This episode of The Negotiation features part 2 of our conversation with Arnault Castel. Arnault is the founder of Kapok, a retail experience that focuses on designers and brands whose work provides quality craftsmanship and creativity in design. Arnault has developed an extensive knowledge and understanding of the Asian consumer goods and retail environment since 1996 when he moved to Hong Kong from France. In 2001, he joined the team in charge of the development of the Lomography brand in Asia as the head of Southeast Asian operations. Arnault was also the co-owner and director of Working Unit Limited founded in 2005, the exclusive distributor for the Moleskine brand in Southeast Asia.

In part two of our conversation, Arnault discusses how Kapok works with brands in his store, which brands are doing well resonating with consumers in Asia, whether or not it’s important to have a brick-and-mortar presence in today’s D2C environment, and more. He also discusses some of the risks he’s taken that have paid off (and the ones that haven’t), his experience as the managing director of Lomography Asia-Pacific, and what business principles he learnt while there. We close out the conversation by diving deep into the future of commerce and retail in Asia. Enjoy!

Topics Discussed and Key Points:

• Creative control in a retail environment 
• Market localization and why it is important
• Why the Japanese market is so special and distinct from the rest of the world
• Why Kapok failed in Singapore and Taiwan, and the lessons learned
• What makes  Hong Kong so special for Kapok
• What Arnault did while at Lomography Asia-Pacific 
• Why certain geographies and markets do not work for Kapok 
• The future of commerce and retail in Asia
• Changes he is seeing at the intersection of commerce and creativity in Asia 

Timestamps 

[00:57] How Arnault works with brands in their stores, how he promotes their brands,, and what creative control he has

[06:44] Arnault's market risks, which didn’t always work

[13:00] Arnault's experience as the MD of Lomography Asia-Pacific and the business principles he learned

[26:05] Fashion and lifestyle brands that are doing well in Asia today

[29:25] Are customers shifting from brick-and-mortar to digital?

[34:00] How will the intersection of commerce and creativity change in the coming years?

Notable Quotes

[00:01:32] “When a brand is inside Kapok, we have to respect the brand. But they are also in our environment, you know.”

[00:02:18] “We need to localize because people need to feel that a particular model is someone that is like me, that looks like me, that has the same job as me, and the same height as me.” 

[00:03:38] “Japan is special. Japan is not like the rest of the world. And that can be limiting because what might work in the rest of the world doesn’t work in Japan.” 

[00:07:14] “When I tried to bring Kapok outside of Hong Kong, you know, in Singapore or In Taiwan, it didn't work out, you know, because multi-brand retail is very, very detail oriented, you know? You receive new products, so you need training on the products and the brand.”

[00:09:51] “Sometimes you like something, and you realize you like something only when you don't have it anymore. So, when we closed in Singapore, people said:, ``Oh, we're so sad, Kapok closed. I loved the shop.”

[00:15:48] “I was not this natural born entrepreneur, but you arrive here and everyone is doing it.”

[00:16:14]” I would never have opened up and done all this entrepreneurialism if it's not in Hong Kong, because this is a place where people take a lot of risks.”

[00:21:22] “In order to succeed, I need to do things in a different, different way. If 50 people tell me ‘you have to do it this way, then I have to find the 51st way.” 

[00:35:27] “Over time, the marketing set of skills is going to be distributed to everyone, and you cannot defend yourself anymore by how well you play the digital marketing game. So, it's going to go back to how good your product is, how happy it makes your customer, and how strong is your brand story.”