K-Shaped Luxury Market and Consumer Bifurcation (with Katie Graffield, Romain Bostick)

Asks if the K-shaped economy theory holds water given retail earnings.

Katie Graffield

Pauline Brown

Even within luxury, there is a K. Brands with strong equity, geographic balance, and storytelling are doing well. Those reliant on aspirational consumers or aggressive price increases are struggling.

Brands like Chanel and Dior raised prices 50-70% on same items; that was a fashion move.

Asks how brands reliant on aspirational consumers can navigate this environment.

Katie Graffield

Pauline Brown

They have to wait it out; there's nothing they can do without compromising credibility to make it more affordable.

Ultra high net worth consumers are wealthier than ever but being preyed on by more brands.

Asks about pricing divergence among luxury houses, citing Brunello Cucinelli's disciplined pricing.

Romain Bostick

Pauline Brown

Brunello Cucinelli's success is due to being relatively small with room to grow, and a healthy men's business benefiting from Silicon Valley wealth.

Unlike others, they are balanced male/female, have a small footprint, and are well-run.

Asks if the sprawling multi-brand model of LVMH and Richemont is working against them.

Romain Bostick

Pauline Brown

LVMH's complexity is weighing it down. Richemont's reliance on watches and jewelry is now an advantage as that segment is doing well.

Hard luxury has more perception of value for consumers spending $5k-$100k.

Asks about Gucci's path forward given expected double-digit declines.

Katie Graffield

Pauline Brown

Turnarounds are hard in fashion; worst time for Gucci to restructure. New creative director not working yet. May be a brand that shouldn't have chased peak volume.

The cycle is fast and unforgiving; customer base is unforgiving too.

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