How the language of luxury business has already changed

Where are those ones who invaded our social media, marketing plans and business opportunities obsessed by Millennials?

Where are all the meaningless magazines just showing up skinny models and must-have bags?

Where are those obsessed by China (especially for their hidden supply chain)?

Where are the fashionistas going like headless chickens from a party to another, kindly sponsored by fashion brands?

Where are the super models and the go-to fashion and resort shows?

Where are the red carpets and the super expensive events?

Where are the Gen Z due to replace Millennials?

Where are the multi-million dollars concept stores and e-commerce?

Where are the product launches?

Are you sure, dear fashion and luxury brands that you just want to resume where you left a couple of months ago?

The world is at risk.

Some may say that the coronavirus emergency was unpredictable.

Well, this is not the case.

In September 2019, the World Health Organization (a specialized agency of the United Nations dedicated to health) issued a report called “The world is at risk”

The introduction said “While disease has always been part of the human experience, a combination of global trends, including insecurity and extreme weather, has heightened the risk. Disease thrives in disorder and has taken advantage–outbreaks have been on the rise for the past several decades and the spectre of a global health emergency looms large. If it is true to say “what’s past is prologue”, then there is a very real threat of a rapidly moving, highly lethal pandemic of a respiratory pathogen killing 50 to 80 million people and wiping out nearly 5% of the world’s economy.”

“A global pandemic on that scale would be catastrophic, creating widespread havoc, instability and insecurity. The world is not prepared.”

It also stated that ” The world is at acute risk for devastating regional or global disease epidemics or pandemics that not only cause loss of life but upend economies and create social chaos.”

And “The world is not prepared for a fast-moving, virulent respiratory pathogen pandemic. The 1918 global influenza pandemic sickened one third of the world population and killed as many as 50 million people – 2.8% of the total population (16,17). If a similar contagion occurred today with a population four times larger and travel times anywhere in the world less than 36 hours, 50 – 80 million people could perish (18,19). In addition to tragic levels of mortality, such a pandemic could cause panic, destabilize national security and seriously impact the global economy and trade.”

And it also focused on 7 urgent actions to prepare the world for health emergencies:

1. Heads of governments must commit and invest

“Poor” luxury risks to be deeply impacted by the Coronavirus emergency.

It is news of today that the former SIHH, now “Wonder and Watches”, the high-end watchmaking fair in Geneva, has cancelled its 2020 edition.

Unstoppable Luxury

The Coronavirus appeared recently as a totally unexpected emergency in a time of double digit growth for many luxury houses.

Nothing seemed to stop them and the sense of entitlement grew accordingly.

It was like being on a high speed train projected to unstoppable success and rewards.

The Black Swan Effect

Then a Black Swan appeared at the horizon.

“What is a Black Swan?” might ask someone who hasn’t read Taleb bestseller book yet.

“A black swan is a highly improbable event with three principal characteristics:

1. It is unpredictable;
2. It carries a massive impact;
3. And, after the fact, we concoct an explanation that makes it appear less random, and more predictable, than it was.”

While a recession was in the air, this epidemic has a less controllable psychological impact in the markets.

The luxury industry was not prepared, nor were the big consulting firms, because they were stuck in a honey trap.

The wake up call will be very hard for those ones who just followed the flow of cashing in on Chinese customers and didn’t properly developed a balanced, solid growth.

Is it too late to change direction? It depends on how the companies have been developed to be “antifragile”…

What is “Antifragile”?

As per the book of Nassim Nicholas Taleb, the author of “Black Swan”, the “antifragile” is one step beyond robust, as it benefits from adversity, uncertainty and stressors, just as human bones get stronger when subjected to stress and tension.

“He who is not antifragile will perish” Taleb, a former trader, a NYU professor and a bestseller writer, said.

It’s time to go back to the fundamentals and start playing seriously, again.

 

More to follow…

The Amazon forest is burning in a dramatic time of environmental disaster happening worldwide.
The nuclear explosion in Russia was not even covered by the news.
The China geo-engineering of the Tibetan plateau is something that most of the people are unaware of.

But Instagram has been recently flooded with posts from fashion designers, founders, pr, models, photographers and so on saying “The Amazon forest is burning!”

So, what?

Do you really think a tweet or a post can save the world while you sip champagne from the terrace facing the Mykonos sea or a spritz from a yacht overviewing the Ibiza coolest restaurant?

We can do better.

There is no obligation in being eco-friendly.
But if you want to be an authentic eco-warrior, well, you should walk the talk, move all your power, create a lobby pushing the governments being more sensitive and proactive.
Otherwise is just fluff. And people will clearly understand it.

While competitors are “stuck” in their success and troubles, LVMH seems to be speeding up on a series of crucial decisions.

• Balance geo-distribution of the business: Rihanna #Fenty is certainly not aimed at conquering China, but the USA, same as Virgil Abloh Louis Vuitton. These are big catalysts for the black community which represents a relevant market for fashion.
• #Beauty is a big business and when you own both Beauty Brands as well a key retailer you are on the easy path to success
• Slowly but steady growth compared to competitors
• #hospitality business from Cheval Blanc to Bulgari hotels to Belmond is a luxury lifestyle investment that reinforces the group image and perception and makes sense in the global #LuxuryExperience concept
• #winesandspirits is another channel very useful for being relevant in a channel that allows partnerships with key high-end sports players such as Roger Federer and entertainment events such as Golden Globes

Style and clear vision is what makes of this group the first entity in the luxury and fashion industry.

An interesting benchmark, indeed.

Following Jing Daily article today “Chinese shoppers are known as heavy luxury consumers, accounting for 30% of all luxury goods purchased worldwide”.

China, a strategic market, asks for an extra effort to all the brands willing to succeed in such a region.
The must for every brand is to understand how to set up a tailor made approach wisely mixing the Brand history, heritage, DNA and the market needs.
There is no standard recipe that can be sold nor bought.
There is no “Gucci kit” available for this.

The only key is knowledge and vision, keeping also the awareness that what works with the Chinese customers doesn’t necessarily work with French, Japanese or Americans.

The worst mistake a company could do is:

• to only focus on Chinese customers
• to obsess about growth in China only
• to forget to work on a balanced geographical distribution

China growth is slowing down and the Chinese Millennials, following Jing Daily “a survey from HSBC shows that the debt-to-income ratio of China’s post-’90s generation (people born from 1990 and 1995) has reached an incredible 1,850 percent”.

Better to continue to keep an eye also on the rest of the world.

China controls on “daigou” are worrying the investors of the luxury groups listed at the stock exchange. The habit of Chinese tourists buying luxury goods in Europe and South Korea to resell them at a profit when they return in Greater China was a key asset for luxury groups revenues.
Many luxury brands and groups forced to a hell of strenuous double-digit growth turnover focused obsessively the sales on Chinese customers. Everywhere in the world.

Las Vegas boomed thanks to gaming and shopping.
Galeries Lafayette even opened a Chinese restaurant in its premises to lure the Chinese customers unwilling to savour the French cuisine. Other department stores went even further in organizing an impeccable logistics in term of personal shipments to China.
All the luxury stores outside China hired Mandarin-speaking sales assistants. Tour guides specialized in outlet trips.

No more than twenty years ago every brand used to have strict number of pieces limits for purchases in store for customers and for employees.

Then the Gold rush started.
Unconcerned of the risks.
Unwilling to remember the Vuitton history with the Japanese customers.
Trying to keep a foolish growth pace.

Soundtrack “Living on the edge” Aerosmith