us, launching our foray into Asia.
How will Grand Met handle an economic slowdown in North America? And, do you see a need to rebalance your sales away from Asia?
Grand Metropolitan flourishes as a result of economic slowdowns. This is when our portfolio growth spikes as assets become more available at palatable prices. In fact, it has been since 2008 that we have grown from a boutique firm in Beverly Hills to one of the largest privately-held luxury groups in the world. We continue to pace our reintroduction of brands to the market and carry no debt service. In addition, our inventories are essentially timeless commodities that continue to increase in value. Gold is reaching highs of a decade. Diamond prices are strong and precious stones are reaching fevered favour across the spectrum.
We are excited about entering Asia and South Africa. These “emerging” markets experience growth in the luxury industry as populations have access to financial options and introductions to brands. Entering these countries is incredibly complex, requiring patience and understanding of their cultures and governments.
How will future generations, whether in Europe, Asia, or America, feel towards luxury?
That is, in fact, the main problem plaguing the diamond industry worldwide today. Actually it has been ongoing for decades. Much of the producers and subsequent retailers don’t have a strong relationship with the consumers entering the markets. There has been a breakdown in communication and understanding. They don’t know how to speak to them.
The retail brand had lost favour with the market place (prior to our acquisition) by attempting to be “all things to all people.” The product mix became more focus on management than the customer experience. We are limiting inventory depth to between 8 – 11% of what the average fine jeweller currently maintains. Offering only the highest selling items to clients in a highly personalized experience.
We will no longer offer showroom cases stuffed with every timepiece or topped by spin racks of thousands of styles of alloy earrings and semiprecious stone pendants. Customers have options at Amazon, Target, or Walmart. The average fine jeweller is financing almost $1 million of filler for each location in attempts to lure customers in the door. Those resources are better served to clients in the form of service and personalization whether in America, Europe, or Asia.
How do you see consumer concerns about sustainability and the environment affecting the long-term future of the luxury industry?
I can tell you the answer is not lab-grown diamonds.
Much of our industry sources from heavily industrialized activities. Mining commodities is a factor of life and those processes continue to improve themselves and give back to the Earth more and more each year. As jewellers, we have to learn to communicate the story of the journey of these materials and what it represents not just to them personally but to the hundreds and possibly thousands of people involved in composing the piece.
I come across this conflict with a lot of people. The presentation of this shiny new expensive bauble inside an elegant showroom being offered by a well dressed articulate person. That’s the only relationship a client has with the creation of this work-of-art. People sometimes mistakenly assume that what they pay goes directly into the jewellers pocket making him wealthier. They spout off “Do you know how many people you could feed on that?” The truth is many people are fed from the entire process and this needs to be articulated.
In fact, we need to spotlight the courage, talent, and dedication of all those that participate to get this ring or necklace to you. That communication is a job for the industry leaders as well as the local merchant, dispelling the notion of this large belching machine stamping out thousands of settings in 14kt gold. Our jewellery is considered a work-of-art with the care and consideration of its journey under our slogan, “From Mine to Yours.”
SM: Vin Lee Twitter