On the Kilgour website a few years ago, I read an article which described some of the details of an earlier buyout of Kilgour. If I remember correctly, I believe it cited the acquisition price as 1.8 million pounds. What I find remarkable is how relatively inexpensive that is - only about $3.5 million for one of the best known Savile Row firms.
I suspect that a little financial analysis will tell you the acquisition price of bespoke tailoring firms is a very low (if any) multiple of revenues. This is not surprising since firm valuation is a function of revenues, profitability and future growth. And with bespoke tailors there are only a few ways to grow: (1) Lower price and increase volume (usually by adding RTW or MTM product line or using cheaper labor overseas for suit construction) (2) Maintain price and increase penetration of current markets or (3) Create or introduce a new set of customers. Options 2 and 3 are made possible by growth in new markets (e.g. Russian, Central Asian or Mideast petro-millionaires) or growth in the home market.
What's interesting about option 1 is the staunch criticism of Savile Row firms offering RTW. If done well, I'm quite supportive of such efforts to diversify. As I wrote in a recent London Lounge thread, here is why.
Imagine that you are a managing director of a Savile Row tailoring establishment. You see several options to ensure the future viability of your firm. One option is the dogged pursuit of a purist strategy - produce bespoke and only bespoke to the true connoisseurs of taste. If you produce a quality garment, the customer will come to you. However, as pointed out, the bespoke-buying elite is a "much smaller market" consisting of an "ever-decreasing circle of clients."
The purist solution, I'm afraid, is a rather passive, unimaginative and unattractive option because it simply preserves the business for the existing set of customers. It suffers from a fundamental flaw: consigning the business to the status quo (or even worse, to the past). There is no future envisioned to grow the business. Instead the firm is asked to cater to an aging clientele purchasing fewer and fewer garments over time. A principled strategy perhaps but one that ensures SR's gradual extinction.
The other option is to educate, cultivate and appeal to an entirely new set of customers (while preserving the existing clientele of course). The thinking is this: If the existing market is declining, find or create a new one (also known as blue ocean strategy). The upshot is that offering RTW does precisely this. It introduces a new pool of customers to the brand, brings them into the shop and perhaps more importantly gives the firm the opportunity to educate them and perhaps convert them over time to MTM or bespoke.
The tut-tutting of Kilgour or Gieves & Hawkes for diversifying into RTW misses a blindingly obvious business dilemma facing SR firms. If the existing customer base is declining (and has been for decades), how will you find new customers to replace the old? By conducting business as usual? I think not.