The Jim Thompson Thai Silk Company from Thailand is a well-known Asian brand with great potential to become a strong international lifestyle brand. Known for its silk fabrics, apparel, accessories and lately home furnishings, it is one of the few brands praised by the Thai Royalty, celebrities and the discriminating public for its quality, designs and Asian sensibility. From the time it was established in 1951 by Jim Thompson, an American soldier settled in Thailand, the brand has steadily strengthened its reputation.
The company operates 32 retail stores in Thailand, 3 in Malaysia and 2 in Singapore. Jim Thompson has showrooms in Paris, Munich, Atlanta and it plans to open one in London in 2015. Jim Thompson has established a strong name for itself locally and regionally with more than US$100 million in sales across the group. The company employs 2,433 people across its operations, and the brand is present in more than 40 countries globally.
When Jim Thompson resigned from the American armed forces and decided to settle down in Thailand, he spent much of his time initially travelling around it, particularly the northeast region. He became fascinated with the pervasive rural Thai silk cottage industry, which flourished as most village families had traditional hand looms under their houses where cloth was woven locally for their personal clothing. Jim Thompson astutely realized the potential for bringing Thai silk to international attention and acclaim, and to an honored place on the international fabric stage. He took the initiative to “go international” by standardization of the silk woven through the use of chemical dyes. He used his acute sense of style to adapt traditional Thai designs and color schemes to international tastes.
Jim Thompson began his first commercial weaving operation in the Muslim Ban Krua village that now lies just across the canal from his renowned house. He established close personal ties with these village weavers and they became small stakeholders in the Jim Thompson Company.
Jim Thompson was able to produce a world-class silk product that captivated the international community with the charm and feel of a hand-woven product far superior to similar products. For example, Thai silk is different from Chinese silk. Thai silk is inconsistent and has “humps and bumps” and iridescent colors (changing colors depending on the light). Also, Thai silk is not only good for garments but also ideal for home furnishing materials.
To ensure 100 percent quality control of the output, Jim Thompson has a vertically integrated production model. Though in 1967, 100 percent of materials were hand-woven silk, today only 50 percent are hand-woven silk and the remaining 50 percent are other materials. But, according to William Warren, a Jim Thompson biographer based in Bangkok, “it took years of experiment, frequent frustration and plain hard work first to persuade a handful of remaining weavers to increase production on better looms, using colour-fast chemical dyes instead of traditional vegetable colors, and then open up foreign markets where none had existed before”.
The founder, Jim Thompson, was successful in taking Thai silk beyond Thailand by leveraging his contacts in the United States and other countries. Thai silk gained international recognition in Vogue magazine, and in 1951 it was featured in a Broadway production. The company also benefited a great deal from the personal charisma and personality of Jim Thompson. His efforts to establish the Thai silk company proved to be a major profit-earner. This gained him much respect and adulation. In 1967, Jim Thompson disappeared mysteriously in Malaysia’s Cameron Highlands and was never found. There has been no proof found to give credence to any of the many theories around his disappearance. Thus, this lingering mystery has added greatly to the brand’s legend and myth.
Today, almost 65 years since its inception, the Jim Thompson Company continues to grow with its inimitable zest and passion. Though it started out with just silk fabrics, by leveraging its brand equity and the Thai heritage, the company has now diversified into many other related product lines, the latest one being food & beverages (restaurants) and home furnishings. In 2001, it signed up renowned London-based Thai designer Ou Baholyodhin, known for his vibrant designs strongly influenced by Asian cultures, to craft the new furnishing line in collaboration with the in-house design teams. Ou Baholyodhin has throughout the years advised Jim Thompson, and helped to craft new innovations and designs for the company.
Jim Thompson Company’s strategy going forward is to focus on finished products for the home. The company is focusing on retail products in Asia where it has strong brand equity. As the brand is strongly linked to the Thai experience, buying Jim Thompson products for a tourist relates to bringing home a piece of Thai culture. This is why a significant proportion of retail customers in Thailand are tourists who buy gift items when returning from Thailand.
However, in Europe and the United States, where the company is building its brand, the Thai connection and direct experience with Thai culture is difficult to establish. Therefore, the company is focusing on finished products for the home, which are distributed through local distributors and displayed in Jim Thompson’s own showrooms in Paris, Munich and Atlanta.
Jim Thompson has also collaborated with Ed Tuttle, a leading American designer. Through this collaboration, Jim Thompson provided custom-made fabrics (Rue de la Paix, Vendome and Chenille Canvas) for his architecture and design projects, which included Amanresorts and Park Hyatt Hotels. As design is a vital part of the company’s success, these collaborations with external consultants also provided the company with insights on the latest upcoming trends in global markets.
The company’s brand is primarily built on 3 pillars. The first is the legend surrounding the founder Jim Thompson. The second is the unique blend of eastern (Thai) tradition and heritage with western contemporary designs based on traditional Thai symbols and patterns. The third is the elevation of the brand from a cottage industry product to a fashion and lifestyle concept.
The Jim Thompson Company has built a story of the brand surrounding the founder, his origins, his contributions to the Thai silk industry and his eventual mysterious disappearance. The founder’s journey to take the Thai silk industry global and his drive to involve the weaving community as strategic partners in the business itself is a legend in Thailand. By leveraging this connection, the Jim Thompson Company has been able to blend into the social fabric of the country.
Finally, Jim Thompson has created a lifestyle concept centered on silk and contemporary designs. Though the company started out with silk fabrics, it has successfully expanded into home furnishings and even into restaurants. Jim Thompson runs 2 restaurants in Bangkok and one in Singapore. These brand extensions have enabled Jim Thompson to create an emerging premium lifestyle concept around the core brand offering.
By developing the brand on these three pillars, Jim Thompson has been able to maintain its differentiation and build a strong brand. The brand is perceived to be highly authentic, to have high quality and a strong heritage.
In recent years, global competition and customer trends have evolved significantly, and Jim Thompson will have to revisit its brand identity and market position to ensure it stays competitive in this changing global landscape. Jim Thompson has other global brands and their positioning strategies to get inspiration from. For example, Ralph Lauren is excellent at creating dreams and delivering the promises in a complete and distinct lifestyle. French luxury brand Hermes has an uncompromising attitude towards quality and is a very high-end, authentic brand. Bottega Veneta is known for its unbeatable craftsmanship and unwavering belief in a single strong signature product.
Renowned for its quality, design and Asian feel, Jim Thompson has been widely acknowledged by leading brands in the hospitality industry. The brand’s furnishing materials have been widely used by many luxury hotels in Bangkok, which include The Oriental, The Four Seasons, Amanpuri, the Regent, Conrad and the Sukhothai. In Europe, the Park Hyatt Paris and Park Hyatt Milan hotels, among others, have been attracted to Jim Thompson’s furnishing materials. The Park Hyatt Paris has used 9,000 square meters of furnishing materials alone. These hospitality industry clients, among many others, serve as very strong testimonials for the Jim Thompson brand.
As it is common for a strong brand to leverage its equity and diversify into related market segments, Jim Thompson has also followed this path. Today, its portfolio consists of many additional product lines apart from mere silk fabrics, which include scarves, ties, handbags, textiles, apparel, and accessories for home furnishing.
The company has also launched No. 9 Thompson in 2008, an elegant and relaxed brand extension of Jim Thompson. It adopts a new take on Oriental inspiration, staying true to the Jim Thompson heritage while using a lighter, painterly style for a young, contemporary edge.
Jim Thompson has selectively used mass communication channels to build its retail brand. The company uses other communication channels like fairs and exhibitions to create awareness about its professional home furnishings brand. It showcases its products during these events and generates considerable interest. By leveraging the unique designs of its retail stores where it showcases its entire product portfolio, the company offers a comprehensive customer experience. As Jim Thompson does not own retail outlets outside Asia, it works very closely with its international distribution partners.
Many of its resources are focused on internal marketing, which involves educating the channel partners about the brand, product features and benefits. Jim Thompson also maintains a list of more than 50,000 customer names in Thailand for local promotions. As all of these customers have already purchased Jim Thompson merchandise at least once, they also act as strong word-of-mouth marketers.
In recent years, the company has taken steps to enhance its marketing capabilities and insights to better tackle increased competition and changing customer needs and demographics. Jim Thompson has established a global marketing department as it aspires to become more market-driven and customer-centric. This also includes an enhanced focus on digital capabilities including a social media strategy and new online properties.
As the brand is strongly associated with its founder, with Thailand, and its identification with the Jim Thompson House in Bangkok, a museum open to the public could not be overlooked. The Jim Thompson House belongs to the legally, but not spiritually separate James HW Thompson Foundation (a non-profit organization devoted to the preservation and development of art, culture and heritage in Thailand). It displays a wide range of traditional objects d’art along with the entire product portfolio of Jim Thompson. In 2014, the museum had over 200,000 visitors adding significantly to the promotion of the brand to foreign tourists, including keeping the mystery around Jim Thompson’s disappearance alive as part of the brand story. This not only helps build awareness among its prospective customer base but also reiterates its strong link with Thailand’s heritage and culture.
The James HW Thompson Foundation also created and funded the Jim Thompson Art Center. Finally, the Jim Thompson Company is engaged in philanthropy including annual scholarships for children of workers.
Jim Thompson is faced with many challenges moving forward as several factors like increased competition, evolving global trends, modernization of Asia and macro-economic changes will impact the future success and growth path of the company. The Jim Thompson brand has been successful so far and is unique in many ways, but arguably it has grown slowly compared to how Asian and global markets have evolved in the last 20 years. In order to compete effectively, the company needs to acknowledge and tackle a variety of strategic issues around competition and revitalizing brand equity.
Creating a strong brand identity and personality: Jim Thompson’s legend around its founder and the brand is popular in Asia among retail customers. However, in Europe and the United States, the company deals with hotels, designers and interior decorators. Thus, at an aggregate level, Jim Thompson primarily operates as a B2C (business-to-consumer) brand in Asia and a B2B (business-to-business) brand in Europe and the United States. Thus it needs to create a consistent brand identity that resonates across regions and customer bases, while still remaining responsive to the specific needs of any particular customer segment. Bridging a brand successfully across both B2C and B2B categories is always a challenge that needs dedicated marketing attention.
Installing a brand management system: As the brand grows, it becomes crucial to constantly monitor and hone the brand to reflect market demands. With any retail brand, the brand promise and brand delivery must work in tandem. Customer service, for example, is an important element. Jim Thompson owns retail outlets only within Asia, and in particular in Thailand where the brand is strongest. This necessitates that the channel members are properly trained in executing the brand promises outside Asia. For such a training system to endure, consistent support from the corporate management and continuous investment of resources is required.
Protecting the core Thai market: Thailand provides a disproportionate part of the company’s revenues and primarily from retail stores – which is a cause for concern. Recently, the Thai market has been under pressure from the challenging political situation, and the associated decline in overseas tourists coming to Thailand – a major customer segment for Jim Thompson. The brand also seems to have somehow lost touch with the local, affluent Thai population. It thus needs to regain its strong position in Thailand to protect revenues and brand image.
Expansion beyond Asia: Jim Thompson’s brand equity within Asia is related to a large extent to the legend of the founder. But outside Asia, this legend is less known and may not be very relevant. Moreover, an Asian brand with a Western name might confuse customers. Given these impediments, Jim Thompson should strive to create a brand with an appealing identity that is not only relevant to customers across regions but also captures its unique Asian heritage.
Taking a brand to multiple markets and sustaining investment in brand building can take a toll on resource capabilities. Moreover, most resources are utilized for operations and production. Jim Thompson needs to consider these factors before venturing into multiple markets and product segments.
Single brand company: Another major challenge will be to leverage the Jim Thompson brand name and potentially introduce new brands in the market. Until now, Jim Thompson has been a single brand company. Moving ahead, the challenge will be to cautiously leverage the brand equity through brand or line extensions so as to explore new opportunities either by introducing new brands to cater to new segments or by venturing into new product categories. Jim Thompson must be cautious in carrying out this exercise as it might result in a possible dilution of brand equity as a result of brand stretch. Finding the right balance between pursuing an expansion strategy and protecting the brand equity from dilution will prove to be a considerable challenge.
Capture younger generation: Jim Thompson’s core clientele is concentrated among the older age groups, both in Thailand and overseas. The brand does not have a strong image or preference among younger consumers. Targeting the younger consumer and not diluting the brand equity will be an ongoing challenge and balancing act. The product segments are traditionally not those that appeal to youth. Appreciation and sensitivity towards finely crafted silk, homemade furnishings, silks, ties, scarves and accessories are life-stage driven and generally mature later in life.
Capturing the interest of the younger generation and thereby tapping into the lucrative apparel market will be a matter of careful strategic consideration. Launching a sub-brand might be a solution (for example, No. 9), which can be positioned towards the younger generation, without diluting brand equity.
Having a presence in the apparel segment for youngsters and being successful in it are two completely different stories. The company will come up against sizeable competition in this segment wherever it expands into and also in the regional markets where it has a successful presence.
Taking the brand into new product categories either via the use of the existing parent brand name or through a new sub-brand is viable but only until the category selection is rational, carefully researched and strategically analyzed. Launching into the restaurant business has been successful until now, but it is too far from an “adjacency play” for it to be successful in every market.
The company does have potential to expand its presence in the premium and luxury designer apparel segments by identifying more collaboration opportunities with influential designers. Premium and luxury are age-encompassing and will allow it to get closer to a wider age group of potential consumers.
Evolution of the product portfolio: Jim Thompson needs to streamline its product portfolio in the retail business and ensure a constant evolution of new merchandise in tune with customer needs and global trends. Again, a collaboration pipeline with influential designers can be a key success factor here. This will enable the company to influence trends (and not follow them). But, the collaboration choices need to be careful, strategic and future looking. Noting that the company is slowly embarking on a global expansion plan, its collaboration should be with individuals who have at least regional (if not global) appeal.
Jim Thompson has been strategic and sensitive enough to continually expand its product lines, but management of these lines, what to push and what to hold back in different markets, understanding distribution channel nuances and an in-depth understanding of consumer needs and preferences will be the key success factors.
Globalizing the company operations: Home furnishing is the only business unit operating in Europe and the US. For a company used to operating only in Thailand along with a few other Asian countries, operating globally can be a strategic, cultural and operational challenge.
Until now, the company does not have any of its own retail outlets in global markets outside Asia – despite the fact that the Jim Thompson brand has a huge, untapped global potential. The company is solely reliant on its few partners in these markets. Operating via a franchise/distribution model is not a recipe for disaster, but it is not effective for every product category. Jim Thompson operates at the juncture of legacy, tradition and luxury. These kinds of product characteristics and image require a tight control over the whole marketing mix of the brands in the portfolio. That can only come from either full or shared ownership in country level ventures or operations.
Besides the brand’s intangible aspects, there is the challenge of having globally efficient production and distribution models. Because the primary raw material for the company’s products is still Thai silk, decisions around locations for manufacturing need to be taken very carefully. The company has two key challenges to address here – one, the export of the raw Thai silk to any global manufacturing site and more importantly, how to access the skill of the local Thai craftsman in terms of working on the silk. The first challenge may well be addressed, but the second is more difficult.
As mentioned earlier, global expansion and establishing presence in multiple markets require a tight control over the brand and its presence. Jim Thompson has to ensure the same level of quality, the same image around legacy and tradition and the same level of experiential marketing that it has managed to create in Thailand. These cannot be created overnight, but the company has to make visible and conscious efforts and strongly portray its intentions to maintain its legacy and credibility everywhere it has a presence.
Transition of the senior management team: Last, but not the least, is the challenge around creating a globally focused senior management team. Not only do the board and the management teams have the responsibility to become more strategic, the local teams in the countries where the company has a presence or plans to have a presence, need to operate with a global mindset too.
Expansion of teams through fresh hiring and relocation should keep the trait of strategic thinking and global vision as key success criteria for individuals. Additionally, individuals responsible for shaping and driving the company’s global operations should have a deep appreciation of the company’s founder, its values, its contribution towards reviving an almost dying Thai silk industry and the quality and manufacturing process.