Keeping staff and customers on board during a pandemic

José Neves starts every day with Buddhist meditation. “I’ve been meditating since I was 13 years old, when I wasn’t coding yet,” says the founder of Farfetch, an online luxury fashion marketplace. “Neither made me popular in school.”

Neves, now 47, launched Farfetch two weeks after the Lehman Brothers collapse in 2008. He started with a handful of programmers and operations staff in a cramped office in the London Borough of Clerkenwell.

The company gained traction by first enticing small boutiques that needed an online presence and then, when it reached critical mass, using its scale to attract brands like Chanel.

Farfetch is now a global company, listed on the New York Stock Exchange, with more than 5,400 employees and more than 1,300 salespeople, but there have been bumps in the road.

London remains Farfetch’s base, but there are now major offices in Neves’ native Portugal, as well as in China, Italy, Brazil and the US. In 2018, the company launched an IPO in New York, trading 42.3 percent above the offer price on day one and valuing Farfetch at more than $5.8 billion.

In August 2019, Farfetch announced the acquisition of New Guards Group, owner of chic streetwear labels such as Off White, valued at $675 million, to form the foundation of its own brand platform that would nurture new labels sold exclusively through Farfetch’s marketplace. would be sold. The announcement led to a sell-off, with the share price plummeting 40 percent within a day.

Neves admits he didn’t do well enough at the time to explain the strategy – which he compares to Netflix going to produce original content. “Our role is to communicate,” he says.

When Covid-19 appeared, investors were hesitant at a retail outlet that offered a non-essential product. The share price, which had reached $28.45 on the first day of trading, fell to $7.05 in March 2020.

“I’ve experienced all the emotions you’d expect, from surprise at the markets’ reaction to disappointment in us that we hadn’t been able to get the right message across,” says Neves.

“For me it was about going from that emotional state of ‘Okay, this happened, it was disappointing, it wasn’t what we expected’, to ‘what are we doing about it?’ ”

We talk in the Farfetch headquarters, a glass tower on Old Street overlooking Silicon Roundabout.

Neves has arrived in a taxi from his home near Regents Park with an iced Starbucks coffee because the office kitchen is still off limits.

We do not exist to please shareholders. But it is our responsibility to be very humble and explain to our shareholders, listen to them and then do the right thing

“We only reopened this office last week,” he says, adding that all employees have been retained and have been working from home during the pandemic. This includes the staff of Browns, the fashion boutique that first opened in Mayfair in 1970 and which Farfetch took over in 2015.

“We’ve always said that the biggest problem for us is attracting talent, so we don’t want to lose people,” he says. “But we have not sent anyone on leave and we have not claimed any benefits from the government to pay them. We didn’t even have to cut bonuses. I’m very happy that we were able to afford to do that thanks to the efforts of everyone in the company.”

In 2019, the building was packed as employees gathered to hear how Neves kept them informed about the controversial New Guards takeover. All of Farfetch’s employees became shareholders on the IPO and Neves holds a town hall meeting after each market announcement. It was very well attended, he says.

“Communication at such times is very important and the message was very clear: we do not exist to please shareholders. But it is our responsibility to be very humble and explain to our shareholders, listen to them and then do the right thing.”

He believes that the reaction, or rather the lack of action, from the employees — nearly all of whom held onto their stock rather than sell it after the New Guard’s announcement — was proof that the message was the right one. “I think people were galvanized. They said, ‘Let’s prove the shortsellers wrong.’”

After addressing the staff, Neves proceeded to explain the strategy to the portfolio managers of one of his largest shareholders, T Rowe Price.

“At the end of the meeting, one of these PMs led us to the door, which is very unusual,” Neves recalls. He said, ‘Listen, I can’t recall any company that has done this. When this happens, people normally bury their heads in the sand, they disappear. And we were surprised that you wanted this meeting. We were curious. What is he here to say? That was really good. That makes us believe in the company even more.”

There was also a strategic reason for the meeting. “It served us again to keep calm,” says Neves. “Our response was: let’s take a deep breath. We have the trading data every hour. Most important of all, our decision was to support the creative community.”

In March 2020, when the global pandemic broke out, Neves gathered his senior team to create a campaign for small businesses selling luxury goods, with the slogan #supportboutiques.

It launched a month later, with Farfetch offering free deliveries to its customers from the company’s six regional distribution centers, plus an advertising campaign with the hashtag #supportboutiques.

The recovery in luxury sales in the following months more than offset all the costs of the campaign, Neves says, building goodwill with Farfetch’s global customer base.

Revenue rose 60 percent to $1.67 billion in 2020, though pre-tax loss rose from $372 million to $3.35 billion. Neves says this year’s growth, driven by the online luxury market growing, will enable Farfetch to post its first full-year profit in 2021.

The company also strengthened its position late last year with a $1.1 billion investment from Chinese e-commerce company Alibaba and Swiss luxury goods group Richemont.

Farfetch is also betting that brick-and-mortar stores will still remain vital for selling luxury goods. In April of this year, Browns opened a new flagship store in London, where she combines cutting-edge technology, such as augmented reality in the in-store mirrors, so you can see yourself in clothes on sale, with a luxurious refit.

“There is still room for physical retail, but we are digitizing it,” says Neves.

The opening of the new Browns store is a confirmation of London as a base for a luxury brand, although the growth opportunity for Farfetch lies in China, while the capital comes from the US markets.

“We’ll stay in London,” says Neves. “Obviously the UK leaving the EU has made it a lot harder with visas and work permits for people we hire from other parts of Europe. But London is a great city and it doesn’t take much to convince people to come from elsewhere to live and work here.”

He expects to create more jobs this year as the pandemic has left Farfetch in a much stronger position. “What we said would happen over the course of three, five, maybe seven years has been compressed into a much shorter time,” Neves says.