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Vegas - 2015 - Issue 5 - September - Fall Fashion - Kate King

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Moderator HitHa Herzog Retail Analyst and Contributor, Fox Business Network Panelists Henri Barguirdjian USA CEO and President, Graf Pamela Baxter CEO and President, LVMH Perfumes and Cosmetics North America BarBara Cirkva Division President of Fashion, Chanel roBert CHavez CEO and President, Hermès vinCent ottomanelli President and Regional Director, Salvatore Ferragamo maz zouHairi CEO and President, Lalique North America Graff necklace Vegas recently sat down with the CEOs and presidents of top luxury brands to get their read on the new luxury economy, how millennials will impact this vital sector, and what's hot in luxury across the US. The gathering dovetailed with the 10th anniversary of the Luxury Education Foundation (LEF), a public, not-for-proft organization that focuses on educational programs for design and business students at both the undergraduate (Parsons School of Design) and graduate (Columbia Business School) levels. The programs, studying the creation and marketing of luxury goods, also allow students to learn about this highly competitive area of retailing by interacting with senior executives of iconic frms. In turn, these frms beneft by gaining fresh perspec- tives on their brands from a new generation of talent. tell us about your relationship to the luxury education Foundation and how your involvement has benefted your brand. robert Chavez: It's really great to get a new perspective from students. Sometimes when we've presented projects and they come back with their observations, we think, Wow, we never looked at it that way. This fall we'll ask them to focus on the traditional Hermès scarf and come up with new ideas to market and wear it, and to present the scarf digitally in unique and innovative ways. vincent ottomanelli: We learn what the students' perceptions of our brand are from the outside looking in, so we beneft from learning how we can communicate to different generations. Barbara Cirkva: What's so interesting with LEF is how the program has expanded. Obviously, we're famous for the Master Class [in which luxury-brand executives work on case studies involving current business situations], and now, over the last several years, we've added fve or six different programs. Just 10 days ago, we hosted 25 students from Columbia Business School at Chanel. They spent the day with us so that, from their standpoint, they can under- stand what happens every day in the world of luxury. What was so rewarding for us on the Chanel side was having the opportunity to interact with the students and learn what was important to them. the maker culture has taken root strongly with millennials in this country. are american students interested in developing craftsmanship skills? or do you fnd that more likely to happen in europe? rC: When you visit the ateliers in France, you'll be surprised at how youthful many of the new craftspeople are. There's been this surge in interest of people wanting to do something with their hands, whether it's making jewelry, working with silk, or stitching leather. With LEF we're always looking for new programs to offer students, just like the craftsmanship program we launched this year, the 10th program in our 10th year. Pamela Baxter: Students need to be exposed to luxury from the very beginning. You can't separate craftsman- ship from the brand, because it goes back to the beginning of the brand. If you take the Dior brand, it goes back to Christian creating and designing for the brand, and you want students to understand that. Today, when you have Raf Simons designing, he's very involved in the art world, so he collaborates with artists to create fabric for dresses—it modernizes and keeps it going in a very contemporary way. the 2008 fnancial crisis impacted all market sectors. How did your consumer change during the last fve to seven years? rC: I would say nothing changed for Hermès. We found that even during the crisis, customers were willing to invest in certain items. The 2008 holiday season was a very interesting time because we saw very loyal clients still wanting to purchase those investment pieces. vo: We learned that we are not recession-proof. Customers weren't shopping at the same level. But here's the thing: For brands like ours—true luxury brands—you don't start manipulating or changing your approach. So we took a little bit of a hit in 2008, but I think we rebounded very quickly because we didn't change our formula. maz zouhairi: It was similar with us. In 2010, things turned around, and 2011 and 2012 were better years. I would say that the recession did remind us that we have to be relevant, exciting, and fresh to today's world and time. Luxury is a dream, not a necessity. millennials, the so-called frst generation of "digital natives," are projected to be the biggest generation of spenders since the boomers. However, millennials are dealing with economic issues that boomers didn't have to—a long-term slow-growth economy, which is postponing their arrival at certain levels of affuence. they have more debt and less spending power than other generations did at equivalent ages. How are you marketing to them versus how you market to boomers or their successors, gen x? PB: If you look at brands like Chanel and Dior, we are seeing new, young couture clients every day. There is always going to be that customer where there's no price ceiling—they want something that's exclusive to them. "Communicating with social media makes our lives easier because you get instant reaction." —henr i barguir djian, usa ceo and pr esident, gr aff

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