Luxury the ultimate pat on the back for high flyers

james-kennedy.jpg

Photography by Stuart McEvoy

By Eli Greenblat, The Australian, June 15 2015

James Kennedy received his first Rolex watch, a gift from his parents, when he was 15.

For any teenager this might seem unusual — it’s rather more ostentatious than a football or a new bike — but given that his parents owned a prestigious store in Sydney’s Double Bay specialising in expensive Swiss watches and jewellery it was within the realms of normal for his family.

“I still wasn’t allowed to take the watch to school,’’ jokes Mr Kennedy, now in his late 30s and chief executive of luxury retail owner Emerald Group Investments, “but, look, it was a special gift, I still have it, and it’s part of my personal watch collection, which now numbers around 16 or 17, ­although I could argue the 500 watches in my stores are probably mine as well.”

When Mr Kennedy’s father, Louis, a Holocaust survivor, died at the age of 83, James inherited the family business at age 29 as part of a generational transition.

Renaming the retailer LK Boutique, Mr Kennedy quickly restructured it in the midst of the global financial crisis to now operate three stores, at Crown casino in Melbourne, The Star casino in Sydney and in the iconic Henry Davis York heritage building in Sydney’s Martin Place.

The business, now one of Australia’s leading retailers for Rolex, Patek Philippe, Dunhill and IWC, has experienced growth of more than 50 per cent, year-on-year, since 2012.

If you have to ask Mr Kennedy the price of his cheapest Rolex, you probably can’t afford it (for the record, an entry-level Rolex will set you back $5000 and the brand goes for as high as $300,000).

Despite the GFC, and despite the downturn for other segments of retail, classic luxury watches have remained in hot demand among those shoppers for whom the price tag is not their prime concern.

For Mr Kennedy, it underlines the hollowing out of the Australian retail scene, where the top end — represented by retailers such as his LK Boutique — do well, as do the discounters such as Kmart or Aldi — but the middle suffers.

“Data and statistics suggest the rich are getting richer, and poor getting poorer, and the gap between the two — the middle area, middle class for lack of a better term — tends to drift more to one side than the other,’’ he said.

When his customers buy a Rolex or Patek Philippe it’s not just to tell the time. “People work hard and sometimes they don’t get the external rewards, they don’t feel that pat on the back they think they deserve and so they want to reward themselves, and ultimately that’s where they buy an expen­sive watch, suit, car — anything that makes you feel good.”

Mr Kennedy’s family business has now stepped outside watches and jewellery to buy the Australian retail and distribution rights to high-end European audio and visual brand Bang & Olufsen.

“For these consumers, when you go to an event, a charity ball, when you have got a wedding, a black-tie party, are you really going to wear an Apple Watch or do you go to your drawer and pull out a nice watch like a Rolex?”