Hello BoF Professionals, your exclusive ‘This Week in Fashion’ briefing is ready, with member-specific analysis of this week’s main topics and summaries of this week’s top stories.
Following the death of George Floyd, another unnatural murder of a black man at the hands of police, anti-racism protests have swept the United States. Chanel, Gucci and other luxury shops in rich neighborhoods from Soho New York to Rodeo Drive in Beverly Hills, have been attacked, not only as targets of opportunistic looters but also as symbols of inequality. According to local media reports, besides “Black Lives Matter” and “I Can’tt Breathe,” another slogan was sung on the streets and engraved on the building: “Eat the Rich.”
Protesters call for racial justice. But systemic racism is always associated with economic oppression. In 2018, as the spoils of globalization and technological innovation continue to increase disproportionately to the upper echelons of society, the gap between the richest and poorest American households has been greater than ever since the US Census Bureau began tracking the distribution of income more than fifty years ago, with Gini Index, a measure of income inequality, reaching 0.485 and black households at the bottom of the rung.
Now, at a time when more than 42 million Americans have lost their jobs due to the Covid-19 crisis and mishandling, with black income hardest hit, the hatred is reflected in clear protests about economic and racial inequality.
To a certain extent, the luxury industry benefits from inequality. After all, luxury brands like Gucci and Louis Vuitton sell products that most people can’t afford. But there are more stories. Contrary to popular belief, “old money” the rich does not encourage the luxury sector. Most of the luxury growth comes from “new money” consumers with increased incomes and new statuses found to be projected.
“Inequality of income is good for developing luxury goods, as long as it is socially and politically sustainable,” explained analyst Luca Solca. “This usually happens when successful people are seen as role models that can be imitated by people, and when society offers social mobility to those who are entitled. That is the essence of the American Dream or Chinese Dream today. “
But if inequality becomes so entrenched in society that wealth and status are only passed down from generation to generation with little hope of upward socio-economic mobility, the luxury sector will suffer. With fewer new millionaires printed, there will be less demand for luxury products. And if class barriers continue to harden and revenge continues to increase, the symbolic meaning of luxury brands will change. No longer a badge of success, luxury goods can be a symbol of oppression.
Make no mistake, because inequality increases, so does wages. In fact, in the same year income inequality reached record highs in the US, as did average household income. But research has shown that people instinctively care more about relative status than absolute conditions.
Social media only exacerbates this problem, making the lifestyle of a handful of people visible to the masses like never before, creating jealousy in addition to admiration. The same is true for luxury goods in particular, which millions of people can now crave up close on Instagram but rarely achieve.
Back in 2015, Richemont Chair Johann Rupert was the beginning of the observation that deepening inequality is bad for the luxury sector. Talk in a Financial time Luxury Business Summit in Monaco, he predicted that sophisticated technology will unleash “abundance” for a small population while killing millions of jobs and creating a massive underclass, accelerating economic inequality and leading to “jealousy, hatred, and social war.”
“I don’t know what new social pact we will have, but we better find it,” Rupert said. “If not, our clients will be targeted. They will be hated, hated. “
“People with money won’t want to show it,” he continued. “If the parents of your child’s best friends become unemployed, you don’t want to buy a new car or anything striking. We destroy the middle class and it will affect us. And that’s not fair. So that’s what kept me awake at night. “
This week, Trevor Noah, popular commentator and host The Daily Show, described the crisis in America as the collapse of social contracts. “When you boil it, the community is the contract that we signed,” he said. “There is no contract if the law and the people in power do not enforce their goals.”
The luxury sector must use its power of influence and pocketbooks to lobby the government to address the problem of inequality and improve social contracts, or they can see their carefully managed brands burning. When protests hit America, did the executives listen?
MODE, BUSINESS AND ECONOMY
LVMH said it was not considering buying Tiffany shares on the open market. But sources say LVMH’s Chair and Chief Executive is Bernard Arnault wants to renegotiate a deal worth $ 16.2 billion prices due to the condition of the US retail sector staggered from coronavirus and widespread civil unrest. Exactly how LVMH can achieve price reductions is still unclear, but renegotiation can occur if Tiffany violates the financial agreement of the agreement.
The brand faces a retaliatory attack on the Black Lives Matter post. Gucci, Louis Vuitton, Prada and Valentino have supported Black Lives Matter on social media, but some users accuse them “Signaling virtue“Without a track record of positive action. Munroe Bergdorf, a black transgender model who was fired by L’Oréal in 2017 for commenting on white supremacy, accused the company of “turning on gas” after the Black Lives Matter solidarity post. Some media companies include Refinery29 and Paper have also come under fire.
Adidas sees the rebound in China faster than expected. The German sports clothing brand now expects second quarter sales for the Greater China region around the same level as last year. But with the gradual reopening of stores in the US and Europe, Adidas has been stuck with the guidelines given in April at least a 40 percent decline in second quarter sales and a decline in operating profit of more than € 100 million ($ 112.05 million).
Canada Goose expects a little revenue in the current quarter. Sales down almost 10 percent to C $ 140.9 million ($ 104.15 million) in the fourth quarter ended March 29, but beat analyst estimates of C $ 128.1 million. As a result, Goose Canada implemented cost-saving measures, cutting costs and investment in the first quarter of around C $ 90 million. The company also said it had sufficient cash flow to deal with expenses related to the virus that could arise in fiscal year 2021.
Puig acquired a majority stake in Charlotte Tilbury. The founder of Tilbury will continue as chairman, president and chief creative officer of the brand and retains “significant minority shares.” The deal brings Charlotte Tilbury under the same roof as Jean Paul Gaultier, Carolina Herrera and Dries Van Noten, among others. While the financial details of the acquisition were not disclosed, Charlotte Tilbury was valued at more than $ 1 billion in April according to media reports. The deal will also significantly advance Puig’s position in the beauty market.
Coty collaborated with Kim Kardashian for the cosmetics line. The cosmetics company announced that in talks with reality TV stars to produce a beauty line after buying a majority stake in Kylie Cosmetics last year. But Coty said there was no guarantee that an agreement or partnership would occur. The company’s shares jumped about 7 percent after another possible collaboration with Kardashian was announced, adding to the 20 percent rise in Coty shares seen earlier this week.
Designer Aurora James asked retailers to source from black-owned businesses. The owner of Brother Vellies asked the fashion industry to do it do more to combat systemic racism. He has placed a manifesto asking shops including Sephora, Net-a-Porter, Target and Saks Fifth Avenue to commit to buying 15 percent of their products from black-owned businesses.
Frédéric Arnault named CEO Tag Heuer. The 25-year-old son of LVMH Chairman and Chief Executive Bernard Arnault has was appointed chief executive of Tag Heuer, effective July 1. Frédéric Arnault initially joined the company in 2017 as director of strategy and digital. Former Chief Executive Tag Heuer Stéphane Bianchi has been appointed as the chief executive of the LVMH watches and jewelery division, overseeing Chaumet, Fred, Tag Heuer, Zenith and Hublot.
Daniel Grieder came out as CEO of Tommy Hilfiger. She has resigned as chief executive Tommy Hilfiger Global and PVH Europe after 23 years with the group. Grieder will be replaced by Martijn Hagman, with whom he has worked closely for the past 12 years. Hagman will report to PVH president, Stefan Larsson.
Peter Harf appoints the new Coty CEO. In an unexpected move, Peter Harf, current Coty chairman, had named his fourth chief executive in less than four years, replacing Pierre Laubies. Harf will oversee the newly formed executive committee together with Chief Financial Officer Pierre-André Terisse and Chief Transformation Officer Gordon von Bretten.
MEDIA AND TECHNOLOGY
Fashion magazines are gaining in popularity as advertising spending decreases. Global fashion house is cut their marketing budget 30 to 80 percent to overcome the impact of the economic pandemic. This could drive a change to digital marketing by one of the last sectors that still invests a lot of money in print advertising. The losses will be the smallest, most independent publications. This sector has been forced to use layoffs and sales amid a financial crisis.
Fix Stitch to lay off 1,400 employees. Online retailer known for his personal shopping services cut the stylist in California and put it back in lower-cost states, according to a report in Wall Street Journal. Layoffs will mostly occur in September, but affected employees will have the choice to move and continue their work. Stitch Fix will also recruit around 2,000 new stylists in Dallas, Pittsburgh, Cleveland, Minneapolis, Austin and Texas.
Compiled by Daphne Milner.
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