The great luxury reset: how to beat the chaos with Professor Stéphane Girod

In this episode of The Luxury Society Podcast, Robin Swithinbank and David Sadigh, Founder and CEO of DLG, are joined by Professor Stéphane Girod, Professor of Strategy at IMD Lausanne and Leader of IMD’s Luxury 2050 Initiative, to examine what the great luxury reset actually demands of the industry's leaders.

The engine of growth that powered luxury for three decades, built on globalisation, unjustified price hikes and an emotional playbook, is sputtering. Girod argues the industry faces a structural shift rather than a cyclical correction, shaped by geopolitical fragmentation, the rise of Chinese brands and badly eroded consumer trust. The conversation moves from macro forces to granular strategy: what agility genuinely means for a heritage brand, why functional value is making a comeback, and how AI is beginning to reshape both the customer experience and back-office decision-making in luxury.

Tune in for:

• Why the 30-year luxury growth model is structurally broken and what that means for conglomerates accustomed to double-digit returns
• How brands can rebuild perceived value without retreating to volume or cutting prices
• What the luxury industry's digital talent drain reveals about a deeper organisational problem

Brought to you by DLG, in partnership with The 1916 Company.

The 1916 Company is reshaping the world of collectible watches and fine jewelry, uniting a global community through trusted expertise, editorial excellence, and client-first experiences. With more than 20 boutiques and Collector’s Lounges worldwide, the company bridges new and pre-owned markets across collectible watches, fine jewelry, and designer handbags – supported by dedicated advisors, expert watchmakers, and seasoned journalists. As majority investor in independent manufacture De Bethune, The 1916 Company holds a singular position at the intersection of retail, editorial, and community.

www.the1916company.com

Produced by Juliet Fallowfield, Fallow, Field & Mason 2026 

Transcript

Stephane Girod: [00:00:00] now we are in this,model of luxury of delirium, of emotions and emotions at all costs. I think that what people realise is that emotions are fluff, The engine of wealth creation that propped up the luxury models at scale of the last thirty years is suddenly sputtering.

 Globalisation has considerably slowed down. I'm not arguing it will disappear, but we're going to have much more, regional fragmentation by spheres of influence. what has also sapped a little bit the credibility of luxury brands in the last four years have been these incredible price hikes for no additional perceived value.

Speaker 9: This episode of The Luxury Society Podcast is brought to you by The 1916 Company. [00:01:00] What started as a family jeweler in Philadelphia in 1916 has grown into a highly regarded international business. Today, The 1916 Company has 25 locations across the United States, Asia, and Switzerland, as well as a powerful e-commerce site.

Now recognized as an authorized retailer of the world's finest watches and jewelry and a global leader in pre-owned, it continues a conversation about how collectors buy, sell, and trade that's been going since 1916. Find them at the1916company.com.

Hello, hello, and a very warm welcome back to the Luxury Society podcast, a podcast created by Digital Luxury Group to peer through the decorous fronds of the luxury jungle. I'm your host, Robin Swithenbank. 

David Sadigh: and I'm your co-host, David Sadigh.

Robin Swithinbank: David, as we record, it's a couple of days since François-Henri Bennahmias, a season two guest on this podcast, announced, well, it's pronounced [00:02:00] news, but it's spelt N3W5. It's a new watch brand. There's a lot to unravel in here in the story, but, uh, two questions for you. First, what do you make of the name? And second, do you think there's space in the market for another watch brand making 20,000, $60,000 watches?

David Sadigh: bet is on Benamias. The bet is on the network he built, uh, through the years at Audemars Piguet, on the fact that he was an early adopter and someone who had, like, a strong impact on the development of Audemars Piguet, first in the US and then globally. Uh, but this is the exact type of stories that I think coming from someone else, we wouldn't be, like, giving much credit to it.

So no, I think all the bets are on François-Henri

Robin Swithinbank: Yeah, I think that's true. Uh, without wanting to sound too portentous, I think he's one of the last great showmen of the watch industry. He's this sort of Pied Piper, Willy Wonka figure. He's magnetic, he's highly intelligent. Uh, some people I really respect think he's a genius. That's a, you know, difficult thing to quantify.

So when he says he's invested 15 million Swiss francs of his own money in establishing The Honorable Merchants group, and he's raised a further [00:03:00] 30 million to kickstart a watch company, at the very least, uh, I'm ready to pay attention. I don't get the name, uh, no matter the inspiration of the compass points, and I'm not really convinced by the alphanumeric logo either.

But, uh, I think he will deliver on his promise of original designs, groundbreaking tech, um, and I don't struggle to believe that he'll pull in the big names to help him launch his first collection, which, uh, isn't du- it's not due until Dubai Watch Week next year. There's a lot of time to pass before we see the results, of his vision.

But, uh, he has an incredible little black book. Um, when I spoke to him last week, he told me the usual suspects, quote unquote, "had been engaged in the project." So, uh, he didn't add any detail, but, uh, if one of Kevin Hart or Tom Brady isn't involved, um, I'd be quite surprised. it's also an update on the, um, the episode of the podcast we recorded with him last year, which, if you're listening and you missed it, is well worth a listen back.

Uh, he thought he'd be ready to launch his brand much earlier this year. In fact, he'd, uh, he told me that it would be February, I think February the 3rd was the original target date he had, and he said, uh, it'd [00:04:00] be one of perhaps four watch launches, acquisitions, and he had some investments he was planning to make as well, um, that he'd be adding to his, his new group's watch vertical.

So when I spoke to him last week, he told me the plan had been, uh, per the rumors, to acquire De Bethune. Indeed, it was one of, uh, watchmaking's worst kept secrets. Um, but he said the deal had gone south. Uh, he said there'd been two other brands he'd planned to invest in, um, but they had instead come to this sort of mutual agreement, that he wouldn't.

Um, that's all tittle-tattle I guess, but, uh, it's part of the narrative nonetheless. he also said he was, uh, just about ready with a jewelry and that subject to investment that would probably come later this year. but he kicked the fashion can down the road, uh, another one of his verticals.

So, uh, for me, Ben Ames is always one to watch. What did he make of the De Bethune news?

David Sadigh: Well, I think, you know, the fact that both news came at the same time, Antoine Pin confirmed as the CEO of De Bethune, and on the same day, uh, Benhamias launching his new brand while everyone was, like, talking about the fact that he might take over last year, uh, De Bethune.I think it's, an interesting timing.

Now, this being said, I don't [00:05:00] think that the new brand being launched by, uh, I think the timing is expected for late next year, so we are talking about, like, uh, end of 2027. I was quite surprised about the price point, more than 20,000, speaking of, like, thousand of pieces being produced.

I don't remember any brand in this bracket being launched from scratch with high volume. Uh, if you think that the Richard Mille and other type of brands who were, uh, positioned at the beginning in those type of price range, those were brand who started with, uh, I think, m-much more limited, uh, uh, production.

Uh, but once again, as you said, maybe there are, like, top-notch celebrities around. Maybe they will, will be able to go against the grain and prove us wrong. Personally, I think it's an extremely complicated, challenge to build a brand from scratch. and I think that, taking over a brand, uh, and an asset, uh, such as De Bethune would have been not only a shortcut, but also a way to significantly increase the chances of success of the watch [00:06:00] venture of the honorable merchant group.

Robin Swithinbank: Yes. Uh, good to see Antoine Pana back on the, back on the scene, and we wish him well. Universal Genève, of course, is coming into that price point, um, although of course it has a heritage which Nius, uh, does not, uh, as well as a name which, uh, I think pulls on the heartstrings, which again, I'm not sure Nius does.

But, uh, time will tell. Brands grow over time. Um, picking up on another past episode, uh, I don't know whether you saw the news that Polestar is to be banned from selling its 2027 models in the US. The US Department of Commerce is, it's called the Bureau of Industry and Security. They've got this new connected vehicle rule, and this is gonna restrict the sale of new cars with both hardware and software links to China or Russia, was the expression I picked up.

What in the world did you make of that?

David Sadigh: Like pro-protectionism again

Robin Swithinbank: it's hyper-protectionism, isn't it? Uh, at, at one level. I mean, the US market is not huge for Polestar. It's got a much bigger footprint in Europe. But, the impact on Polestar, I think is, is potentially negligible relative to the impact on the luxury sector [00:07:00] were this protectionism to be extended.

We, you and I both know there are plenty of luxury brands out there which are sourcing components from China, uh, and they may well be quaking in their boots a little bit this morning.

David Sadigh: Yeah, the signal is quite bad, and you can see it, uh, across the board, uh, in other industries as well. couple of months back, uh, Meta, the, the parent company of Facebook, announced the acquisition of, uh, AI, a Chinese startup that was going extremely fast called, uh, Manus. And they integrated... started integrating as part of like, uh, uh, Meta, and now the Chinese authorities have blocked the transaction.

And, uh, basically, uh, apparently there is a group of Chinese shareholder that are, like, uh, going to buy Manus back from Meta. So I think the word you used is, uh, uh, probably the right one. This is not protectionism anymore. This is like hyper protectionism. And this is maybe the beginning of something much broader

Robin Swithinbank: Yeah. Oh goodness, very few luxury products are connected, uh, so it's hard to see how the logic behind the ban would be extended. But then, hmm, how do we put this politely? It's al- [00:08:00] not always wise to rely on logic, perhaps we should say, when forecasting the current US administration's next move. Um, sticking with the US, uh, one thing I wanted to pick up on was the World Cup.

Many congratulations on Switzerland's win. It's great to see you wearing your Switzerland shirt as we record this interview. I, I, 

David Sadigh: And I, 

was up at 5:00

Robin Swithinbank: Well, England play, uh, about four hours before lands. Uh, so, uh, at the moment both our teams retain interest, but let's not get ahead of ourselves.

Uh, we believe in Harry Kane and all that. 

David Sadigh: by the way, speaking of Harry Kane, I've noticed that he has a quite, uh, impressive collection of watches. Of course, many soccer players do have an impressive collection, but, uh, his collection seems to be like probably one of the best watch collection of a soccer player. Did you see it?

Robin Swithinbank: I don't know where he gets the money for it. Extraordinary

David Sadigh: multiple Patek, some like, uh, very rare edition and so on. So in my mind I was like, hey, this is like, uh, maybe the famous Sir Harry Kane that is going also to, uh, the level of enthusiasm for like, uh, Swiss [00:09:00] watchmaking in the UK.

Robin Swithinbank: Uh, I know he's very well advised. I met him once quite a long time ago, actually. It was 2017 or 2018. I think I met him the spring of 2018 before the Russia World Cup, and, I've never had an interview subject who had quite such a retinue of hangers on. I think I was one of about 10 people in the room, and eight of them were looking at me intently to make sure I didn't ask the wrong question.

It was really very bizarre. Anyway, that's another matter. I wanted to,

David Sadigh: why you decided to do a podcast instead

Robin Swithinbank: to th- with o- with only you looking at me. Uh, I, I think the World Cup has been an interesting spectacle from the perspective of a, a luxury gazer. We had Julian Tornare, CEO of Hublot, on the podcast earlier this year, and I've spoken to him at several other occasions as well about this decision that Hublot made not to sponsor the World Cup this year.

Hublot had become pretty synonymous with the World Cup, chiefly through those Big Bang-shaped fourth official boards. I suspect we both know plenty of people who don't know Hublot, who don't know the Swiss watch industry, but recognize Hublot because of those fourth official boards.

David Sadigh: Absolutely

Robin Swithinbank: Now, Hublot dropped the partnership this year, and sports marketing analysts [00:10:00] I've spoken to estimated FIFA would have asked Hublot for $50 million to continue the sponsorship, with the cost to the brand thought to be the same again once activation's been taken into account.

And I'm sure that Hublot will be hurting as a result of this. Um, they are working with Mexico and with Japan, and there may well be other national football teams of each, I should say. Uh, and there may well be some local rub-off, uh, from those partnerships, but it's having no impact globally. I've not seen Hublot in the, in the World Cup context at all this year.

David Sadigh: But you have se- you have seen Rexona instead

Robin Swithinbank: Um, but this is it. I've seen lots of Rexona, which is on the fourth official board, and I think my, my theory, my argument would be that although Hublot will be hurting from it and loses out to an extent, I think FIFA is losing out every bit as much, if not more. Um, because I think from a brand perspective, this World Cup feels very mainstream, very high street.

It's Budweiser, it's McDonald's. It's not premium. It's certainly not luxury. what do you think? supermarket deodorant brand takes the place of, uh, of, of Hublot and reduces the brand profile of the World [00:11:00] Cup. Is that fair?

David Sadigh: I mean, th-th-that's an interesting lens in term of like pure sponsoring and visibility, but then if you look at the hospitality part and the price of like ticket, I think it was like more than $250,000 to attend in a lodge the, the final, uh, of the World Cup. And, uh, I'm under the impression that a lot of like the budget had been also moving towards like more experiential element and so on.

A bit like in Formula 1, right? Where it's not just about the logo, it's not just about the sponsorship and so on. So it would probably deserve to have a, a deeper analysis not taking into account only the billboard and the ads but, uh, also the overall level of like, uh, yeah, curated experiences that have been like created by brands around the, the event.

 the only thing I know is that the cost is extremely high. As you remember, many cities in the US decided not to host, uh, World Cup, games. the level of investment that was required either to renovate the stadium and so on were extremely high. We have seen that the FIFA was extremely tight on [00:12:00] control and you probably follow the Heinz story, uh, ketchup, uh, which was basically not visible they tried to hide the logo on all the ketchup, and Heinz, uh, answered to that in a very clever way by, making some ads on Instagram to show you don't need to see the logo to recognize the leader.

I think it was very clever. Uh, but yeah, I FIFA is a bit on a rollercoaster. They added this, uh, break also within the game to try to probably increase the monetization potential from like a sponsor and TV advertising and so on. And, uh, we will probably know in a couple of weeks what is the overall results of all that.

My perception is that those sports element, again a bit like Formula 1, are becoming, uh, let's say bigger and bigger and, uh, I wouldn't be surprised to see this, World Cup as setting a new standard in term of monetization. But yes, indeed also at the cost of maybe some smaller brands, uh, which couldn't afford anymore, uh, to be, uh, partnering with the FIFA and Hublot is probably one of them.[00:13:00] 

Robin Swithinbank: Well, that's really interesting, I'd love to pick that up with you in a couple of weeks' time, uh, when some of the data's a little bit clearer. Um, we should, uh, wrap this up. I mean, the only other thing I thought to mention is that the Italian Damiani Group has completed its buyout of Baume & Mercier since we last spoke.

Uh, that of course had been sold off, uh, by the Cartier owner, Richemont. Uh, it's pretty noteworthy in a week when Chanel bought Charvet not long after LVMH divested itself of Marc Jacobs. These groups are shifting shape quite a bit, uh, at the moment, and we might see if we can get Baume & Mercier on the podcast to, to unpack that one for us at some point.

So, uh, let's leave that one percolating for now. David, we should, move to our guest interview. Bit of a different one, this one. Uh, no chief exec, no brand voice. instead you've invited an academic on. Give us a quick introduction to Stéphane 

David Sadigh: Well, Stéphane Giraud is quite well known within the luxury industry as, uh, being a professor of strategy and organization at IMD in Lausanne. IMD is, uh, considered as probably one of the top three, top five executive education institution in the world. Stéphane has been behind a program called Reinventing Luxury.

I've been attending the [00:14:00] program, uh, for, uh, several years. I've been also a speaker in the program, and I have to say this is one of the best program, uh, not necessarily I, I've-- the year I was the speaker, but I just mean that in general, I think it was an excellent program. he managed to bring in, the CFO of Chanel, who is not speaking that often publicly, many other, like, industry leaders and so on.

And I think Stéphane brings some interesting blend of, like, understanding of the macroeconomic environment, but also of organizational design and what are the implication in today's world to better adapt to the level of uncertainty and the risk. So yes, I think it's extremely interesting for us and obviously for our listeners to broaden a bit the horizon and get the view of an academic, on the evolution of our little industry.

Robin Swithinbank: Amazing. David, I think you spared me a job there. Um, I thoroughly enjoyed the conversation, partly because it confirmed some of my bias, but also because it corrected a lot of my thinking too, actually. I learned a lot. Well, look, we recorded our chat with Stefan last week, and here's how we got [00:15:00] on

 so it's our pleasure to welcome to the Luxury Society podcast, Stephane Giraud, a professor of strategy and organizational innovation at IMD, the International Institute for Management Development in Lausanne, Switzerland.

Stephane, very warm welcome to the podcast. Thank you very much for joining us, for coming on. How are you?

Stephane Girod: Uh, very well. Very well. Thank you. It's a pleasure to be with you, and, uh, I look forward to an interesting, conversation

Robin Swithinbank: Well, let's get going. Uh, you specialize in the transformation of large businesses to suit more volatile and fast-changing environments. Goodness knows we're in one of those at the moment. The temptation for luxury businesses is to believe the world has never been more volatile than it is now, and that each new day brings with it the high possibility of a new crisis.

Are they right to believe that, do you think?

Stephane Girod: I think, every period has had their, its turbulence, right? last week I was in a country where bombs are falling. So, there's, degrees and degrees of turbulence. But I think what's important is what actually business [00:16:00] leaders do with that turbulence.

and I think all the work I've been doing, with my first book, Resetting Management, a few years ago on the topic of business agility, shows that the difference between, rigid and, agile firms is that, rigid firms at some point stop being relevant and adapting to their new circumstances and, as a result become irrelevant and then it's their demise. What I find interesting in today's times for the luxury industries is that, you know, we've lived, a paradigm shift, in the late 1980s and early 1990s, when we had a little bit the contemporary luxury book invented by LVMH mostly, but also, followed by Kering, by Richemont, that replaced the older, luxury model that was much more artistic and,based on style and small volumes and [00:17:00] mostly handmade.

Robin Swithinbank: And less global? 

Stephane Girod: Yeah, or, or le- or let's say had an international outlook for a small niche of customers what the contemporary luxury playbook has done is to really make luxury, highly attractive to a huge mass of people, right? 

Robin Swithinbank: Democratization 

Stephane Girod: more democratization. And, how it has done that is through, 24/7 everywhere communication and marketing accelerated by social media in the last, decade or so.

more mass pro- production, more artificial rarity, a greater attention to financial results, the control of the retail experience because this model has along the way killed a little bit the, wholesale retail network that, used to be so fun and so diverse, so little by little, and I was recently in [00:18:00] China for my, new research project, on the emergence of Chinese luxury brand, and if you get into a luxury mall in China, you would like to cry because everything looks the same, 

Robin Swithinbank: Oh, really? right?

Stephane Girod: all the brands, it's the same materials, it's the same colors, it's the same logos. It, it, it's, it's totally sterile

Robin Swithinbank: A homogenous approach to luxury and luxury design

Stephane Girod: Yes. So, all this has come, if you like, with pros for the brand owners because, they've become very, very powerful and global phenomena. but at the same time, it has to some extent started to dilute, the relevance, of luxury. So th- this era of turbulence, I think there's a gradual realization that we are coming to several rupture points and that adaptability, entrepreneurship, innovation are once [00:19:00] again being, the keys of the, of the game.

So why is that? So I would like to really, articulate a few, important shifts that from my research I see, emerging. I think what luxury has been really propped up in the last 30 years, if you look at some statistics, the sales revenue are three times larger of all these industries compared to the 1990s.

It's in fact because of globalization. the world is also-- the world's GDP is three times bigger than what it was in the '90s. So an extraordinary wealth has been created in the world. but what we're seeing now, because consistent with economic theory, globalization and its returns are usually unevenly, distributed So we're seeing a massive amount of, social polarization between more [00:20:00] and more, an economic set of winners, and the, mass of the population that are, struggling with cost of living, inflation, et cetera.

This polarization also manifests itself in the geopolitical rivalries, between, of course, on the one hand, the United States, which hegemon has been called into question by the rise of China, its, impressive, dominance in many sectors of the future, with a Europe that's suddenly caught in between, but you could also see from many angles in decline, right?

And it's very important to remember that the strength of European luxury has been built on a certain amount of cultural and economic power, right? As these are eroding, the, country advantage of the Swiss-made, [00:21:00] French-made, or Italian-made is also, undervalued or could become undervalued. the second element, that comes to that is the, the fragmentation.

The paradoxes of globalization was that it has put so much pressure on conformity that in reality social groups are re-fragmenting. I don't know if you read a few weeks ago the article in The Economist about the explosion of the global cultural and media industries, to a return for a much higher interest to local content.

And this is also going to support the expansion nowadays of American brands and in particular the rise of Chinese brands. Because it's completely untrue to say that the luxury market in China is declining. [00:22:00] It is declining for Western brands. Why? Because emerging local brands are growing and taking market share from a slower growing market.

this is the, evolving trend,

David Sadigh: Stéphane, just before you move forward, one question here. Do you believe that basically we are starting to approach the end of this globalization? that now most of the growth is going to come, without disappearing of course, but is going to come more and more from, I would say, regional and more local or national brands

Stephane Girod: So, what I'm seeing is, Globalisation has considerably slowed down. I'm not arguing it will disappear, but we're going to have much more, regional fragmentation by spheres of influence. in some ways, consumers will benefit. In others, they will lose. Let me give you examples. The Chinese consumers are enchanted to be [00:23:00] able to buy, locally born brands that, for some of them, resurrect ancestral traditions, but for most of them are resolutely inventing the future, huh?

I think in Europe, we as consumers are in direct danger to be losers because, what I'm reading is more and more the European Union is going to curtail and erect new, protectionisms toward Chinese brands. And what I saw, in China, and you also go to China a lot, is that where are, including in luxury, the best levels of technological innovation?

They are in China. I mean, our iPhone, when you look at the new generation of the Huawei mobile phones, it's the Middle Ages, right? But we've been led to believe that because it's Chinese, it's, risky, [00:24:00] it's not safe. Huh? But our European bureaucrats are suddenly waking up that actually we are equally dependent on American technology.

What is better, right? Same thing will happen with automobile because the innovation of Li Auto, NIO, Li Auto are just so generations ahead of what our Volkswagen is going to offer, right? So we are going to pay the price of, bureaucratic incompetence and managerial leadership,preference for preserving the status quo as opposed to innovating.

And why innovating? And luxury brands are also trapped in that paradigm. they were so successful that, it was never the right time to change, right? But, a lot of what is changing is that we're moving to business model innovation, ecosystem innovations, not just [00:25:00] incremental small product innovations, right?

And why has, Volkswagen and the EV in Europe failed is because they never bothered to solve an essential customer pain point, which is charging in Europe. 

Charging in Europe doesn't work

David Sadigh: J-just on the point of pro-protectionism, Stéphane, you mentioned China, but the reality is that just now, two days ago, the European Union has imposed a new taxation on, Swiss steel, and we are going to be, in Switzerland, treated as Turkey. So my understanding is that with the same type of, tax rate, because we are not part of the European Union, my understanding is that the world is moving back towards more protectionism and that obviously China is the tip of the iceberg.

so just following what 

Stephane Girod: And America is equally un, un, unashamed of, their own, tariffs and semi-tariff barrier. Yeah, so I totally agree with you

David Sadigh: And, and my question for you is that do you feel it's a temporary trend that is like probably influenced by the [00:26:00] current, American administration? Or do you think we are really to be, heading back to this type of more longer term protectionism measure?

Stephane Girod: Yeah, I think the problem has been caused by, a growing competitiveness, innovativeness, productivity gap, that, China has managed to, overtake everybody. Although the American productivity is considerably higher than the one of Europe. The, the real problems, are for Europe, I think the, protectionism might continue, but the real implication we have to understand is that the engine of wealth creation that propped up the luxury models at scale of the last thirty years is suddenly sputtering.

And that means, much more tension on the growth pace and range of these, big conglomerates in particular. the growth rates are unlikely to be, returning [00:27:00] to what they were. that's why I see a, a structural, not just,a temporary change in the growth rates and the consumption patterns of, customers in the world, just because an AI will accentuate the pressures on job creativity, who wins, who loses in the race for, reskilling, upskilling, and mastering the technology.

Robin Swithinbank: Full stop. Let, let's, consider all of this. I mean, this, this is quite a picture that we're painting. There's a, there's a very clear landscape that you're describing there. If, if in a very unlikely parallel universe I'm a, a luxury brand leader today,

 of an s- of a, of a, of a legacy brand with, with deep roots and heritage and all these things that they're looking to protect

and to perpetuate into the future, what, what-- how do I need to respond to this?

Stephane Girod: I think what's really important is to, to be truly agile or future-ready. 

Robin Swithinbank: What does it mean to be agile in this, 

Stephane Girod: It,

well, 

it doesn't mean to change all the time, and it doesn't mean to be fast. [00:28:00] What it means rather is that, in this type of world, you want to give yourselves options, options and room to maneuver if your circumstances change.

If you are only obsessed by your heritage, your icons of the past, and you stop inventing for the future, you actually are choosing one over the other, and you might lose out, So to get out of those,ditches, you have to think about what's the place of forward future-looking innovation in our business.

So it can take many forms related to circularity and sustainability. It will take many forms related to business models, and not 

Robin Swithinbank: it's about product, isn't it? I mean, if I'm Hermès and I'm making a, a Birkin handbag or I'm Audemars Piguet 

Stephane Girod: and

it can be products depending on the companies because companies like Hermès or Rolex or Patek Philippe or Audemars Piguet that are [00:29:00] mostly selling,iconic products, yes, but that were invented so many years ago and that they m- they might create fatigue over time. And if there are not the next models, then they might be in trouble.

Robin Swithinbank: So they would be rigid in that case, appealing to a new demographic, or is it simply just that the consumer has changed in their appetites and their posture?

Stephane Girod: Yeah. So , the, the consumers have, also changed in their posture. I think what has also sapped a little bit the credibility of, luxury brands in the last four years have been these incredible price hikes for no additional perceived value, right? And how do you, create additional perceived value?

And here it depends on the brands, and it depends on the sectors. The fashion industry has lost credibility because what they produce, by and large, and here I, we could make also differences, but is [00:30:00] difficult to wear and therefore is overpriced in customers' eyes.

Why is that? Because gradually these companies, for financial reasons, have realized they are better off to sell accessories which are much higher margin than clothes, okay? So little by little, that, clothing environment has stopped being their priority, and they're losing that factor where, they could be attractive because they're not just selling bags, but they were also selling clothes.

So revisiting, the wearability, the cut, the fact that fashion should be about dressing people so that they look good in different moments of their lives is critical, to become, more forward-looking. In other contexts, it's going to be business model innovation, right?

 So for example, I was talking about the luxury automobile world. It's how do we solve customer pain points around, charging, [00:31:00] around, interacting with the brand, and, and these are other opportunities for, creating more agility and future-looking. So depending on where the brands come from, they will have to, caliber a little bit, is it product innovation?

Is it more business model innovation? But definitely trying to create new things, and guess what? This is riskier. It's costlier if it doesn't fly, and that can also explain why in a financial logic, conglomerates little by little have stopped innovating for the future.

Robin Swithinbank: I, I-- you've talked about value perception, and this is, is so critical, and it's something that we've returned to on this podcast a number of times as, and as you've, as you've referenced, brands have pushed prices so high since the pandemic, and there is a real value,problem as far as the industry is concerned.

Is this, partly about coefficients? a lot of the luxury brands are operating at sort of coefficients of seven, eight, nine, 10, trying to protect these profit margins. is the luxury sector, the [00:32:00] establishment luxury sector, going to have to pull back on that a little bit, reduce the coefficient, and say, "Our profit margins are gonna have to shrink slightly in order to accommodate a consumer that is a little bit fed up with being charged so much for some of these products that were once attainable"?

Stephane Girod: Well, in my new book, "Purposeful Luxury," so, coming out, coming out in September, I look at, the answer to your question, looking at a sustainability lens. and if you look at the sustainability lens, the more you sell, and therefore to sell more and more volumes you will need to reduce the prices, the more negative impacts a brand creates.

So going back to,volumes, and volumes growth as we knew it, is not going to probably cut the mark for, meeting those environmental,problems that we're facing. and we have for a lot of, [00:33:00] materials, real natural resource constraints. Some of them are caused by environmental problems, some of them are created by shortages.

So can you-- can one really reduce the prices? So going forward, there are other alternatives to that, you can make your products more accessible by orchestrating new business models, such as, renting, sharing. collectors could actually, mm, put their products on loan, on a brand's platform via, of course, a, a, a security insurance.

but that would be maybe cheaper for customers. It's an access to a service, but not necessarily based on ownership. 

Robin Swithinbank: Re- the rental model is a really

challenging 

Stephane Girod: a... Because we know from, we know from, all the lifecycle analysis that are, conducted gradually is that the impact of [00:34:00] collections on environmental and negative impacts is high.

Because to justify the negative externalities that every product creates, you have to use it a lot in time. If you buy products that are in a safe or in a drawer for hundred of years, rarely used, they don't turn that into positive impact sustainability, right? So this could be an option for 

brands to 

Robin Swithinbank: I, I struggle with it a little bit.

 the watch brand Breitling tried it about five years ago, something

like that, I think. they talked about it, they tried to launch a project, and I don't think it even got off the ground. I mean, it was,

it's, uh, it's partly cause it's counterintuitive, but also because it's so, it's just so difficult to manage, because of insurance, because of shipping, because of damage.

th- th- this, it's, it's almost, I'm not sure whether it's a sustainable model, particularly for brands who actually at the moment, and okay, we're talking about transformation, and it may be that businesses need to transform their models in order to accommodate a rental model. But at, at the moment, they have to make new stuff [00:35:00] and sell new stuff, don't they?

that's how it works

David Sadigh: maybe Stéphane, you had in mind the business case we have seen at IMD around Porsche, I guess?

Stephane Girod: Yeah, so these models actually were, turned by the brands into actually an opportunity to convert those people into first-hand resale, right? They were not exploited as opportunities to give,to replace the first-hand,sale. Another factor that, temporarily makes it difficult is that we're not factoring the negative externalities of every product.

as soon as one day it becomes obvious that the environmental impact of, your watch or your car or your jacket is three times higher than the price that your-- the company's charging, so the difference between environmental and, and non-finan- and financial value, you will see that the [00:36:00] equation of economics is actually going to go in favor of these new business models as opposed to, these, traditional models, right?

And I don't exclude that this could happen. I don't exclude it that, we, we move to,obligations for companies to disclose their net impact by product. L'Oréal, for example, is working on signaling this type of, net impact labels. and this will profoundly change the customer behaviors, when we factor in also the cost of negative externalities.

David Sadigh: you're referring to potentially integrating scope two or scope three emission as well as part of the overall externalities. Is that 

Stephane Girod: Yeah. Or, Or, impact on nature or impact on, water and all these type of impacts, yeah

Robin Swithinbank: How effective is that messaging into our near future? Two or three years ago, sustainability was on everybody's, everybody's lips. I wrote about it [00:37:00] a huge amount. I did lots of interviews on it, and then suddenly overnight the story appeared to go cold. And I don't know if that's because brands realized that they

weren't able to reach the, target.

Stephane Girod: And everyone is happy.

Robin Swithinbank: well quite so, how much value, let's go back to value perception. How much value is there in maintaining a sustainability, pillar in your communications, as you look into the future?

Stephane Girod: So the central argument of, purposeful luxury is that, scientists agree that about a 20-year time window to actually avoid, catastrophic,environmental challenges that would result in systemic, crisis such as shortages of foods and, and basic necessities. collectively, we're not on track to,address those challenges in the next 20 years.

And by the way, it's not just because we reduce, emissions that we're going to make, the cut, but it's also because a- at the same time, we continue to degrade other key fundamentals of [00:38:00] our climate and biosphere. so emission reduction but continuous environmental degradation leads to also acceleration of climate change.

So what I look at is What can luxury brands do to avoid such a situation? Because they would be the first to lose their license to operate, 

Robin Swithinbank: Make an example of them. Hyperfilm

Stephane Girod: So I think what we're seeing this summer is a little from a climate perspective, another milestone, of, this degradation.

I believe very much that, the topics of sustainability will, come back to the fore very soon, and we will be forced by, by this. the question is: what do we mean with sustainability, and how do we approach it? And this is where I believe that for luxury brands, the most important [00:39:00] element is to, avoid waste, to make products that people buy.

so the qualities of functional value, wearability, quality, repairability, refurbishing over time, the cut, the fittings, if it's clothes, these need to be reappropriated by brands because now we are in this,model of luxury, of delirium, of emotions and emotions at all costs. I think that what people realise is that emotions are fluff, and what they want is real perceived value, and going back to functional value is critical.

I'm actually baffled that,Kering had to, hire a CEO from, Renault, from the automobile industry, to fix basic problems such as wearability, cut, [00:40:00] quality, and, making clothes that people can wear normally in different moments. It's, it's not rocket science, right? To,to do that. This is the DNA of a luxury brand, and I'm afraid a lot of them have cut down on that.

So this is the first level of strategic sustainability, for example. Okay? So, moving to made on order, like the haute couture model was,and has always been about, or like you have in the top luxury world, Ferrari, Lamborghini, you know,it's made after you order, I think could become a really important norm to avoid the wastes.

Robin Swithinbank: It's a volume killer though, isn't it? I

mean, from an industrial perspective, it's, suggests that the

industrial future of the luxury industry, or that there is no future for the industrial

Stephane Girod: but it's, it's, it's, where the, misunderstanding is. Luxury also pretends that they are just about craftsmanship, but they're not, right?

David Sadigh: So in terms of [00:41:00] jobs, some jobs will disappear, new jobs will appear. innovation in, the materials of the future, which is immensely important, and we are nowhere near where we should be on these.

Stephane Girod: there will be,more work or talents or skills profile maybe with the use of AI in relationship to how we handle predictive models and how we match that with demand. 

Robin Swithinbank: Which jobs are going to disappear? 

Stephane Girod: there will be more jobs probably also to orchestrate these new business models, 

Robin Swithinbank: I'll, I'll ask again, Stefan, which jobs are going to disappear?

Stephane Girod: so I mean, you, you might have, fewer jobs in the manufacture, because, instead of making, X amount of pieces, you will-- you might make fewer, but more expensive. while the rest of us, we might actually buy something if we can occasionally, but also rent some other things when we, when we don't need.

I'm not saying this is what's going to happen, [00:42:00] but it's, questions that luxury brands should ask themselves. But at the very minimum, think about volumes, think about waste, think about repairability, refurbishing, and wearability of what they make, there's been a lot of ambivalence, about sustainability, particularly in the luxury industry, is what I call the four tensions between the values of luxury and the values of sustainability.

 Sustainability requires a lot of innovation, and this can go in contrast with, heritage, the values of heritage, where luxury comes from. 

David Sadigh: Stéphane, I would like us to stop for a second on the AI,topic, because I think that's a really important one. Many people tend to think that, AI is still using ChatGPT or Claude to write emails and do a couple of, slides here and there. obviously, we see that agentic AI is going to automate a lot of the [00:43:00] tasks, not only legal tasks, but marketing, commercial, merchandising.

You mentioned this paradigm of, like, demand and offer also being quite at the center. You mentioned the sustainability element with, potentially taking into account all the external,availabilities,around the product. How do you see basically AI being integrated, in this industry?

Stephane Girod: I see it being integrated cautiously, with good reasons, because there are data risks, there are reputational risks, there are employment risks. but what, what we've seen is that a lot of the luxury world has or been slow or, or sometimes even regressed, I would say, on any digital innovation.

and, perhaps it's not true. It depends on the sectors also, We have to remember that when we talk about luxury, there are different realities. 

David Sadigh: Of course 

Stephane Girod: the L'Oréal and, and Estée Lauder of this world are immensely ahead compared to watchmakers [00:44:00] or even fashion brands, and they believe in digital.

The traditional sector like fashion, and watches do not really believe in it, and you've seen a lot of talents leaving those companies because this is not where innovation in the digital space is, uh, 

Robin Swithinbank: A bit of a brain drain, would you say? are you observing a bit of a brain drain in the watch industry?

Stephane Girod: In the digital space, yes. many of my friends, have moved away from various luxury groups because this is not where the innovation is. But it's a conscious decision by luxury leaders that we should shop in their stores. Temple of experience, punto, right? But if you think about it, it... There are other opportunities, of blending digital, virtual, physical experience, perhaps with AI and inventing new retail models of the future that, we're just scratching the surface, right?

With intense [00:45:00] personalization, learning and education, that the physical retail model doesn't allow us to do at all, right? So I think at some point it's a strategic decision that brands have made. customers want this, and that's what we give them. And same thing about sustainability

David Sadigh: I have one case that, I wanted to share on that, which is the pricing part. You mentioned the price was sold in a, a much,let's say, a too aggressive manner. and we know that price elasticity is basically one of the absolutely critical ingredient, to, to understand how to position your prices and so on.

And we start seeing more and more algorithm and AI use cases and so on around, measuring price elasticity So my understanding is that we are not going to see AI just being adopted for, retail or visible, from a, a end customer standpoint, but also within the kitchen and without the client, being able to notice it in the restaurant.

what does it inspire [00:46:00] you?

Stephane Girod: No, I mean, I, I think if that really happens, I think it's good. I hope for this wave, luxury industries won't be left out or the more traditional sectors in their adoption of those technologies. What's critical, all our research shows, is that you think about value creation first. You're very strategic about where you want to invest, and then you think about technology, and most importantly is how you upskill and bring along your people, right?

This, value people data is immensely important, and not going for the sake of it or because it's a fashion. AI probably completely change the way we shop also. I was listening to the ex-CEO of Walmart, and he explained how they're going to abandon their website and their app, and their agentic commerce proposition will vary depending on whether you are shopping [00:47:00] for a party or whether you are sh- browsing for entertainment, in which case it would look like more TikTok, or if it's for replenishing it, we...

which case all the programming will be tailored on making the convenience and the ease for you, right? So, yeah, profound transformations. I'm not sure the brands have the capabilities yet to build, this because, A, in some sectors, talent has gone, and two, there is this mental resistance, to, We have decided that, luxury is physical, at least what the customers see, and, and that's a, 

Robin Swithinbank: I, uh, I'm, I'm, I'm intrigued here because, on the one hand, we've started the conversation by talking about how volatile the market is, how volatile the world is, and how I don't think we quite got there, but I wonder if we, we might have sort of talked about how the consumer has an appetite and a hunger for something fairly predictable, for [00:48:00] stability, for certainty.

That's what we, we're, we're led to believe that, that we want certainty in an uncertain world. And yet what we've been describing through the conversation is, is further disruption, further transformation, faster, more profound. Is it-- Have I, have I understood you correctly there? Do you think that's what's necessary or is there, is, is it also possible that simultaneously luxury brands need to reach out to consumers and say, "Everything's gonna be okay. We, we are steady, we are consistent. You can trust us"?

Stephane Girod: Yeah, but the trust,relationship has been a little bit severed by those price hikes. 

and I'm not sure that a lot of brands are now perceived as providing the relevance for the stability. So that's why you're seeing a move towards experiences that people can live with their family and their dear ones.

Robin Swithinbank: one of a kind type of,things that are hard to get or ticket to the final of [00:49:00] the World Cup. I heard some were sold at auctions for two millions last... a few days ago. if England are there, maybe

Stephane Girod: know, so I don't know if customers are afraid of disruption and resist innovation or want to be reassured, but what they want is authenticity, consistency, and a honest value position.

So they 

Robin Swithinbank: Wh- which is, which I think is difficult to deliver when you're, when you're talking about transformation and you're talking about mass disruption. Elon Musk is the poster child of disruption. He's the world's first trillionaire, depending on which day of the week it is. but I don't think he's universally loved.

I think people are nervous about the model that he has created,

Stephane Girod: at, 

Robin Swithinbank: which we all have to live now

Stephane Girod: if you look at, the realities of China is that you hardly see any more, traditional, automobile players, in, in the Chinese market. And why? It's because customers see the value of these, product-related, technological-related, and business [00:50:00] model innovation-related type of offerings that, their brands have started 

Robin Swithinbank: 

Stephane Girod: to... case, what I think is important is we leave the choice to customers rather than having regulators block importations and, and, and, and, and, and, then we're left out

Robin Swithinbank: the message to consumers is anticipate further change. Disruption is still, is coming and it's, it's coming at the same pace as it's been coming for the past 20, 25 years

Stephane Girod: Yeah, but I don't think, customers are worried by that. What they're worried, they like innovation. They like,brands who solve their untapped or, or unthought pain points. What they want, however, is connection, relevance, authenticity, 

honesty, 

Robin Swithinbank: sense of belonging

Stephane Girod: A sense of belonging is also important. and this is, has nothing to do with the pace of innovation

David Sadigh: one last question on the, leadership part. You are, training, many of the leaders of some of [00:51:00] the most world-admired,companies across different sectors and so on. what keep them, awake at night, 

Stephane Girod: I think it's, the discrepancy between middle to senior middle manager and the top management, That,A second thing is, am I, re-skilled regularly, right? From my perspective, with some exception, a lot of luxury brands grossly under-invest in learning and development, and when they do, it's,bricolage that they do inside as opposed to relying on, leading institutions, academic institutions like ours and other business schools.

So that worries a lot the,the executive and the realization that, can they really contribute? Because more and more decisions, it's a still a very hierarchical top-down, perfection-obsessed type of [00:52:00] industry, as opposed to excellence that's focused on innovation when it makes sense to innovate, empowerment, and curiosity for experimenting.

if anything, I think these people are comparing more and more is that, am I working in an industry where I'm going to develop myself, and continuously relearn and upskill, where I can make decisions that will have an impact and, or not?

Stéphane, we must, bring this conversation into a close, but before we go, David and I really like to invite our guests to share reasons to be cheerful, to be optimistic about the future.

Robin Swithinbank: What is the-- what is it that's giving you reasons to be optimistic about the future of this luxury industry?

Stephane Girod: first of all, I see really lots of new blood coming in, whether it's this emerging, Chinese luxury brand and in collaboration with, the Digital Luxury Group, DLG. We're, going to inaugurate this white paper [00:53:00] on 5th of November on this topic. In Europe, you see new startups like, ID Genève watches or Organi or Acne Studio that are starting to really run from A to Z all their operations around, more purpose, more circularity, strong conceptions about their im- their, impacts.

I think what, also gives me hope is that, at some point we're going to see, the traditional brands realizing and stepping out that it's time to step out of their comfort zone, to doubling down on certain things that they might have neglected, but actually add new,codes to the luxury playbook,going forward.

So and importantly, it's about reconnected with honest luxury, inspiring, but also providing clear, [00:54:00] perceived value. And the, the, the connections with culture, I'm sure we're going to see a, continuous growth, maybe not at the same pace though as we experienced in the past.

Robin Swithinbank: Yeah, I suspect you're right.

Well, look, final thought before we wrap up this conversation. we've covered a huge amount of ground and unpacked a number of complex ideas during this conversation. What's the one thing, though, the one piece of advice you'd commend to luxury business leaders?

Stephane Girod: I think they, they really have to be agile, here become agile. it's not just heritage, but it has to be future-looking innovation. I know it's about controlling their image and, but it's also about opening to communities, to customers, to ecosystems in order to innovate better. it's about shifting from this culture of perfection to one of excellent, where there is more curiosity, learning, and a growth mindsets created inside the workforce.

I think this would be... And, and thinking [00:55:00] much more about,strategic sustainability. what's the role, what's the contribution of, my brand in a world that might become more environmentally challenged, and we... where we want to be, influencing the conversation

Robin Swithinbank: Thank you. I think that was more than one thing, but we'll allow you, we'll allow you the broad summary. Stephan, this has been a hugely entertaining and highly informative conversation, and we're very grateful to you for 

sharing your knowledge 

Stephane Girod: Thank you for your great questions,

David Sadigh: Merci Professeur Giraud 

Robin Swithinbank: Thanks for joining us.

Stephane Girod: Thank you very much. I enjoyed it very much too 

Speaker 6: Thank you for listening to The Luxury Society Podcast, brought to you by Digital Luxury Group and produced by Fallow Field and Mason. 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 luxurysociety.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 Swwithinbank, [00:56:00] and this has been The Luxury Society Podcast, available on Apple, Spotify, and wherever you get your podcasts.