Retailer and events promoter Desmond Vella decided to venture alone into the world of businesses at a young age. Now 34, he has grown into one of Malta’s biggest retailers. Is he feeling the pinch? Interview by DAVID DARMANIN
You are self-made. How did you become drawn to business? My father worked as a financial controller for a big hotel chain based in Europe, so he used to travel very often with my mother. I used to travel with them too, and I used to buy clothes from abroad and sell them in Malta. There was a huge demand for fashion at the time.
But I started taking it seriously in business when I was 20, 14 years ago. I started by opening Exit at the Savoy Arcades in Valletta, as a shop-in-shop concept, where music and fashion come together. It was an instant success.
After I opened, I did not have a penny left for marketing, as I had paid a huge premium for the shop. I wanted to reach youths, and the best way to get to them was through music. So a year after Exit opened, I started organising music events and people following the Exit brand started growing. We called them the tribe. In no time, we had a following of 500 to 600 – although it now grew to about 8,000.
When did you start growing? How did the expansion of your business come about? Eleven years ago, we brought the Miss Sixty brand to Malta, initially within Exit itself. Only after we thoroughly tested the market did we open the first Miss Sixty outlet – with a franchise store in 2001, in Valletta. We then opened another Miss Sixty in Gozo, followed by another Exit in Paola. Some time after that, we opened another Exit outlet in Merchants Street, this time with women’s clothing. The third Miss Sixty store then opened its doors in Bisazza Street. After re-analysis and consolidation, we opened Shu, our first concept shoe store in Valletta – just opposite Miss Sixty in St Lucy Street. The idea was to create traffic between the two stores. With Shu being opposite Miss Sixty, we started offering a range from head to toe.
We reanalysed the market last December, and because we realised that Malta is very price-sensitive, we made a decision to direct Miss Sixty for premium products, Exit for value-for-money fashion and opened Babylon – an outlet where pricing is kept very low. This way, our spectrum now reaches people from all walks of life – from the factory worker to the high-flying executive.
So do low-wage earners purchase low-cost products and vice-versa? Does it work out so simply? No. I would say there are three tiers of customer profiles. At the top end, there are people who will not settle for less than a good clothing product – the trend-setters, who are after being identified with a brand. But these need not necessarily be high-wage earners. They are the ones who simply feel comfortable wearing branded clothes – so no, it does not figure that the factory worker will go for low-cost items and the manager for branded items. It is not that simple to analyse the market. It took us twelve years to realise what the needs of people out there are – while these are continuously changing. For instance, Maltese customers have now become very discerning. Irrespective of the price, or the brand, people will look at the quality of the product and analyse the fabric before deciding to buy a piece of clothing. The market has changed completely over the past five years. The majority of people for instance, now shifted towards mix and match – where you could be wearing a premium jacket, and a sub-brand underneath.
Don’t you think that fashion outlets were, for a long time, overpriced in Malta? Remember that our prices are established from the mother company abroad. We do participate in recommending prices in Malta in accordance to local wages and affordability of the market, but ultimately, it is the mother company that decides. When you see a pair of jeans that costs €80, €90 or even €100 – remember that they’ve been designed and manufactured by means of a costly process to get the right fit, fabric and look. Talking about Miss Sixty, we are about 20 per cent cheaper than any other outlet of the same franchise abroad.
But there still have been outlets charging rude amounts for outdated stock… It’s true, some people did that in the past – say 12 years ago, when they’d go abroad, bring old stock at slashed down prices and sell it in Malta as though this was new stock. We never did that and never will – and even if we wanted to do it we couldn’t. The franchise would take our contract back. On top of that, people nowadays can distinguish between old stock and new stock. They can check on the internet or on a catalogue, to see for themselves what new stock is coming in and what stock is of previous years. Mind you, when this was happening, we grew. In employing such tactics, some of my competitors gave me a chance to offer better quality.
Is shopping just about selling a product, or do you also subscribe to the idea that retailing and leisure are very closely interlinked? Shopping is an experience in its own right. People love to shop and socialise. The leisure side to shopping has become more than fundamental. If you don’t provide edge in your customers’ shopping experience, people will just turn away and go to another store.
Why do we have such bad service at shops in Malta? Because abroad you get to employ people who would have trained at schools dedicated to fashion, whereas here we have to train the staff ourselves. Some outlets do not bother, but we do, and this is chiefly because we do what we do with a lot of passion. For instance, we also take our staff abroad to the mother company so they can follow the process from design stage to production. This way they are very well versed with the products we offer. That said, I still maintain that government should provide the opportunity for formal education in service and customer care. Sadly, a lot of businesses in Malta are still very traditional.
The world of fashion is a world of change, and thanks to such changes, people in your line of business thrive. Now that we are going through a recession, are changes still taking place as fast? There’s a massive revolution out there, and we have no clue that it’s happening. This recession is bringing about enormous changes in culture and mentality. There’s an ocean of difference, for instance, between the crowd forming part of the 14-24 age bracket and that forming part of the 25-40. The younger crowd has become extremely reliant on tools that never existed up to a few years ago. Just have a look at Facebook, Hi5, Twitter, iPhones and iPods. It is through this kind of media that you can reach them – and this was unheard of until recent. We must continuously analyse what they want and how to reach them. We keep asking ourselves questions. If they are spoilt, because they are, what do they want? What are they after? The new kids on the block have a completely different culture. Whereas people our age enjoy dining out at restaurants or entertain themselves at a wine bar, youngsters will just want to sit on the pavement and drink. The cultural differences between the two age groups are huge.
When did you diversify into catering and why? About five years ago, I had decided to take a two-year break from my active involvement in fashion in order to dedicate time to a new sector – catering. So I opened 2.22 with the intention of doing cross-penetration between shops and leisure. With 2.22 I managed to find a space where music, food, art and fashion come together under one roof – with enthusiasts of these different cultures coming together in a social environment. I chose Valletta for a venue because I believe that our capital city – so far the only one in the world which dies at night, has great potential. At the time I could sense that government would do something for the regeneration of the city. So with 2.22, my main aim is now to draw crowds closer to our capital at night. I want to contribute to turning Valletta into a place that’s happening. I’ve been open for two and a half years now. Before we were hit by the recession the place was doing very well.
Surely, turnover has decreased during these times. What are you doing about the general slump in demand for consumption? We’re doing a lot of studying throughout this period of recession. Some businesses keep talking about cost-cutting measures, which we are also doing – but we simply cannot stop there. This is the time to attack and invest. Even government needs to change its way of thinking in a world that’s changing so much so quickly.
We started feeling the pinch in the fourth quarter of last year so by the first quarter of 2009, we had decided to give it some time. By the second quarter, we started working hard on studying the situation and evaluating ourselves. We made plans and got in consultants to help us take a new direction. As a result, we have now decided to open four new stores over the next five years. This is the time to use reserves, if you truly want to attack the market. It’s a hard time in terms of turnover, although we are working double so we can fight the current economic times.