Latest news with #Solca
Business of Fashion
23-05-2025
- Business
- Business of Fashion
Inside The Great Luxury Reset
Listen to and follow the 'BoF Podcast': Apple Podcasts | Spotify | Overcast Background: Instead of his usual place in the host's seat, BoF founder and CEO Imran Amed appears this week as a guest in an interview with Jonathan Wingfield, editor-in-chief of System Magazine, alongside Luca Solca, senior research analyst at Bernstein — as featured in the debut issue of System Collections. This conversation was recorded on March 14, about two weeks before Donald Trump's shock announcement of so-called reciprocal tariffs on countries around the world, most notably China. Together, Amed and Solca explore major shifts in the global luxury market, the growing fatigue with high prices and mass production, and why creativity, innovation and strategic alignment between business and creative leadership are more crucial than ever. 'These companies are run by human beings, and if you don't give people incentives to change, they will kill you. If you see that you're making as much money as you like, and the business is as good as it ever was, then you probably will not change very much,' says Solca. 'I think that adjusting to a more normal environment is causing a lot of soul-searching and is getting these companies back in line.' Amed adds: 'Where brands work best is where there is that impeccable alignment between the creative leadership and the business leadership. Many creative directors feel like a lot of decision-making and creativity is being dictated to them rather than being in conversation with them. And I think that's what we need to see now.' Key Insights: Excessive price hikes and product ubiquity are causing consumer pushback. Amed says, 'When customers look at a €10,000 bag that used to cost half of that, there's real pressure because the value proposition no longer adds up.' The industry's future success depends on brands' abilities to innovate and excite consumers. Solca stresses, 'If people need to pay these prices, they must be excited; they need to feel they haven't seen these products yet, and that they desire them.' Amed adds, 'Brands need to inject new creative energy to get customers excited again.' In a stagnant market, luxury brands can no longer rely on organic demand and must instead compete aggressively for market share. 'In order to grow now, brands need to actively win market share from competitors,' says Imran Amed. This shift has forced operational changes across the industry. 'Fashion shows are getting smaller, not just for intimacy, but also to cut costs,' he adds. Luca Solca agrees: 'You need to take into account that a lot of the costs in this industry are fixed ... When sales decline by as much as 20 percent, you really need to cut the fixed portion of your costs.' Maintaining exclusivity remains challenging yet essential. As Solca puts it, 'The nature of the industry is that you need to sell exclusivity or perceived exclusivity.' He warns that high visibility can backfire for smaller brands: 'We've seen it a number of times; smaller brands hit gold, but at one point, they succumb to that very success because they become too visible and people move elsewhere. They tend to be a bit of a flash in the pan or face a glass ceiling around €2 to 3 billion, which is very difficult to break through.' Effective luxury strategies hinge on strong creative-business collaboration. As Amed explains, 'Where brands work best is where there is that impeccable alignment between the creative leadership and the business leadership.' He continues, 'Many creative directors feel like a lot of decision making, a lot of creativity is being dictated to them rather than being in conversation with them. And I think that's what we need to see now.' Additional Resources:
Yahoo
07-05-2025
- Business
- Yahoo
Hermès Hikes Prices in the U.S.
PARIS — As the business world adjusts to the Trump administration's tariffs, Hermès International has followed through with the price increases promised during its most recent round of financial results. Bernstein analysts examined prices on the brand's U.S. website across women's bags, jewelry, ready-to-wear, silks and accessories, watches, fragrances, makeup and home, concluding that prices have been bumped up an average of 4 to 5 percent across the board. More from WWD 'These will likely cover for a worst-case scenario of 10 percent tariffs and compensate for the recent weakening of the U.S. dollar against the euro,' Bernstein analyst Luca Solca wrote in a report this week. Hermès' move follows Louis Vuitton raising its prices in the U.S. 3 to 4 percent in April. Hermès can lean on its 'undisputed' pricing power, according to Bernstein. The company has steadily increased prices each year, but it still hasn't dented customers' desire: Sales were up 17 percent for the fourth quarter of 2024 and continued to rise in the first quarter, up 10 percent year-over-year. In fact, the company is trying to increase production capacity for its popular handbags by building four new factories over the next four years after it was hit by tight supply over the holiday period and start of the year in the U.S., despite price increases of about 6 to 7 percent last year. Hermès chief executive officer Axel Dumas believes the company's reputation makes it a steady choice for customers in turbulent times. Speaking at the company's annual shareholders' meeting on April 30, he recalled the 2008 financial crisis as raising the brand's value. 'There was a flight to quality,' he said. 'Hermès is the gold standard in a way.' Hermès is still 'top-of-the-mind for consumers…particularly in China,' the Bernstein report noted. 'I think it pays for a brand like Hermès to sit at the very top of consumer desirability. When consumers are more guarded, when they have second thoughts about spending money, when they cut their budgets — think of the Chinese, for example — Hermès is the very last brand they give up on,' Solca told WWD. 'Almost all' pieces in the core categories of fashion and accessories have increased in price though handbags — including the Birkin, Kelly and Constance ranges — are not sold online. However, 'we expect price increases for these products to fall within a similar range,' Solca said in the report.
Fashion United
24-04-2025
- Business
- Fashion United
Louis Vuitton raises U.S. handbag prices amid tariff concerns
Louis Vuitton has quietly raised the prices of several handbags in the United States— a move analysts interpret as a preemptive response to the threat of U.S. tariffs on European imports. The adjustment comes on the heels of Hermès' announcement earlier this month that it will implement a 10 per cent price increase. According to a recent price comparison on the French luxury house's U.S. website, some handbags have risen by as much as 4.8 per cent, with others seeing increases in the range of 3.6 per cent. One of the most noticeable hikes was seen in the Neverfull GM in monogram-coated canvas, now retailing for 2,200 dollars, up 100 dollars from the previous week, reported Business Insider. In a note to investors on Wednesday, Luca Solca, luxury sector analyst at Bernstein, interpreted the move as a calculated hedge against the uncertain trade environment. 'A price increase of +3.6 percent seems more than enough to cover even the worst case scenario of 20 percent tariffs on EU exports to the US,' Solca noted, referring to growing concerns that transatlantic trade tensions could escalate further. The United States represents a vital revenue stream for LVMH, the parent company of Louis Vuitton, contributing 24 percent of group turnover in the most recent quarter. The U.S. market's importance underscores the strategic rationale behind price adjustments that seek to preserve margins in the event of trade disruptions. Interestingly, not all Louis Vuitton products were affected by the price increases. Industry observers suggest that bags and accessories produced at LVMH's three U.S.-based workshops and manufacturing facilities may have been spared due to their domestic origin, making them less vulnerable to import duties. This selective pricing approach also reflects a broader trend in luxury: brands are increasingly localising production to mitigate geopolitical risk and streamline logistics, particularly in key growth markets like the U.S. While Louis Vuitton has not made a formal announcement regarding the price changes, the timing and selectivity of the increases are unlikely to be coincidental. As trade relations between the U.S. and the EU continue to evolve, luxury houses such as Louis Vuitton are already adjusting their strategies to protect profitability without sacrificing demand. Whether American consumers—already accustomed to annual price increases from the French luxury brand—will react differently to this latest adjustment remains to be seen. But with handbags continuing to serve as core entry points into the luxury market Louis Vuitton's pricing strategy is likely to remain under close scrutiny.
