A long while back, I wrote about the Twsbi Eco and the threat which it represented to Lamy’s business. The Eco has now been on sale for quite some time and I thought it would be interesting to look at what’s happening with Lamy, how they are responding to the challenge, and the choices they are facing to secure their future. In this post, we’ll explore all of that and try to determine whether their business is on sound footing or not.
As you’ve probably heard, 2016 is the 50th anniversary of ‘Lamy design’, the line of minimalist products that was capped with the Lamy 2000. Although most of the attention will go to the products themselves, it’s important to remember that this wasn’t simply about some new designs: it was also a new strategy for the business.
By 1966, ballpoints had exploded into the stationery market. Fountain pen brands around the world were aware of the threat but, for the most part, struggling to come to terms with it. When any business is disrupted by a cheaper, lower quality competitor, it’s quite typical for the incumbent firms to ignore the threat and maintain their faith that their customers are primarily interested in quality. More often than not, this attitude is completely wrong and it allows new entrants to capture the market before the incumbents even realise that they need to react — and by that point, it’s often too late.
So credit goes to Lamy for picking up on the threat to their business early enough to figure out a strategy that would see them through. Not surprisingly, an economist was the brains behind this. Dr Manfred Lamy, son of the founder and an economics PhD, became marketing manager in 1962 and drove the new strategy. They hired external designers, came up with new products, and within four years were selling them to the public. Dr Lamy eventually took the reins of the business and held on until 2006.
By that time, the strategy was obvious enough: selling decently made pens at a price which offered buyers a decent surplus relative to others available in the market. In this period, there was no Pilot Metropolitan, no Faber-Castell Loom, no Twsbis: nothing at all that could hold a candle to the Safari, let alone the Studio or the 2000. That gave Lamy scale: they were able to produce and sell their pens in massive quantities, which helped to keep unit costs low and a healthy profit margin. It’s rather astonishing how long the strategy proved to be effective.
After Dr Lamy’s retirement came the launches of some products aimed at reinvigorating the business: the Pur, the Dialog 3, the Scala, and the steel 2000. While I’m sure these have respectable sales, none of them have really caught on in the same way as the Safari or the standard 2000. And if you compare them with some alternatives, it’s not that difficult to understand why: the Dialog 3 is more than double the price of the Vanishing Point for effectively the same functionality. The Scala is incredibly similar to another Lamy product, the Studio, but 50% more expensive. These products simply don’t offer consumers the same, competitive value proposition that their predecessors did.
While the new products have struggled to catch on, the older products have faced increasing competition. The Safari had to contend with the Pilot Metropolitan in 2012 and now the Eco as well. Taken on their merits alone, the Safari is a good pen and not a bad choice for a beginner. But when price is an additional consideration, it’s hard to justify the Safari over the Metro: both are cartridge/converter pens and the Metro is roughly half the price. The Eco attacks from the other direction, offering a more functional product for the same price.
Since the Eco’s release, I’ve been waiting to see how Lamy would respond: would they cut prices? Redesign the product? My deepest hope was that they would come up with a beautifully designed piston-filler pen that was priced well under $100, something that would really bring the fight to Twsbi by offering customers a product that was more expensive but better designed and better quality. But Lamy haven’t done that. In fact, they don’t seem to have done much of anything.
That’s not just a problem because of lost sales. It’s also a problem because their business strategy depended on scale: the more pens they sold, the more profitable each individual sale became. Every sale Twsbi captures from Lamy drives up their costs a little bit and correspondingly drives down their profits. Once Twsbi start releasing the Eco in new colours and expanding into more retail stores, the harder it will get for Lamy to defend their FP business.
Of course, the lack of action at the low end of the market doesn’t mean Lamy have been doing nothing at all. They released the Imporium last year, a cartridge/converter pen with a gold nib and an interesting, fluted design — for €375 (US$520). In my opinion, this pen repeated the mistake of previous models and totally ignored everything else that is available on the market: for the same money, you could have had an Omas Ogiva, a Graf von Faber Castell Classic, a Pelikan M600 or a couple of Pilot 823s. Shockingly, it hasn’t really caught on.
They’ve also spent a lot of time navel-gazing for their 50th anniversary. There’s nothing wrong with a bit of celebration but when your business is being seriously challenged, it’s hard to imagine anything worse than clocking out for a year. Of course, there are special edition pens being released for the occasion and this might help to prop up the business for a bit — but if the rumours are true, the upcoming release of the new Lamy 2000 model will be a bit of a letdown. I can’t share any product details yet but I’m not sure the design will be sufficiently exciting to make up for the premium price.
So the big question is how Lamy are going to survive all of this. They’re not in strife yet and they still have capabilities and resources which can lead to profitability if they are used effectively. They have a dedicated fan base (albeit one which has stopped growing), a top-notch distribution network, a solid production operation, and plenty of financial capital available from the rest of the business. How do you use those resources to make a successful, profitable FP business?
Well, Lamy’s answer over the last 5-10 years has been to try and rework the original magic of Lamy Design while shifting upmarket. But those premium pens have struggled to gain traction and, frankly, it’s not that hard to see why: each of them have ignored the advantages which Lamy currently possesses and have tried to become successful in areas where other brands have an edge.
Nothing about Lamy’s business says to me that they have a crack marketing team who are good at figuring out profitable niches in the market. Instead, they’re pretty good at selling relatively standardised products en masse — that’s not something every brand can do, it’s a genuine advantage for Lamy. So it’s a bit of a mystery why they would try to sell a niche, designer product instead of a standardised one.
It’s also a mystery because it has ignored Lamy’s key strength. Their whole business is structured for mass scale, that’s what they’ve achieved with their production and distribution strengths. But the niche products ignore these advantages. They’re items made in small batches, with high costs, and sold through a very narrow part of the distribution network. Lots of big-box stationery retailers and bookstores carry the Lamy Safari but very few would bother with something like the Imporium. The premium products even have limited appeal to Lamy’s existing customer base who, for the most part, are drawn to the cheap and colourful Safaris or the hyper-practical 2000. I can’t see either group feeling that the Imporium is their kind of thing.
So, I really don’t feel like Lamy can make the upmarket approach work. It ignores their existing strengths and really depends on strengths which their business doesn’t currently possess. Of course, you can cultivate new strengths but that’s not an easy thing to do. And it’s really not necessary if there are profitable opportunities using your existing business — which I believe there are.
Lamy really need to think about playing to their strengths: producing a pen which uses those advantages, something which appeals to the folks who already own, use, and love their Lamy 2000, something which can be produced at low cost in Lamy’s existing facilities, and something which can be sold through the existing distribution network. All of that will dramatically lower the costs of the product and that will help the value proposition to no end, which I see as the key faults of products like the Imporium, Dialog 3, etc.
The challenge for the marketing team is figuring out exactly what segment of the market is most interested in a product like this and what they want to see in it. There are two possibilities which occur to me as ripe for Lamy’s attention. First is a makeover for the Lamy Studio ($80) into a premium Twsbi 580/580AL equivalent: a low-cost, dependable piston-filler with cheap interchangeable nibs and none of the quality concerns. Offering a premium equivalent would allow Lamy to charge a higher price than the competing product and capture those buyers who are attracted by Twsbi’s value proposition but hesitant about it’s quality. Priced close enough to the 580AL and pumping it through Lamy’s existing distribution network would make for a real competitive effort. It would also mark the first time that any brand actually took the fight up to Twsbi.
Another possibility is a big brother to the Lamy 2000. It seems that a lot of 2000s are sold to university students and that raises the question of what they are buying and using when they become professionals with full-time jobs. They have the means to buy a more premium product and arguably the desire to use something nicer but, other than the steel 2000, Lamy don’t really offer anything to that market. Certainly nothing that would be a good fit for the workplace. I suspect many of these buyers move on to a Pelikan M800 but would have happily stuck with Lamy if they had a decent product in that range. So a sleek, gold-nibbed piston-filler made out of something nicer than Makrolon and lighter than steel, with a solid capacity and an ink window, and priced somewhere in the $200-300 range. An external designer might be ideal for this, but someone less artistic than Bellini and more like Newson. In fact, imagine the Montblanc M as a piston filler with a $250 price tag. Ignoring the design, that’s almost exactly what I have in mind. You can probably see what a winner this would be for Lamy.
A good value pen at that price would be extremely appealing for the L2k lovers as they move upmarket and could potentially even be an M800 killer. Such a product might well be tempting to the premium and even the mid-range retailers in Lamy’s distribution network and could be produced in tandem with the 2000s, keeping costs nice and low while contributing to the scale benefits enjoyed by the rest of Lamy’s business.
Of course, these aren’t the only possibilities which are available to Lamy — they are just examples of what the business could be doing if they seriously looked at the advantages available to them and the opportunities in the market. Right now, ignoring these advantages is Lamy’s biggest problem and their new products will keep failing while they keep ignoring them. In business, as in life, it’s all about how quickly you can learn from your mistakes.
Lamy isn’t in the best position at the moment but they are far from down and out. They still have a good reputation, capital, and a host of other advantages which they could use to revive their business and become competitive once more. The sad and frustrating thing is that they currently seem to be pushing, repeatedly and unsuccessfully, in the wrong direction.
I’m really hopeful that we’re going to see some big changes to their business over the next few years, something similar to what revived the business in 1966 and set them up for four very successful decades. If they fail to figure out a new direction, it’s hard to imagine them avoiding the same fate which has met Cross, Parker, Sheaffer, and Waterman: empty shells of their former selves, being milked for whatever money can be made before they close down completely. But if they can pull off a transformation, they will live up to the reputation which they’ve inherited from the company’s founder and his son, and remain an integral part of the industry and community.