Bumps in the road: Bernstein’s Luca Solca analyses luxury's rough patch

In this episode, hosts Robin Swithinbank and David Sadigh welcome Luca Solca, one of the most respected analysts in the global luxury sector. They explore the current turbulence in the luxury market, from macroeconomic pressures and post-pandemic consumer behavior to creative turnover and digital transformation. Luca offers razor-sharp commentary on everything from Swatch Group’s boardroom drama to China's shifting luxury landscape.

Highlight include: 

• The macro view: Is luxury really in crisis, or just correcting after post-COVID exuberance?
• China's impact: How real estate and consumer confidence are shaping Chinese luxury demand.
• Luxury’s pricing problem: Have brands pushed price hikes too far?
• Creative churn: Why soft luxury is facing unprecedented designer turnover.
• Swatch Group spotlight: A look inside the shareholder drama and what's next for this Swiss giant.
• Retail recalibration: Why brands are closing smaller stores to focus on flagship experiences.
• Golden rules of luxury: Growth vs. exclusivity—and why that tension still defines the industry.
  
  

Also in this episode:

DLG Insights: Aude Degrassat discusses Apple’s Vision Pro 

On the Download with DLG's Benedicte Soteras: 

• Winners: Qeelin, Max Mara, Louis Vuitton, Van Cleef & Arpels
• Losers: Watch brands suffering a 32% YoY drop in China
• Trend: Extreme polarization in China’s luxury e-commerce performance

Brought to you by https://digitalluxurygroup.com/

Follow us @digitalluxurygroup & @robin_swithinbank on Instagram

Produced by Juliet Fallowfield, 2025 www.fallowfieldmason.com

Transcript

ITW Bumps in the road: Bernstein’s Luca Solca analyses luxury's rough patch

 [00:00:00] 

Robin Swithinbank: Hello and welcome to the Luxury Society Podcast, brought to you by Digital Luxury Group. I'm your host, Robin Swithinbank, and back after one episode hiatus.

David Sadigh: I am your cohost, David Sadigh.

Robin Swithinbank: In this episode, David and I talk to one of the most powerful figures in luxury an all seeing analyst frequently ranked as the leading voice in his space. In our conversation, we'll crisscross the luxury checkers board tackling matters as varied as the boardroom drama now unfolding at Swatch Group and the price to value ratio problem currently keeping customers at bay and luxury brand bosses awake at night.

And then stay tuned for an insight into one of the luxury industry's fast developing trends. Namely the integration of mixed reality into the luxury consumer experience, and particularly the application of Apple's Vision Pro. 

We'll also be joined by Benedicte Soteras for on the download in which she'll be reporting on D G's latest Compass Index, which tracks and overlays the marketing and e-commerce performance of 150 luxury [00:01:00] brands in China. All that to come in a bit, but for now, David, on with a show. 

David Sadigh: Let's do it.

Luca Solca: getting outta COVID alive, made us all decide that we wanted to enjoy ourselves nobody, wanted to be the richest person in the graveyard.

I think that the amount of churn in the creative responsibilities we're seeing this year in the soft luxury space is unprecedented as it is happening all at the same time.

Luca Solca: sweat Group has been, by some distance the worst performer in the overall luxury goods space.

At the moment, we are recommending investors to buy, the stock because it's, valued,very poorly.

Luca Solca: The most difficult, golden rule for luxury brands has always been,

try and drive growth while maintaining perceived exclusivity.

Robin Swithinbank: . So it's my great pleasure to welcome onto the pod for what I hope will be the first of many appearances. Luca Ska Luca [00:02:00] is senior analyst covering global luxury goods at Bernstein, one of the world's premier global equity research and brokerage firms.

Previously of Xan and Credit Agricul, Shira Luca has frequently been ranked as the number one analyst in his sector, and he's an eternally quotable source for journalists such as myself when we're looking for pit insights that break through luxury's, gilded narrative and tell us what's really going on.

So Luca, welcome to the Luxury Society Podcast. Great to have you. Thank you so much for joining us. How are you?

Luca Solca: Thank you Robin. and thank you for inviting me. I'm very well, thank you very much. 

Robin Swithinbank: So, Luca, I think probably we'll just to cut through some of the jargon first, if we can. That was a bit of a jargon, heavy intro. unpack for us a little bit of what your work involves and how it shapes or reflects the luxury landscape.

Luca Solca: Well, you know that, there are people that, whose job is to manage savings. these would be, professional asset managers and, uh, these people seek advice. And, uh, [00:03:00] research, from other people like me. we work on the so-called sell side, and our job is to, try and separate the wheat from the chuff in a way, to try and understand how an industry works and which companies, which stocks are therefore worth of investment, and which ones are better left alone.

And, uh, that is what I do. I write research and I talk to investors for the most part of my time. and that makes it a very simple job. You just need to do two things.

Robin Swithinbank: Very simple. Well, in which case I'll ask you a simple question and who knows, maybe we'll get a simple answer. But if we start with a grand sweep of the luxury sector, looking at the research that you've done and the conversations that we've had even this year there, there appear to be very few bright spots across luxury at the moment is luxury, as some headline writers have it in some sort of crisis at the moment.

Luca Solca: I, I don't think that, we could call it a crisis. I think that what has been going on is [00:04:00] two or three things. That have been impacting the trajectory of luxury demand. We need to take into account the context of the past 30 years or so is that luxury has been a very high growth industry. On the back of income and wealth inequality rising and on the back of, the global economy, creating new markets where, like in China, in the most recent, 30 years, GDP growth has been faster than in the West, and where we had a larger number of people moving into the middle class.

what we need to reckon with though is first. out of COVID, China and the Chinese have been the number one growth driver for,a long time, for 20 years at least have been on the back foot because of the real estate. market plunge, consumers, in China felt poorer on the back of their real estate assets being worth less.

And as a consequence, [00:05:00] they haven't been in the mood to spend money. Their growth in luxury spend has been a lot more muted. Prior to COVID in the low single digits rather than in the high teens or low twenties before COVID. The second element is that, out of COVID in the West. Instead, if we take what has been going on in the West and in Europe.

We all got very scared. during the pandemic. We all entertained the idea that this could be the last of the world. We could see. And getting outta COVID alive, made us all decide that we wanted to enjoy ourselves and, uh, spend a bit more and enjoy life while it was there. nobody, wanted to be the richest person in the graveyard.

So. For a few years, there's been, what I would call, discretionary spend, supercycle. If you take 21, 22 and the good part of 23, a lot of people in the west have been spending very [00:06:00] freely, which has brought, golden age for, luxury goods, but also for, restaurants, for travel, for hotels, and so on.

I, I think. But at least in some cases, especially if we look at the middle class consumers, there was a sobering up of this post pandemic euphoria, just because inflation was catching up with them and, they were forced to moderate. I. Their spend. And that is, much of what we've seen in 24. The third element I would add, which is going to be very relevant in 25, is that, the New American administration has brought a lot more, Volatility to the market. We ended 24 after the presidential election with most people anticipating that the American consumers would be in a very good mood to spend money and anticipating that the second President Trump term would be very much similar to the [00:07:00] first, with the stock market rising and so on.

And I think, a couple of elements. came in to make all this a lot more entertaining. first the doji agenda and the massive, efficiency plan that President Trump introduced. And second, the Liberation Day agenda, which, opened a whole, new. international trade confrontation and caused in the process, quite a significant,financial markets corrections, both middle class consumers because of lower perceived job security and high-end consumers because of the plunging stock market in the beginning of April.

a being on the back foot and a being, less. Available to spend money. And, and we're still very much in a volatile environment. The stock market has come back a lot. all is not lost as far as the, luxury spend prospects are concerned. but there's a lot of, bumps in the road. And this has been [00:08:00] everything but a linear,cyclical recovery trajectory.

David Sadigh: Luca have been like traveling lot lately and just before we started recording you told me that so thousand twenty five has un nec slash special type of year something that you seen that off sous York Can you explain that 

Luca Solca: Yes, indeed. I think that,referring, to the very significant, New news that have been shaping, market forecasts. it is normal, for example, that we publish a yearly forecast for the sector that is towards the end of the previous year or at the very beginning of the new year, and that stays in place.

I. For at least, six months. and, often we don't have to change it, for the whole year. this time we already published, three outlooks, one at the end of November after the presidential election [00:09:00] reflecting the Anticipation that the American consumer should be very supportive. another one, just after Liberation day, introducing the two major, disrupting elements that we just addressed.

The doji agenda and, the, liberation Day agenda. And another one, just after the major breakthrough that American and Chinese negotiators could achieve in Geneva two weeks ago. finding a way to deescalate massively, the import tariffs that had been decided on both sides. And, so first having a 5%, growth forecast, then moving to a mantu and now moving to a flat forecast.

that is the first in 20 years and we've been very busy indeed.

David Sadigh: not the right.

Luca Solca: And the year's not over. Yes, absolutely. And, we know that, one of the most I difficult, import tarriffs negotiations is going to be that [00:10:00] between the US and the European Union because the European Union is made of many different,countries with many different,national interests.

So finding, a synthesis of all that is going to be. Probably more difficult than negotiating an agreement with the uk, China, or Switzerland for that matter.

Robin Swithinbank: we've talked about volatility and goodness. Volatile seems like an understatement suddenly, doesn't it? In this current climate, it's very clear that there are all sorts of external macroeconomic factors, which an industry such as the luxury industry is never going to be able to control. But at the same time, would you ever point the finger of blame back at the industry and, would you be able to identify missteps that the industry has taken over the past few years, particularly since that period of revenge purchasing immediately after the pandemic that have led to this sort of softening in luxury consumer demand?

Luca Solca: Well, I think for sure, one of the things that, we noticed in, today's performance is quite a significant amount of polarization and there's, uh.Is doing very well and companies [00:11:00] doing not very well, to use the understatement of the day. and I believe that, this goes back to two elements primarily.

First, how brands have been, managing pricing, during, the post pandemic boom. those, that have decided to increase prices the most, are the ones in general that are more under pressure today. as they struggle to, justify their value for money propositions in the eyes of consumers that are sobering up from you only live one's, attitudes.

the other element I think, goes to. innovation, many brands decided that, they didn't have to do much because in the post COVID boom, they could continue to do more of the same and, sell the same products and,likely at higher prices. Those that, were, innovative, during that time, those that continued to bring newness to the [00:12:00] market, to take, even small players,

have been doing very well because they've been attracting, a lot of consumer attention, especially. Established consumers have been buying luxury goods, products for a long time, and who had, the wardrobes full of stuff, they needed new, stimuli to be parting with their money.

And those instead wrap been, in mirror. The same mode are, are struggling more. this explains why we're seeing at the moment a huge musical chair game when it comes to creative responsibilities. brands are scrambling, to come up with newness and typically in order to get new stuff, you need new blood In the creative department, I think that the amount of churn in the creative responsibilities we're seeing this year in the soft luxury space is unprecedented as it is happening all at the same time.

I.

Robin Swithinbank: it's the most unusual season in that respect. You mentioned [00:13:00] Mimi there, and miu miu is a company that we have focused on in the past, on this podcast. moncler would be another, Which particularly come to mind because we have identified through some of the DLG data that we've, been able to pull down that these are companies that are doing particularly well in China. And as you identify at the beginning of this conversation, China has obviously been a bit of a problem area for the luxury industry over the past couple of years because of the,the climate in the country at the moment, the economic climate in the country. some of the suggestion, that has been brought to this podcast by DLG analysts is that, there are signs of a Chinese recovery, maybe not in 2025, or at least not in Q2 or three, but towards the end of the year and into 2026, there are perhaps green shoots that, give the luxury industry something to build on.

So some sense of encouragement. Do you see that?

Luca Solca: yes, I would, definitely agree with that viewpoint. I was in China very recently. In the first week of, April. I spent a whole week in, Beijing, Shanghai, and Hong Kong with a group of investors [00:14:00] visiting, luxury goods companies, local international retailers, landlords. various people associated with the industry.

I think that there's definitely a number of, indicators that are moving in the right direction. First of all, I would point to consumer confidence inching up, that then I would say that, at least the volume, if not the price of real estate transactions is, also quite significantly increased, which seems to suggest that.

the real estate market is finally finding a flaw. Then if you look at Chinese spend abroad, and in Europe in particular, we've seen a revival and, we're now back to the 2019. So the pre COVID levels, which is a first, in the past five or six years, and additionally we could see, a ray of light.

In the Chinese stock market as well with, a Chinese tech taking center stage first with DeepSeek, and then [00:15:00] with the coming back to center stage of Jack Ma, side by side, to President Xi Jinping. And I would argue that, the pressure that, the American administration is piling up on China.

It is likely going to translate into an accelerated shift of the Chinese economy from an export driven economy to a domestic consumption economy. and that should be, working well for, consumer spend, including discretionary spend as well.

 we have seen that in the last cup of days as well we found co. Or américa exécutif saying une date de p is Indeed generating of like investment and measures in China to become as autonomous as possible from the américa and that therefore chinese companies are not only catching up but. Il semble cases Ivan i even probable [00:16:00] exceeding de capability of companies Exactly, and I think that we also need to be,Cognizant of the fact that, this, shift to a domestic consumption economy is also going to entail, at least in some markets a shift. From Western brands to our local brands, we've seen, a lot of developments by Chinese brands, not just in terms of being priced at a lower level or being better distributed, and being more effective in communication, but also, in the product, that they bring to the market.

I'm just thinking, for example, about. Consumer areas such as autos or beauty. just to make two examples, but even in luxury, we've seen most recently a major success story with the Laopu gold, growing like a weed. And, since its recent, IPO multiplying its, stock market value by seven more than seven times and reaching a market cap.

north of $20 [00:17:00] billion. So those are, definitely developments that, the luxury goods industry needs to be, aware of.

Robin Swithinbank: Well, of course the follow up question to that becomes, will, the export of these Chinese luxury brands become a significant factor in the global? Luxury economy. it's clear that there are some domestic consumption of these brands, the automotive and beauty brands that you've just outlined to us. do you expect that in years to come, and I dunno if we can talk about how soon, but are we going to be looking at, retail districts in major western cities, heavily populated by Chinese luxury brands, or is that still a very long way over the horizon in your perspective?

Luca Solca: maybe that is a bit, for the long term. I think that, the first step we should see is. Chinese brands potentially getting market share in,their own domestic market. First, the moment if we compare and contrast where Chinese brands are in many categories, including beauty for that matter, despite the most recent developments that we [00:18:00] have seen, and then, look at, Japan.

we can see that the Japanese brands have, yet a lot, to go and a lot to gain in terms of market share. so there's, definitely going to be a need. for Western, players to up the ante and to, invest a lot more when it comes, for example, to beauty in r and d and come up with, innovative products and, but not even, companies that rely primarily on the brand heritage and on their,brand appeal can rest on their laurels because the Chinese are incredibly.

Capable and very competent and very dynamic. So, I would say that China, because of the, learning curve that consumers have been going down to is probably the most difficult market today and the more sophisticated market in the world.

David Sadigh: juste la s the chinese trip that you dit couple [00:19:00] of weeks ago what was the biggest surprise Lucas.

Luca Solca: I would say that, uh, definitely this focus of private equity companies, in China, on, China, for China and, uh, the sort of,the done deal decision that, that this would be the future. I. it was quite a wake up call and I would align that with my first, trip to China last year after COVID and, the changed landscape of the Beijing and Shanghai streets with, 

a dominance all of a sudden of green plates on electric vehicles. And they were all made in China. And, the question I had back then last year was, where have the German companies gone? and I think this year, this, sensation was spreading to other product categories as well. And we haven't even talked about sports apparel and sports footwear, where, the Chinese are definitely building major strides.

Robin Swithinbank: Lura, it would be remiss of us if we, went through this conversation without [00:20:00] talking about one of the biggest stories in luxury at the moment, which is that of Swatch Group. And I know that Bernstein has, been, issuing, comments, about the current situation at Swatch Group. For those of our audience who are unfamiliar with this, it's, this is the Swiss group that owns a number of Swiss watch companies, including Omega Long TSO and Brega. specifically the stories around the unfolding succession style boardroom drama, currently filling columns of business sections all over the world. I. and now to caveat this, I should just note that we're recording on May the 23rd. in the same week that the Swatch group investors, Steven Wood, who's founder of the New York based investment firm, Greenwood Investors, had his proposal to join the Swatch Group board, rejected at the group's ordinary general meeting, which took place just two days ago.

At this point in time, I. Now as I understand it, Mr. Wood's intention, at least at a surface level, is to increase the voting rights of investors such as himself who control 75% of the group's shareholding, but less than 50% of the voting rights, are otherwise controlled by the group's founding Hayek family and Swatch Group execs. in your [00:21:00] view why is Mr. Wood attempting this and you think that it's a necessary course of action?

Luca Solca: I think that when you look at Swatch group, you see a lot of unfulfilled potential. when we look at, for example, the shareholder value creation and the return on invested capital that the Swatch Group, has been able to produce in the past 20 years. So, let's take the long-term perspective.

we see that despite, this company having some of the most interesting,and best brands in the industry, such as, for example, or Omega. sweat Group has been, by some distance the worst performer in the overall luxury goods space. And that I think is seen by investors, as an opportunity if there was, a more focused, management, of the high-end, and, the Omega brand, which in the end today represent at [00:22:00] least two thirds of the group revenues.

You could argue that, this would be, a much more valuable company. interestingly enough, today that in the, stock market, swatch group is trading at a discount, to its, book value, which is a very rare occurrence in this day and age. And, which I think begs the question of how you could potentially.

create more shareholder value given the cards and given the assets that you have available.

Robin Swithinbank: one of the reasons Mr. Woods' application was rejected, as noted in the OGM agenda was that. He's not Swiss NYLO Hayek. The group's chairwoman described him as a US citizen with no apparent connection to Switzerland or to Swiss industry and its products, which seems a slightly strange thing to say about one of your shareholders.

But is this healthy protectionism or in your view, would it be shortsightedness?

Luca Solca: I'm not sure. I think that, one of the good things about Switzerland and Swiss myself, at least,by adoption. Is that, we are [00:23:00] able as a country to attract a lot of talent from all over the world. I believe that, this is, something that, allows Switzerland to stand out, among of course, the very good tradition in a number of industries and, the entrepreneurial spirit and, the work ethics that, the Swiss have, uh, shown over.

the decades. so, the short answer is, I'm not sure that,someone's passport is necessarily a good criteria in this choice.

Robin Swithinbank: Yeah, interesting perspective. I, we certainly see the Swatch group can't seem to buy a good headline at the moment, which has taken the heat off Kering, which only a month ago Bloomberg described as the sick man of French luxury. But, what are your long-term projections for Swatch Group and what are you advising your investors at the moment?

Luca Solca: I think that,at the moment, we are recommending investors to buy, the stock because it's, valued,very poorly. the only thing is, we would need some kind of catalyst in order to unlock, the value. The stock market calls, very cheaply valued, stocks with [00:24:00] no catalyst, value traps because they can stay cheap for a very long time unless something changes for the better.

so we're hopeful that at some point, either because. The current management team improves, or because you have, external elements that can be brought into the recipe that, swatch group becomes on top of being a great manufacturing company and a great industrial company, also a savvy brand marketer.

I think that, it's the lack of attention, on brand marketing and how you build icons and how you nurture icons over time. that has probably wrong footed some of the, iconic brands within, the Swatch group. And so, we are, counting on that to appear. We're not sure that we would be sitting on the edge of our seats, considering how control works in the company as you just highlighted.

But, even, An [00:25:00] improvement in Chinese demand. And we just discussed, the green shoots that seem to be appearing in China would probably be making this, a worthwhile investment because Swatch group is, highly exposed to China and the Chinese. And if the Chinese buy a bit more, we should be,we should be benefiting from that with,with Swatch group.

David Sadigh: changing the subject one of the trend robin have to observe this year de retail stratégies slow down week end c brands are closing point of sales instead focusing on flagship store ou can maximize des over overall brand experience cuisine allocation tous ceux. Couple of go we saute es especially in the Washington the street many of the party we going to die now we like seeing dishing or you signe de same un if so in New opinion what's causing this.

Luca Solca: I think that, [00:26:00] when, uh, the sort of the tide,moves out, you have a problem of retail space, productivity, stores, mono brandand stores are, having quite a significant amount of fixed costs attached to them. And, if you're above the breakeven point, you make a lot of money. If you're below, you lose a lot of money.

so in a subdued market, you have more stores causing trouble to you, and as a consequence, there's more of a focus, to try and rightsize your, network to cut, or at least right size. the. Stores that lose money. Maybe you don't need such a big store. Maybe you need a smaller store. Maybe you don't need 14 stores in Hong Kong.

Maybe you need 10, maybe you need eight. And that to the benefit of the retail space productivity of these stores that remain. In the network, this, at least outside of watches. And if we look at leather goods and jewelry, [00:27:00] it is a relatively simple industry because, it is a retail industry at the end of the day.

And your ability to increase return on invested capital is directly, proportional to your ability to increase,sales per square foot. So, to increase, like, for like, if like, for like goes up. Then return on invested capital goes up, then the stock price goes up, very simply. and in this particular environment when your sales are more likely to go down than up, and your productivity is more likely to go down than up, this is a good time to go back to the drawing board and to take a fresh look at your retail network and make sure that all of your stores make sense.

David Sadigh: That very interesting observation des un ordre like théorie around date which obviously beyond just the nombreuses is the fact that are total changing their expectation when it comes to instore experience and that [00:28:00] looking for something obvious les experiential with more space more ability to try things coffee restaurants. Un week end c major trend de like Cyril lignac lui vit on une milliard de collaboration between like in know restaurant audomar PGA also pushing forward hip du think des réseaux sociaux like question like New generation a New expectation is it just like l'ay temporary phénomène.

Luca Solca: no, I think that, for sure this goes down to how consumers, like to shop, but also this goes down to how. Competition in retail is evolving. What we've seen for sure is an escalation driven by the largest players, driven by of LVMH first and foremost in opening. Significantly better, significantly larger, significantly more [00:29:00] meaningful stores, which is putting pressure on everyone else. when you look at, the Dior flagship in Avenue Mountain, being 12,000 square meters, including, a museum, including some original,rooms of the door.

Including a private, penthouse where you can invite,very important clients with 12 people, at their service, including a cook and everyone else. Well, that defines a very significantly higher bar. And within that store you also find a cafeteria. You find the three gardens you find, whatever.

So. the Vutton store that is, being, rebuilt in New York, the Vuitton store in Milan, the new Vuitton store in Paris, and the mega stores that are popping up. all of this, whether you like it or not, whether it's consumers asking for it or not, you're teaching in a way or somebody's teaching consumers to expect.[00:30:00] 

Better and more. And, and if you don't do it, then you move into, a second class or third class. And so we are seeing for sure, many brands trying to emulate this trend and, for what they can, build better and larger flagship stores.

Robin Swithinbank: Interesting. Luca, we should, bring this conversation to a close, partly because I'm aware you may well have another. report to go and write before the day is out. But,let's conclude if we can, around golden rules. Luxury's always had golden rules, I suspect. and although the landscape is very fast changing at the moment, it's volatile as we've discussed. people still want luxury. The, the Lentheory of conspicuous consumption, remains. So what in your mind are the golden rules of luxury now in the here and now in 2025? And in what way are they different to those of years gone by,

Luca Solca: I think that, there's many golden rules. What I would like to point out, is that luxury is in a way, built on a paradox. [00:31:00] luxury is a fixed cost industry, so, you would want to be a bigger and bigger in order to sustain these fixed costs, very efficiently. But, luxury is promising people to give them something special, so that they become special in their own, turn.

And, uh, bigger can correlate with ubiquitous. And if we all have the same stuff, then it's not special anymore and it's not making us special anymore, which is, the issue. So, I think that, the most difficult, golden rule for luxury brands has always been, try and drive growth while maintaining perceived exclusivity.

And as brands become bigger and bigger, this, is more difficult. What I think is different. This kind of environment, is that, for the good part of the past 10 or 15 years, this has been achieved by continuing to increase the [00:32:00] product mix and by continuing to increase prices. I have a feeling looking for example, at how accessible luxury brands in America are doing.

that we've probably reached a ceiling, especially in this post yolo boom and in this silvering up boom. So I think brands will have to find ways not to become ubiquitous while at the same time not having as much pricing and,a great opportunity as they had in the past few years, especially if they want to remain relevant to middle class consumers.

David Sadigh: Luca, it's been a thrill to have you on the pod and to get to do this conversation in this format. Thanks so much for joining David and me the Luxury Society Podcast.

Robin Swithinbank: Never a dull day in luxury. So please do come again and talk to us once more.

David Sadigh: you sans match Lucas. 

Luca Solca: Thank you Robin, and thank you David.

David Sadigh: 

Robin Swithinbank: now I'm very pleased to welcome onto the podcast, Aude Degra SA Digital Luxury Group's Executive Creative Director. ODE has worked all over the world for premium [00:33:00] and luxury brands, including Mac Cosmetics, pi Dior, and Beats by Dr.

Dre scooping multiple awards along the way. At DLG, she now guides global luxury and lifestyle brands through digital transformation and creative innovation. Championing AI integration across branding, content design, and digital development mode. Welcome to the pod.

Aude: Thank you so much, Robin.

Robin Swithinbank: Nice to have you here. Now, it seems you sit at the intersection of luxury and digital innovation, so just how compatible is this really tangible world of hand craftsmanship with the much more ephemeral world of digital?

I.

Aude: That's a good question. So definitely, hand craftmanship is part of, the DNA of luxury brand. I don't think the ephemeral digital space and the tangible world of hand craftmanship are incompatible. On the contrary, I think they are completely. Complimentary, the digital world and tools, have the power to ize the world of [00:34:00] craftsmanship at so many level.

It can bring storytelling, give context and create emotion, before a crafted product is physically into their hands in, into the hand of the user. So you can, create an emotion. Before it gets into the hand of a person, you can think about innovation like, video, virtual try on for example. So let's think about this.

the consumer journey is vast and, I think innovation really is here to create emotion before people can really touch and buy the product before it's in their hand. as a piece of art, you appreciate much more a unique timepiece if you know the brand history, the heritage, if you understand the process.

So the digital world, the innovation world is here to help with all this. So innovation, the world of innovation seems really technical, I think, and distant, but for me it rhymes with emotion if I put it that way.

Robin Swithinbank: No, I think that's a good answer. and in many ways, I suppose what you've described is the sort of gateway into the luxury world, isn't it? The digital [00:35:00] tools that we have and have had for some time now, let's be honest. We've had these tools for a number of years now, which enable brands to introduce their products to, to customers, in advance of them ever actually seeing the thing or handling

Aude: Yeah.

Robin Swithinbank: person.

Aude: We wanna take the conversation onto a, the next level, And one of the reasons we've got you on the pod for this episode is to talk about Apple's Vision Pro.

Yeah.

Robin Swithinbank: Space age, mixed reality headset, if I've described that at all correctly, was released in the US in February last year

Aude: elsewhere last summer.

Robin Swithinbank: So we're now at a point where users and brands have had about a year or so to fiddle with it and to get to grips with what it can do. So first of all, for a bit of context, many of these things has Apple actually shifted now and what sort of strategic vision does it have for it?

Aude: Yes, you're right when you speak about a shift, actually, Apple's Vision Pro strategy has Undergoing a significant recalibration since the launch. first it was launched as a revolutionary product, and now I think as a [00:36:00] strategy is to adopt a more long-term approach. First of all, there was a lower than expected demand.

So the initial sales generated enthusiasm, 200,000 units were sold in the first weeks, but then demand slowed significantly afterwards. So the projected total, for 2024 was approximately, 420,000. So the primary barrier to this wider adoption, is a high price point. it's 3,490, 99, dollars.

So it's inaccessible to the mass markets and, Considerably more expensive than competitors,meta Qury, for example. So Tim Cook consistently presents it as an early adopter product for those wanting tomorrow, technology today. so it draws. Parallel with, iPod, iPhone, and Airpod to suggest a wider long-term vision, where success take time and iteration.

So [00:37:00] in this new shift and this new strategy, this involves recognizing the new status of Gen one and managing inventory. then prioritizing software innovation to enhance value. So Vision OS three is expected to be released in September, 2025. Further expanding Apple Intelligence, for example, capabilities, and they are now developing a more affordable non provision headset.

that we launched. We don't know exactly when, but, probably late 2025. And this model should be addressing the buyer of the price. question?

Robin Swithinbank: the question. I suppose the buyer at

Aude: Yeah.

Robin Swithinbank: does this mean they're also thinking very differently about who's actually going to be buying it? So

Aude: than everyday consumer, are we actually talking more about, a business execution, perhaps a business usage,

Definitely and, they have a two strategy because they're developing this more affordable non-pro provision headsets and at the same time, they are still focusing on an incremental update on the [00:38:00] current premium design. So they will upgrade with the M five chip, for example, enabling more powerful on device Apple intelligence feature, for example.

So there is a two distinct model, that will respond to different market segment and strategic needs.

Robin Swithinbank: Interesting. of course we're talking about this in the context of luxury and luxury brands. is this a device for luxury brands? Should luxury brands be taking it seriously?

Aude: Yeah, so my perspective is that, What's critical is understanding Vision Pro as part of the long-term vision rather than judging it solely on the initial adoption metrics. So Apple approach follow their, a established pattern, often entering markets with premium price product.

This strategy serves multiple purposes, so it allows them to test market reception. It positions the technology as aspirational. And we've seen this succeed with previous innovation like, iPhone, iPad, and Apple [00:39:00] Watch. Apple is playing a patient game as, manufacturing efficiencies improve. The price will decrease while production volume increase, making special computing accessible to, increasingly, broader audiences.

and this. Needs to be combined with Apple striking force. We know like they have 535 Apple stores spreaded across 27 countries, and region around the globe. So I'm particularly fascinated by, the diversity of the use case emerging. the platform's versatility is becoming apparent despite,its early stage.

Robin Swithinbank: And what makes, for me, the vision ProE particularly relevant for luxury is the ability to bridge digital experience with sensory rich needs and potential to detail that luxury brands value. talking about spatial computing. apple of course, as ever invents new language and makes some very big consumer promises, about immersive experiences. apple's gonna be giving us experiences that we've never experienced before, [00:40:00] which of course, historically we know it has. But if you're a luxury brand and you're used to dealing in the physical world, where, I mean there are very non-digital sensory experiences with luxury products. The touch, the smell, the overall sensation of handling something is something that, is surely very difficult to replicate

when you're talking about mixed reality, how in the world can luxury brands create an immersive experience that goes anywhere near replicating the in-person experience?

Aude: here's how, So this is a very, interesting technology because It can mix VR and augmented reality as well. So they are merging digital and physical. vr, which only, isolates the user and ar, which is used usually as, overlaying elements here.

It's really seamlessly integrates digital content into the user physical environment, sense to sensors, high resolution camera. But what's interesting for luxury brand is like the quality, like it's, the quality is [00:41:00] incredible. and also it respond to the user, movement. it can really react to what you're doing.

So something can turn the, where you are physically, it can really react to your environment. It's, it's beautiful as well, because even the, like the big type and tighter the shadow is on your wall. So it's, it really respond to the environment.it makes it completely immersive and it uses the eye, hands voice as primary control method.

So it's really intuitive, natural, and fluid. So it really finds, for me, immersion, it's not. Only a visual immersion. It's also a narrative immersion. So the user become an active participant. you can really virtually explore the brand heritage, interact with product. So it really creates a deeper engagement.

it's as I was saying, it creates more emotion and. The emotion for me, it create more memorable brand experiences as well. So, uh, [00:42:00] studies for example, suggest that this tip of deep immersion generates like more brain recall compared to a smartphone AR, for example. So it's a stronger emotional engagement, but of course the vision pro cannot yet.

I would say replicate, touch. But, it's not there to replace it, it's really about enhancing aspect where it takes Excel. Yeah.

Robin Swithinbank: don't wanna sound like a total Luddite, and I've actually not experimented with Vision Pro myself, but

Aude: Mm-hmm.

a scenario where I know I, I'm wearing a Burberry trench coat, or I'm picking up and I'm handling a luxury wristwatch. And through the Vision Pro, I could perhaps, if I'm wearing the trench coat. Maybe it puts me in a situation where I can see myself wearing the trench coat and walking about the man about town, how fantastic I look in this trench coat or with a watch or any, any other piece of jewelry, perhaps you hold it in your hand and perhaps

Yep.

Robin Swithinbank: the Vision Pro starts to give you lots of information about what you can sit, where you are holding it in your hand and you're wearing the headset at the same time and you're looking at the watch and it's, and it starts explaining to you what [00:43:00] everything does and how everything works.

are there applications such as that already? Who's using it and, who's doing it well?

Aude: Yes, definitely. there are so many interesting use case and that are really different. One from another. I can speak about a few I experienced and I really liked. Balenciaga, for example, was interesting one. it's, really enhanced. Interactive experience. So it was launches, July 24.

 it was the first phase from the first stage, the first phase of IT apps. It was really interesting because you are, in a de, you see what's happening and it's. So much more immersive. There is this, immersive,180 degree special video as well. it allow a user to zoom as a virtual catwalk.

It's, it was really interesting. HRO was really nice as well. It's a fully immersive experience At the front row of a dfi. So you can watch if it's a model on the left or on the right, you wanna follow, you are within the spectators. So it really brings you in the middle of it and it creates [00:44:00] this idea of, more exclusivity.

But the application I liked. So much was the Gucci, and and you really need to try it because there are so many good things in it. And I think they really explored a lot of capabilities and yeah, a lot of features. So there are those immersive video that are so interesting. So while you look at, a new campaign video, you are immersed in the environment.

 but they play as well with the gamification. For example, when I say gamification, it is just,like for the iconic product, the bamboo bag for example, they let you recreate gesture, so that,for the craftsmanship, so that you are really in the skin of a person making the bag.

So you really recreate the gesture. So it really creates a connection and bring much more storytelling, through it. Yeah,

to this? Do you have to be in store to experience this or is it if you own if you are in it,

Robin Swithinbank: at home, you can experience the same thing.

Aude: yeah, you can [00:45:00] experience the same thing. It's, it's really interesting and what I love about it as well is how, The experience is completely redefined a menu. For example, as you can think, in the real world, a menu like in a website, for example, here it's a waiting room.

You have a book in front of you, you can, to access to the different piece of content. You turn the page of a book. So the narration is completely redefined. A and, it involves space, gesture, gamification. so yeah, there is a whole storytelling there. That's so interesting. I.

Robin Swithinbank: can, I can tell you're very enthused about this. you are talking about it enormously enthusiastically, which is wonderful, and I get to experience it myself. So I'm trying to create a picture in my head, which is another sort of form of reality, to imagine what it must be like to use one of these things.

But,when it comes to, advising. Luxury brands on how they might, how they might engage with Vision Pro and how they might integrate it into their communication strategies. what are you saying to them? what do they need to do differently compared to, I don't know, just creating a website?

Aude: [00:46:00] first of all, I would say there is no one answer for all. and whenever you create or any innovation, the luxury brand should go back to. Who they are, what they wanna say, and how this technology can really, help them, depending on what they wanna focus on. Is it about exclusivity?

Is it about craftsmanship? Is it about personalization? What do they want? it's a powerful tool, but it needs to be used wisely depending on the brand. So first I think there is that and, but yes, immersive narrative experience. it's really used to transport user into, the brand universe and heritage.

You can see really a different use case like, for example, like this, immersive narrative, if, the brand want to speak about their heritage, for example, you can be transported into unrealistic, like emotional or abstract environment you can think about. Tours, for example, of manufacturer brand museum, flagship store.

So it's another use case. I love the [00:47:00] product. Augmented, product visualization. I think, the Gucci one is really amazing. you bring it to you, you turn it, you change the color, you tap twice and it opens. And, I think it's really nice. Of course,It's really, but it's so well done.

I think it really creates an emotion and trigger the wheel to then see it, in reality. Virtual trans is interesting, but it's not adapted for all brands. So it's really depends. in some of the application, I liked the, digitalized archives documents. I think it's beautiful.

Like instead of going to a museum and see a little thing like looking at the drawing, I think it was Gucci as well. you could look at the drawings of the creative director. But it was so detailed, you can see it you feel so small compared to them.

There is a difference of scale, which is so interesting. I feel it really creates animation. It really depends on the brand. But, thinking as well about. As I was speaking about the defi, like giving access to exclusive content, I'm thinking as well about [00:48:00] when for high-end luxury product, like thinking about a watch brand, which is really expensive.

People buy the product and then they wait for month. What about, you know, like application where you can see, like the process while you are waiting for your product. you see the process of, it's getting prepared. You can imagine like. First connection with it, seeing it getting built, for example, just to compensate this waiting time.

there are really a lot of use case, but it goes back to,

Robin Swithinbank: all your trade secrets ordered at this point, which, I'm, I must, I'm must stop you before you give away too much free

Aude: okay, I stop.

Robin Swithinbank: it's interesting all of this, but I must admit that there's still part of me that remains skeptical

Aude: that there has been lower demand than Apple initially expected.

Robin Swithinbank: So if I'm a

Aude: Yeah.

Robin Swithinbank: brand and I'm thinking I must invest in this, simultaNIOusly there might be a, a natural caution.

Aude: says, I'm gonna invest a lot of money in developing, all this software, all this experience for customers using Vision Pro. but what if the technology just proves to be a flash in the pan?

Robin Swithinbank: what if I end up, am I gonna be spending my money wisely? What do you [00:49:00] think? Do you think is this product, is the Vision pro here to stay? And is there going to be a useful application for luxury brands for the next 3, 5, 10 years?

Aude: So even though the Vision Pro is experiencing slower start than expected, I think it really offers luxury brand and unprecedented platform to reinvent the customer experience through immersive digital environment to translate the heritage, the craftsmanship, to strengthen like the perceived exclusivity.

it really. Push the boundary of digital engagement, and I think the one who choose to invest in this new territory now could be pioneer of a new era of immersive luxury. So I don't really know a hundred percent if it's here to stay, but I know if you don't try, you won't be the one. And yeah.

Robin Swithinbank: it sounds like I need to, um, break outta my ludite tendencies and get myself down to, certainly the Apple store, but [00:50:00] maybe even to some luxury boutiques, which are gonna be integrating this technology

Aude: Mm-hmm. stores,to enhance the customer experience and maybe, Yeah.

Robin Swithinbank: The scales full from my eyes. All. It's been genuinely eyeopening talking to you and exploring this, this niche, but potentially very rich subject. Thank you so much for being with us. we look

Aude: Thank you. Thank you so much, Ruben. 

Robin Swithinbank: And now I'm very pleased to welcome back onto the Pod Benedict Suter d lgs partner and international client director for this episodes on the download Benet. What's in the download for this app?

Benedicte: Hi, Robin, great to be back for this episode. I'm going to share some of the key findings from our latest Compass Q1, 2025 report, so very fresh.

Robin Swithinbank: Compass, remind us what's that?

Benedicte: Compass is our proprietary data analytics tool that tracks over 150 luxury brands across China's digital ecosystem. We look at, multi-platform analysis to provide like unique insight, and we bridge marketing performance and e-commerce data, which is something that [00:51:00] most brand actually struggle to connect.

Robin Swithinbank: it sounds like it creates an enormous amount of data. Let's see if we can, pull out one or two of the highlights. What's in the highlights reel.

Benedicte: Okay, so the first to note is that our Q on data shows an increasingly star polarization in the Chinese luxury market. 61% of brands experience revenue declines of more than 10%. About 21% actually managed to grow by over 10%.

Robin Swithinbank: Okay. That's just quite significant disparity. I'll buy two of the big winners and losers. I.

Benedicte: Ready to wear continues to show remarkable resilience by 10% year over year while watches is dropped sharply by 32% year over year. And bags also decline, but only by 13%.

Robin Swithinbank: Interesting. I mean, that gives us a pretty clear indication of where Chinese consumer interest currently lies. Um, are we seeing the same thing in marketing trends and a direct correlation between marketing and e-com?

Benedicte: not always, actually. A few brands that have achieved growth on the marketing side in Q1 2025 [00:52:00] versus Q1 24 have actually recorded like declining sales, across T-Mobile and other channels. Breitling is an example, for instance.

Robin Swithinbank: Give us a couple of examples of brands that have really nailed it.

Benedicte: So Qeelin the jewelry brand clearly stands out as a winner for us. Compass shows us that they've climb from the 15th position in marketing rankings to the eighth in Q1 and from the 11th to the sixth in e-commerce performance due, we think to the activations around the lunar year, and then we also have luve.

And Max Mara, I've gone like they have done pretty well for themselves too. Louis jumped from 21st position to eighth place by leveraging the Ambassador Wong WebU across all platforms while Max Ma I climbed from 48th to 29th, in the marketing ranking through a multi-event strategy spanning the entire quarter.

Robin Swithinbank: you picked out three there, but it sounds to me like there aren't many brands enjoying big gains at the moment. Certainly not. When those two are correlated, [00:53:00] is that, is that the right way to look at it?

Benedicte: Yes, you're completely right. Only are very few and I would add ary and van cleef and arpels to Qeelin, which are managing to bridge the gap between marketing and e-commerce performance. Highlighting just how difficult it is to bridge the gap into this market.

Robin Swithinbank: Yeah. And of course we know this is all against the backdrop of a market that's yet to emerge outta the covid chill. and that continues to give luxury brands a headache, which may be the underlying story here in any case. But, Benny, let's leave it there. Great talking to you. thank you as always for your insights.

Benedicte: Thank you very much, Robin. 

Robin Swithinbank: Thank you for listening to the Luxury Society Podcast. If you've enjoyed this episode and would like to hear more, don't forget to subscribe. And if you want to go deeper into any of these topics, check out luxury society.com where you'll find stories, insights, and profiles that unpack what's going on in the world of luxury right now.

I've been your host, Robin Swithinbank, and this has been the Luxury Society Podcast available on Apple, Spotify, and wherever you get your [00:54:00] podcasts.