5 Big Questions About Luxury

0:07Hello and welcome to The Debrief from the Business of Fashion, where each week we delve into our most popular BOF professional stories with the correspondents who created them. I'm senior correspondent Sheena Butler-Young. And I'm executive editor Brian Baskin. Today we're going to try something a little different. There is a lot going on in the world of luxury, and instead of covering one big piece of news, we've invited on our luxury correspondent at large, Robert Williams, who has promised to answer all of our questions about the global luxury industry. Today, we're going to cover a lot of ground from the mindset of the Chinese consumer to who makes the best Papa al Pomodoro in Milan.

0:46And for the record, that's a kind of tomato soup if you're Italian is a bit rusty. Robert, welcome to The Debrief. Thank you guys so much for having me back once again. We're happy to have you here. We want to grill you. Let's get started with one of this week's big events, which is Chanel's Metier d 'Arc, which it feels like we're paying more attention than usual to this. They do this every year, right? But it seems like this year people care a little more. Robert, why? Well, Chanel is Chanel. So, you know, Chanel being Chanel, it is a brand that people just really tend to care about and get excited about.

1:18But it's true that since they have so many shows in a year, you know, sometimes certain ones can slip between the cracks and people maybe get less excited about them. In this case, now it's only the second show since Mathieu Blasie took the reins and did his debut show in September. He actually arrived at the brand several months before, and Chanel had to do a couple of summer shows over the spring and summer where Mathieu was actually working there but still not signing the collections because basically he has so many collections he has to do every year there that they really have to work quite far in advance.

1:51He couldn't arrive and start trying to tweak and work on and fix or put his span of the collections that were already underway. He just had to kind of slot into the pipeline looking forward. So, you know, the shows are by Mathieu since September. Actually, since the beginning of October was when his first show was. And now this is only his second show for the brand. It's on the road. It's a travel show. Chanel kind of was one of the ones that spearheaded these programs of travel shows with this Metier d 'Arc collection under Karl Lagerfeld. He had the idea that there should be a special collection that would kind of fall in the time of year when most brands would be maybe releasing their pre-fall as a lookbook.

2:32He said, no, we're going to do a show, and it's going to be a show dedicated to showcasing the work of all of the maisons that are these suppliers that Chanel has bought over the years. So they bought this like brass casting and sculpted jewelry house called Goussons that makes like design objects, jewelry and all kinds of things out of cast bronze. there's like this embroidery house called le sage there's another one called le marier which is like the specialist in um embroidered like decorative fake flowers which can be made out of feathers or little pieces of silk they've got you know all these different companies that they've bought up over the years that are their most noble and special suppliers and this collection is supposed to really show that off.

3:21So with Mathieu, who really showed during his time at Bottega Veneta how much he really cared about the materiality of things and how to express the brand through craft, that he's getting to come out with his second show, and it's the Metier d 'Arc. It's a really big moment because he's going to get to advance that story about what Chanel is really capable of and with this new young spin on it through his design process. There's another reason that we're interested in this show right now. A headline-making campaign also debuted in the last couple of days with ASAP Rocky. Robert, how does that play into the equation?

3:56I think it's a great teaser for them. I think it's a really big PR coup for them to have signed ASAP as an ambassador. We actually saw that this teaser was going to happen a few months ago because they shot it in the streets of New York. So there were these great paparazzi images of Margaret Qualley and ASAP on the street in New York in this film being directed by Michel Gondry. And so these paparazzi pictures were leaked that like, you know, they made it seem pretty cool. And everyone's pretty excited about it. So now that they've released that over this past weekend, along with an announcement simultaneously that they've signed ASAP as an ambassador.

4:30So this is pretty cool for Chanel. I mean, because ASAP is just seen as so stylish. He's so handsome. He looks great and everything. He has a great stylist he works with, as well as really having a point of view on fashion himself. and he really helped drive the narrative at Bottega Veneta in showing how this brand that used to be so conservative, especially with what they were doing with men, how it could really be interpreted for a much younger customer, a more diverse customer, and like a person who's much more interested in fashion than the old Bottega menswear client, which had been really, really quite staid and conservative.

5:07They really sold a lot of cardholders and briefcases and very, very simple things before recent years. And, you know, ASAP just really helped to take forward that narrative, working together with Mathieu Blasie. So I think it was really strategic to bring him over to Chanel. Also, just, it's exciting for them. It's, you know, they're building this narrative around Mathieu, kind of brick by brick, bringing over one or two celebrities every couple months. You find about someone new that they've involved in the project, and then they're doing it in this really thoughtful way, where it's not just an announcement like ASAP is a face of the brand now with a random picture.

5:45It's him in this short film that they've done with Margaret Qualley, which is a really smart way now to get the content that a brand needs. It's kind of paradoxically, people thought that TikTok was going to be this race to the bottom for brands in terms of marketing. But now actually to get the stills, to get the visual campaign and the snackable video bites and all the little elements you need. Often now what brands that have a big budget will do is they'll direct a full-on short film or a really awesome brand video because then you can, through editing, snip out all the things you need from that.

6:21And so I think they're going to be able to roll this out in such a cool way alongside all the content from this fashion show. I thought that film was really fun, but I was distracted that when he climbs out the fire escape at the beginning, he left the window open. I mean, they're going to return to a freezing apartment full of pigeons. I just, I don't want to see the aftermath of that film. Isn't that a fun reference though to like all those great pandemic era paparazzi shots of him and Rihanna when they had first gotten together and were like, kind of like cooped up in New York and, you know, getting ready to have their first kid.

6:55And like, they were always like kind of hanging out at the window on the fire escape. And probably they, let's hope that the paparazzi had their consent. Otherwise, I will not be looking at those images anymore as references. Paparazzi are definitely known for their consent. Let's move on to the next topic. This week's other big development is that Prada is expected to finalize its acquisition of Versace. What is the first thing they need to do to fix that brand, Robert? The brand has taken on a new sort of materiality and a new sort of, I would say, like gravitas over the past couple months with this first show by Dario Vitale, which I thought was much more incarnated, much more varied, much more grounded in products and the real world and references versus just being like a really glossy, glossy image, which is what Versace had stood for.

7:54So it's gone through a pretty radical shift over the past couple months. And whether or not they're going to want to continue with that is, I think, the biggest, most urgent decision and for them to clarify that for the market. The brand has, at least not to date, the group at Prada has not said anything implying that the changes they had been making already under Michael Kors' ownership over the past year, that those were of interest for them to continue. They have not given any strong signals that this is their vision for the brand. But, you know, as they get in there and they see how it's working, they're going to have to decide.

8:31I think the fashion people perspective on this show has landed on the debut and the relaunch under Dario Vitale has, you know, drifted favorable after a pretty divisive first reception. I think it's kind of drifted in a pretty positive direction. But then, you know, you see some challenges with how they're going to roll this out. The prices are really, really high, making this kind of ready to wear, which seemed like it was aimed at a much younger and more fashion forward client in terms of the styling but then in terms of the actual object it was much more luxurious and the fabrication was going to be you know quite expensive to produce so kind of clarifying the position is probably what they have to do first the most important thing and um yeah i mean they could take this a couple different ways i think they could say this is going to be their brand that helps them to keep kind of re-energizing the more accessible end of the market and kind of lean into its credibility in these more entry price categories while just trying to make the image feel a bit more contemporary.

9:30Or they could kind of go in this more fashion, more ready to wear, luxury ready to wear direction that they've started. I think also aesthetically, they could kind of continue with this wonky fashion twist on Versace that Dario has started, or maybe they're going to want to go with something a bit more of like classic glamour to offset all of that more fashion forward quality of their portfolio more broadly because they have Prada, they have Miu Miu. And if you're going to have a third big brand, you know, for it to be something a bit less edgy could be a good idea as well. Although it's Versace, the vehicle for something less edgy and for something ultra expensive.

10:11I mean, they kind of had the opposite thing going until not that long ago, right? Yeah, less edgy when you think about Versace's history. And it was definitely a very transgressive brand, a very sexy brand. What I mean by less edgy is maybe less niche. You know, it could maybe be a very sexy brand, but in a way that's quite broadly digestible and broadly understood. Or it could be a brand that challenges notions of what is sexy. I think that, you know, these are different routes they can take. And there's, you know, big pluses and minuses to both. Right now, there's a talent in place who I think seems well positioned to say something really interesting about what does it mean to be sexy and cool to a younger audience for this brand.

10:54At the same time, you know, there's some names that have floated around other people that they've been rumored to be interested in hiring that are really credible, serious designers, but with something that's much more glamorous in a straightforward way. So your personal opinion, we're doing rapid fire here. So what does good look like in the next six months? What would make Robert say Versace's on the right path? What would you need to see? I would like them to continue on the route they're doing because I really like what Dario is bringing to the table. So I would like them to continue that but then show that they can build momentum around it by both, you know, continuing to take it forward in terms of the fashion narrative.

11:36But also how are they going to translate that to the mass market? I think it's a mistake to say that at your pinnacle expression, which is the runway, that the brand needs to be so simple and mass and have a really mass expression in that forum. I think you could maybe let that space continue to be a bit more wonky and experimental and let him cook over there and then just see how can you trickle this into the wider business in a savvy way. over the past few weeks, they've shown a lot of like the first commercial products coming out. So after that very expensive first ready-to-wear drop, you know, we've seen some more simple bags and shoes where you could see, you know, this actually could have a much wider audience than what you would have imagined when you saw it all styled together in this really Baroque way.

12:26You know, I think there's just how can they kind of juggle that and have the right balance.

12:33we'll be back with more of the debrief right after this

12:40so there's a reason i was pronouncing an italian soup earlier in this episode and it has a lot to do with luxury robert talk to me about langostaria and all these other high-end restaurants that are popping up within in luxury spaces can they be cool so these high-end restaurants that um you I think have been on a big growth cycle the past few years. I think we've had these sort of luxury chains happening in a way that feels kind of paradoxical because you have quite a few new locations for Langosteria, which just opened its latest location in Milan in the Palazzo Fendi. So now I think they have five of them in Milan, four or five.

13:19And then they also have locations in lots of other cities. I think they're opening London next year. They have one in Paris. And this is a place that is kind of always really buzzy and booked up. And even though they've opened all these additional locations, it seems like it's still really got a lot of momentum. The family behind Montclair invested in it, the Ruffinis. I think they did one in San Moritz, which is the favorite ski destination of Montclair and the Ruffini family. They have one in Portofino. So basically, it's this quite a big phenomenon that this very cool or seen as cool at one time and now very buzzy still restaurant destination that a lot of people want to eat at.

14:04And it has a vibe there. And it's attracting a certain clientele that is able to now try to replicate that in all these different markets. It's, I guess, kind of following the same track that Cipriani has done in some places. There's also Carbone now has a lot of different locations. San Imbres has quite a few. And so this is kind of a lot going on in this space because the Fendi one opened just like two weeks ago for Languisteria. And now in Paris, we have a new San Imbres. The first time San Imbres has tried to crack the French market. Which I think is pretty cool as like a test case. It's a pretty interesting test case because I think the French diners are quite conservative about how much they're willing to spend, how much they're willing to go to a branded location.

14:54And so while there's a lot of tourists coming in and out of the city, you know, San Embraes, it has this vibe, this positioning where it tries to stay pretty clubby, tries to kind of root itself in the neighborhood as well as being, you know, an international brand. And so I think if they can manage to kind of get like a core cohort of locals that come and some regulars versus it just being a tourist restaurant, I think it'll be a really big test case for whether or not you can make this kind of thing cool. What do you think? I mean, are they going to succeed in this or do they become the Hard Rock Cafe for fashion?

15:28Yeah, I think I was pitching a story about this and Brian said like, so you mean like Shake Shack or McDonald's? it's true it's like then he goes shake shack had lines around the block i mean it was it back in the day i mean people forget but that's the whole point is people forget you know brian in defense of shake shack again you forget that something was cool once it's a chain i see that that's a thing i mean i think it's just like some for some reason fashion once upon a time was all made by your local tailor your local couturier and once it became you know they decided they could scale taste and say and become these global brands and that was more desirable than just having something that was uh like more uh small scale you know for decades that's been the perception you know a luxury fashion brand is more global usually than like a mass market fashion brand which those often are like you know local chains like high street chains with the exception of like the big fast fashion giants or the sportswear brands and then in food it seems like it's kind of the opposite.

16:31Aren't like chains, like has this perception that like, if it's a chain, it means it's fast food, really cheap. So I don't know if that's just a historical fluke or if it's for a reason. Well, I mean, the point of chains is that you know what you're getting wherever you are, and the food's safe and delicious. And to me, a high end restaurant is an experience. It's something unique to the place that you're visiting. And the idea of just visiting the same restaurant in different cities feels a little odd to me. But, you know, all these locations so far are doing very well. So I seem to be in the minority.

17:03No, I don't. I mean, I don't think you're in the minority instinctively. Clearly, the restaurant business is dominated by hyper local restaurants. Most nice restaurants are local institutions. But then maybe there just is a bigger slice of the market than one would have thought of people that are moving around the world a lot, having events or hosting events in all kinds of places. And to be able to like bring together people around a trusted brand is maybe like, it's more appealing than you would think. You know, it's certainly worked for a long time in places that depend on tourism a lot and places that maybe don't have the same kind of like local community identity or historical roots.

17:45And you always have big like luxury restaurants that will have a outpost in Las Vegas or in Dubai. but Paris is yeah it's different I'm really interested to see if they can take on Paris so I was I met up with the creative director of the restaurant a couple weeks ago and he was showing me like you know the space is in a really cool location in the sense that like it's very touristed it's very traffic-y in some ways but it also is a very like desirable part of Saint Germain where locals want to go to. It's the space that used to be the Silencio de Prey. So the nightclub that was created, directed by David Lynch, then had like a second location that was focused on like a members club dining concept on one side.

18:30And then also like a small cinema where they would host like movie premieres and screenings and cool cinema events. And the cinema part really worked and drew a lot of locals for a long time. It was very cool to go to little screenings and events there. It was certainly something that did quite well, even though I don't think it brought in a ton of cash. And then the restaurant was more complicated, but it's a great location that they've moved into. I think if they can manage to integrate in the neighborhood the right way and kind of cultivate the right vibe around it, it could maybe do better than people would think.

19:08Like, Langosteria's expansion in Paris has, I don't think, managed to, like, draw as much of the local community. It's really good. They, like, they got a French pastry chef to, like, redo their dessert menu so that it's all, like, Italian desserts. But with this French twist on them, a really good French pastry chef, like, redid the whole menu for Paris. They're delicious. But it's on the roof of the Cheval Blanc Hotel. So it just really does not feel like it's for locals. So I want to talk about beat up handbags a little bit. So there is a trend, and I think this is probably most pronounced among aspirational shoppers, of being excited about handbags and jewelry and watches that are scratched up and worn to death.

19:50Robert, what's your take on that? What's driving it? Is it that luxury prices have gotten so high that this cohort that can't afford it is actually putting some hype and excitement around what they can afford, which is to wear something over and over again? I mean, I think key to your question is the word cohort. You know, I think it's a certain part of the luxury market thinks that's cool and probably has for quite a long time. Obviously, the biggest example is with Birkins and with Hermes bags. And these are bags that do take a nice patina. Usually they can patina quite well, but then some of them, you know, they do look trashed when they're trashed.

20:26And there's something about the fact that, like, no matter how much you wear out that bag and trash it, that it's still not going to break and fall apart. I think it just makes it a really cool style gesture. It shows you're not someone who just bought into it yesterday, who didn't go pre-spend tens of thousands in blankets and pillows and all this stuff to impress the sales associate to get offered a bag, which then you're going to keep it like it's in a museum. So it just shows, like, I wear luxury stuff, but I'm still cool. I think it's kind of the expression they're trying to have. I wonder if it can really spread to other brands and styles that much.

21:06I think there's – or other segments of the population too. I would say there's a certain kind of young person or edgy city person who is going to be able to look really cool rocking up also with a really beat up old Fendi bag or a really old Louis Vuitton monogrammed key ball. but you know it depends on the situation how old you are how many you know but how mature your style is overall not of course about you know your actual age but kind of the how polished you like to present yourself it's interesting to see the brands now trying to get in on this though because there was this pre-distressed jackie bag that was one of the main bags in demna's first collection this fall and i think it sold quite well and um you know it was like a bit softer and more supple and it had these scratches on it already.

21:55It was kind of cool. And then there was the destroyed Chanel bag in Mathieu Blasier's show as well, which was, I don't know, I thought it was kind of cool. I don't know, I feel like that people have a love-hate relationship with when a designer presents them the distressed item for purchase versus when I get to distress it myself. I prefer the latter. I don't want to buy it already that way. But to your point, Robert, but I think you have to look like I'm intentionally wearing this with the thread hanging from the side. It can't look like you unintentionally are wearing a beat-up bag. It's a whole look.

22:31It's a vibe. It has to go with your vibe. So I don't know if it's going to be a trend that's going to drive the industry in one direction or other. But I really like Joan's story about this that she wrote for BOF, because it was just showing how this trend has, like what started with this very specific case, I would say like a lot of people being either inspired by Mary-Kate and Ashley with their old Birkins or like buying up really cheap, trashed old monogram bags on Vestiaire Collective or the RealReal. I think that that kind of has trickled out into the wider market a bit more. And she found some cool ways that it's popping up.

23:11Let's close things out by tackling the big question, which is the future of luxury itself. So this week we have seen a series of investment banks, I believe it was UBS and Deutsche Bank, put up very optimistic forecasts for luxury sales next year, somewhere in the mid single digit growth range. And Bain came out with their very widely tracked luxury report last week and was a little more reserved. But it still basically said luxuries hit bottom. We're going to start to see them climb out of this hole they dug themselves in. Robert, what's your take? I read these. I was a little bit skeptical. I was like, it seemed like there were a lot of ifs in there.

23:48It was like, we're basing this on a scenario of improving trends in China was a big one. And that was a big factor that they think is going to relaunch growth. And I mean, I can't really speak to whether that is or is not going to happen. I just know that it's something that people love to say and then have not happened in this industry over the past 10 years. The Chinese client was really what was powering the industry for almost 20 years from the mid-2000s into the pandemic. But now it seems pretty stagnant. Unless there's big moves of migration to help a big comeback for long-haul tourism that's putting products in front of people at a much lower price in duty-free and outlet settings.

24:42There's just big chunks of what the market was for reaching Chinese consumers that are not really there, not really relevant anymore. But I guess what people can also would say to that point is that that's already been annualized. That kind of traveling aspirational luxury shopper has already been very depressed for several years running. So now any improvement among that segment of the market is just going to show up as growth in the numbers. And then you also have like a very high end Chinese clientele that is traveling more, that is shopping more. And I think there's some momentum to build on.

25:20In the U.S., it's, I think, less about anyone having really bullish forecasts for growth so much as just thinking that there's no reason that the current trend won't continue, which is that luxury brands got very big in the United States. during the pandemic in particular, they pushed really hard with lots of new stores in 2022. And this surge in relevance and all these new customers that came into the industry, you know, that's created now kind of generational impact in terms of the brand awareness and how many French or Italian luxury brands a person knows about. You know, I think compared to 10 years ago, it's certainly much higher now, you know, that people know about brands like Loewe And, you know, Bottega brands that I think were very big in Europe had gotten quite big in Asia as well.

26:12But in the U.S., probably only people who are quite into fashion or who are really quite into luxury fashion in like big cities would have known about them. And now more throughout the country, there's this big awareness that's been built up through social media and just through how big these brands got in the culture and financially during the pandemic. So they have a really big solid base to build on. And the other big if here is how the luxury industry addresses its pricing, or I guess addresses what we would call its value problem. And whether that means offering lower priced items or just finding a way to telegraph that the higher prices they're charging are worth it to people.

26:53It doesn't seem like we've seen a ton of evidence that they've cracked that code yet. And I'm curious if you think, do they need to figure that out to hit these growth targets? that some of the banks are setting for them. Yeah, that would be one reason that I'm still quite skeptical. You know, I think a lot of people have said, you know, there's going to be some improvement in China. And the other big thing powering growth would be the creative revival through all of these designer led revamps. I think that a lot of brands now are settling into a good track with a message that feels much more fresh and interesting than what they were proposing a year or two ago.

27:31You know, I think it is overall paying off for a lot of brands. But there's also a lot of confusion as well. There's a sense that I think quite a few brands of like, wait, what does this brand stand for now? You know, maybe just too many brands changed in the same space of time for the market to easily digest. In some cases, it's creating winners and losers where some people were the big standouts of this past fashion season. And the brand has a lot of fresh momentum. I think others where it's a bit murkier. And then definitely the price part of that. So that's, you know, people are seeing more value in the products through the creativity is kind of the big argument people are making.

28:10But then the price itself is a big challenge. I think brands don't want to bring down prices or even bring down average prices by introducing a lot more affordable products. They're thinking more in terms of stabilizing the pricing and letting people grow into it, with the exception of a few brands like maybe Burberry, which has done quite a good job of rapidly putting back a lot of the more premium price points versus the top luxury ones that they had gravitated to over the past few years. But overall, yeah, I would say in terms of really injecting a lot more affordability and exciting entry-level products, I don't think that that's happened yet.

28:53People are waiting and I haven't really seen it. I think maybe there's some slight, slighter recalibrations and de-escalations quite slightly. I thought Chloe was quite an interesting example. They had a couple big handbags that they were pushing in their campaigns, like the relaunch Paddington, I thought was at a more accessible price than a brand would have tried with that a year or two ago. But no, in the big picture, pricing is certainly going to be an issue and it's going to be a big issue in the U.S., which is a really key market for maintaining the brand's top line. It's like, you know, 25 % of sales is probably what's around that is what U.S.

29:30consumers are accounting for, both in the U.S. or U.S. shoppers abroad. And now the dollar is very weak compared to the euro. So either brands have to keep not changing their prices in the U.S. and eating the hit to their bottom line when they convert that back to euro and it's significantly less, or they're going to have to raise prices on a lot of things in the U.S. to absorb that currency shift as long as the current situation continues. Well, it looks like I'll be buying some beat up handbags in 2026. We wait with bated breath for the affordability aspirational shoppers return. Robert, I think that's a good place to end it on today.

30:09Thank you so much for joining us. I hope this was remotely enlightening. Please be sure to check out Robert alongside BOF's luxury team's coverage of all things high-end at businessoffashion.com. These and other stories are available to BOF professional subscribers only, and you can find the links in the episode notes. You've been listening to The Debrief, produced and edited by Olivia Davies and Eric Bria. I'm Sheena Butler-Young. And I'm Brian Baskin. We'll be back next week with a new episode. Thanks so much for joining us and be sure to follow us wherever you get your podcasts.