One truism of luxury is. The world continues to get wealthier, and as the world gets wealthier, there’s more people entering the middle class, and the middle class will buy aspirational luxury products. So long-term Secularly luxury will do well. Retail Unwrapped is a weekly podcast hosted by Shelly Cohan from the Robin Report.

Each episode dives into the latest trends and developments in the retail industry. Join them as they discuss interesting topics and interview industry. Three leaders keeping you in the loop with everything retail.

Hi everyone, and thanks for joining our weekly podcast. I’m Shelly Cohan and I’m very excited to welcome Marie Driscoll. Marie, I have known you a long time and you wear many, many hats and you have a wealth of experience. You actually, I believe you come from equity analysis on Wall Street. I do. And you actually won, you won best on the street like three times, which is.

Wow, that’s amazing. Um, you also have an academic teaching career as well where you teach retail entrepreneurship and equity analysis at Baruch Fashion Institute of Technology and the new school. And most recently, I believe you are now president of the Retail Marketing Society Board, is that correct? I am.

Mm-hmm. Yeah. Yeah, that’s, that’s just an amazing background. And of course I have to put a plug in for the Robin report. You’re one of our esteemed writers at the Robin Report, so welcome. Yeah, and I also do some advisory work. On top of all that. Yes. Lots of little children everywhere. Well, I’m so thrilled to have you on retail and wrap podcasts to discuss the world largest luxury con con conglomerate.

Yeah. Uh, LVMH. I love LVMH. I’ve studied them a lot. I’ve done so much business analysis on their model. Mm-hmm. But what really is interesting is how are, how’s the company navigating economic headwinds? We have a lot of changing consumer behaviors and market. In the United States. So let’s jump right into our topic.

If. Great. So I really wanna start with what I think is the most pressing thing on the top of all of our retail mines, and that is the US market and the macro e economic factors that are going on here. So my first question is, I, you, uh, LVMH has had declining US sales in particular. So what’s happening with the performance with LVMH in the Americas in early 2025?

Yeah, you know, it’s a confluence of events, right? Um, you’ve had, you, you had so many aspirational consumers enter luxury during, um, COVID and then during Covid, which I realize is like, it’s three years away already for many. But it still has, um, significant impact on the supply chain of many different industries, not necessarily luxury, um, and consumer thinking and consumer behavior.

Um, during Covid, you had, uh. New, new consumers entering luxury and Louis, um, LVMH with its portfolio of like close to 80 or more than 80 brands. Um, that’s amazing that they have 80 brands now, right. And some of which are in wines and liquor, you know? Yes, of course. And liquor, some hospitality, um, some direct retail like Sephora.

Um, um, and then many in. Fashion and luxury, um, of which, you know, some of the real, the real leaders are that, you know, the five hand, the five that you could count on your hands. Louis Vuitton, um, Christian Dior, um, Celine. Um, and, and, um, Laura Piana and, and like, like, who, who would be a fourth? Would it be Balman?

Um, but those four are significant. Those are household names to luxury shoppers and, and beyond that too. Um, and then of course they have Gelan, um, of very famous French, um, perfumery. But during Covid, you had aspirational shoppers. People that were locked at home all of a sudden entering the market where, what was the one thing that provided experience when you were having no experiences, when you couldn’t travel, when you couldn’t go to the theater, when you couldn’t eat out, when you couldn’t see your family, and all of a sudden the government was actually giving people monies and you were saving money because you were working from home if you still had a job.

So it, it was luxury because luxury creates like a world of dreams. There’s aspiration. You’ve arrived, so you had an onslaught of people buying luxury. And Shelley, you probably remember friends that like three or four months in said, I just bought myself, um, a Louis Vuitton handbag. It’s absolutely, I didn’t need it, but like it felt good, right?

Yeah, people wanted to feel good and they had the money to do it. Right. Right, right. And so, and I think also, you know, you had a lot of demand pulled forward from, um, luxury shop, from normal luxury shoppers. Your typical luxury shopper who just really was sitting at home and didn’t have that many options as we got.

That as we, you know, exited covid and we had double digit inflation across many categories and people truly demanded now they had pent up demand for travel. Um, they started to, you know, spend elsewhere. And so we’ve, as you entered 2024, you had a slow down in the luxury market. Um, which continues this year and it’s a function of people are spending elsewhere where they’re spending elsewhere, it costs more money, right?

There’s been inflation. Um, if you travel, you know that your airline tickets are double what they were pre covid and your hotels are double what they were pre covid. And guess what? The experience is not any better. The experience is frequently worse. What it was pre covid. Um, and we wonder when that’ll have its reckoning.

But so entering 2025, you know, um, many of the luxury brands increase their prices a hundred percent. During Covid. Yeah. Because they could, and towards the tail end, maybe they were increasing luxury pri prices to offset a slowdown in, in, um, demand and to maintain a sales growth. Right, right. Something, a financially driven model, not really a function of, part of it was a function of increased costs, but part of it was.

We can, why not? Um, and you had ver, and so you had companies like Chanel Prada and Louis Vuitton increasing prices more than a hundred percent from 2019 to 2024. So at some point the consumer even goes, what am I? How is this worth this? Right. Right. And so I think that that, that entering this year, then all of a sudden you have the volatility of the stock market.

We did, we weren’t talking about recession very much in the. The second half of 2024. But this year with the, um, impact, the potential impact of tariffs, there’s discussion of, um, recession and greater probabilities of recession, which impacts consumer thinking, and it impacts the stock market, which provides a wealth effect, which has typically supported luxury demand.

And so all of those things are impacting luxury demand today. So as we come into 2025, we have a very nervous consumer. They don’t know what’s gonna happen, right? We have higher prices. And so there has been a bit of a pullback in terms of spend in luxury market. I wanna, um, follow up on a question, um, with a statement you made about tariffs.

So I just read, of course, the never Full Bag, God, it’s. Price increase. I think it’s like all over the news. It’s like one of the most popular bags. Right. Um, but how, how is LVMH handling these tariffs and inflation that is playing in the mind of the consumer? What are they doing? How are they responding to this right now?

You know, they’ve announced that they’re doing price increases as, as, as has Hermes, and certainly the tariffs are the top of. The news cycle for most Americans. So I think it, it, it’s not like I, I think Americans understand it. I, the dollar is weakening, so it’s not like you can go to Europe and like a few years ago you saw some of the shift of as people, um.

Exited Covid and like during Covid luxury sales took off in the United States because we were, we were kind of constrained from traveling. Once travel picked up, all of a sudden Europe saw incredible luxury spend because of American tourists and tourists from other regions as well. Um, but now the strength of the dollar, the dollar has in fact weakened.

Um, I think. I think the consumer understands the price increases. It doesn’t mean they’ll accept them. Right. But, but it certainly is understood and, and, um, Hermes has already, you know, announced that they were going to do price increases Louis Vuitton has. So I, I think that if they do it in concert, it’s understood and they’re doing it in the backdrop of an amazing news cycle that’s highlighting this and.

You know, we’ll see where it all lands. Well, that’s interesting. So you have these, um, luxury brands that are raising prices, but yet you have this declining consumer confidence in the us So are are, is that mean we’re gonna squeeze out one of those luxury consumers and they’re gonna drop back? I mean, what’s gonna happen with that consumer?

Especially now we have all these US consumers that are really toned into this value mindset. Right. I, I. I was on stage at Shop Talk a month ago and talked about Mai. I gave a presentation about Mai and I really think, um, you know. Not only, there’s lots of options. You can go from one brand to another. Um, you know, one of the things that happened as Chanel prices reached, say, $12,000, was people said, well, this is very close to the price of Hermes.

I can buy an Hermes, uh, I, I may have to spend a few. There is an Hermes handbag that you can buy for less than 12,000. It’s may not be the Birkin, but you can shop Hermes. You also can shop secondhand Hermes. You can go to the RealReal, you can go to fashion file, you can go to, um, vest. So there’s all you, you can do this.

And, and, and then there’s ma. I there you can buy and then there’s du At Mati you can buy similar quality leather, not the, um, powerhouse brand of a Louis Vuitton, a Chanel, but a nice brand, um, a very nice bag that looks very, it looks the same, it just doesn’t have the CS or the lvs on it. Um, right for a 10th of the price.

And then you can buy a dupe on a TikTok for, you know, 100th of the price. Right. So the consumer is the, the consumer has options to be fashionable and without spending this top, top dollar, I think on some level, um, some of the price increases of the last five years has eroded trust in the luxury brands.

Right. And don’t, don’t forget the rental market, right? A lot of consumers are renting Chanel bags, you know, as opposed to buying them, right? So that’s a whole nother avenue. And so I think the resale and the rental are two very big growing markets that are kind of pushing our headwinds against the L vm Hs.

And the luxury brands in terms of selling full price luxury items. What I’d like to ask. Yeah, go ahead. Yeah, I, you know, I remember seeing the founder of Rent the Runway speak at a, um, Goldman Sachs conference, and she talked, you know, this was pre Covid. Um, you know, people could get a subscription of four items.

Sometimes you would get two subscriptions, and she talked about, you know, you may want that really iconic coat. So you, you rent that, that, that you rent that every single month. But guess what? Next year you want another iconic coat. So there’s like, you can have, she called that leasing. That’s, and that’s what they do a lot actually.

A lot of my colleagues at FIT do the leasing model. Right. They love doing that for those reasons. They can have the hot coat today when they get tired of it. And a lot of us in fashion, you know, we tire of things before they actually end their life cycle. Right. And so it’s a great model from a sustainability standpoint.

Yes. So let me switch gears here. So, LVMH has always been the guru of marketing and advertising. So can you talk a little bit about, maybe compare it to its competitors and can you tell us are, are they doing something different in this current environment? Well, you know, they, they kind of, this is going to crack you up, but, so I’ve been covering retail for like the last 25, 30 years.

I remember when every press release from Amazon had this long litany of all the things they were executing on, like we bought. Oh, yes. Like it was just one thing after another to kind of obfuscate the fact that. There were no profits, like, keep watching this because this stuff is gonna move up there soon.

It’s gonna drive sales. Um, and it will, and it, it will expand our ecosystem. It still may not generate profits, you know, so I’m talking about 2001, 2, 3, 4, 5, 6. Oh, yes. Right. I totally remember those. Right. But, but, and they long, it was a long, long, long list. So. Louis Vuitton, um, this year entered beauty. This was something that they never were going to do, and I remember when they never were going to do fragrance and they now have a very successful fragrance line that is quasi sustainable because you buy the bottle, you go back and you refill it, and you can only refill it at Louis Vuitton, they only sell it at their own, um, stores.

And one of the great things about selling. Lower priced items, um, entree luxury items. Aspirational luxury items in a flagship is you start to get comfortable in the, um, in the ambiance in a flagship of a luxury store. And as you, um, increase your wealth, you may well consider a handbag that’s across the floor, right.

Or a piece of jewelry. Um, but so this year they entered beauty. Um, they also recently announced that they’re doing home and they launched that in Milan. And so beauty is, um, aspirational and an entry point, but then home is very high end. So they’re, they’re kind of balancing their act as they, um. As they, you know, think about the next five or 10 years, uh, they’re, in terms of marketing, they’re the consummate market marketers, first of all, as big as they are.

I think they spend 11, 10, 11% a year on marketing, and that far dwarfs anybody else’s. That is tremendous. Right. And it’s, it’s like, you know. It’s like, it’s the same model of L’Oreal. You know, you when you’re spending that much and you are that big, and Nike too, you dwarf what other people can spend. So, um, and like their advertising budgets say would be then 10 or 11 billion, um, dollars or euros.

And most luxury brands don’t have sales that big. 10. Right, right. And of course, that’s the aggregate spend across all their brands, but a lot of it is focused on LVMH, uh, I’m sorry, on Louis Vuitton and Dior. Do, do you remember for the Robin report a year ago I wrote about, I. Um, the Parisian Olympics, the Summer Olympics?

Yes. Oh yeah. Because they got really involved in that, which was great. Right, right. And it From a branding perspective. Yeah, from a marketing perspective, it was like when sales, what I wrote then was when sales were slowing down, we knew 2024 was going to be difficult. So what are we gonna do? We’re spending 150 million euros aligning ourselves with the Olympics, which is sport.

Incredible. Um. The world is watching that. And um, and really Paris became a backdrop to all of the LVMH brands and, and you know, that that lasts for that, you know, think of all the social media, all the clips that Right, of course. And, and that just brought the brands to the forefront of the world and that lasts for years, that, that’s priceless.

Yeah, so LVMH is great ’cause they kind of, I don’t wanna say take advantage, but they really focus on these cultural events. And I believe they did something with Notre Dame’s reopening too, right? Yeah. Yes. Um, um, Farrell Williams was there singing with, uh, it was an amazing event. I was there the week before it opened, so I was so sad I didn’t get in.

Um, but Pharaoh Williams, um, was singing happy with. I, I don’t remember the, the chorus, but it was wonderful women like just, and how vibrant, because Notre Dame is. Quintessential Paris and France. Right? Absolutely. And, and then this year they did something with Formula One. They’ve, they, and that’s, that’s another entire niche market that isn’t so niche.

It’s really gigantic. But for your average luxury goods analyst like me, it’s like, I don’t know a whole lot about that. I don’t have boys that are involved in that. But that’s a big market. And what are they doing? They’re going where people with money spend time. Yeah. And, and they’re, they’re, they’re putting their, they’re placing their brands in the midst of that.

Then they’re also like just here on Fifth Avenue as they’re, um, remodel their flagship. They have an incredible store across the street right next to Tiffany, um, and. They have cafes and they have chocolate and, and the ca you know, Christian Dior has cafes, Armani has cafes, but this is one of the di uh, who is it?

Coach has cafes. This, this is a way of spending time in a brand, getting comfortable and then, you know, just, it becomes part of, part of your consideration set when you buy something special. Absolutely. It’s part of the retail store experience. So they, they, they actually are masters at this retail store experience.

They hit a lot of positive notes when it comes to that customer journey. Um, what are they doing with popups and are there other things that they’re doing outside of the brick and mortar or online business? You know, um, they have, their marketing is great. Their, their apps are great. Um, I, I watched the Louis Vuitton app and of course I’m very, you know, I go to their.

Their investor relations page, their corporate page for all the news that I want. But then I’ll watch what, like, the Dior app is fabulous. Um, so they tell stories digitally. Um, I. In terms of popups, I haven’t, I haven’t seen a popup lately. Um, I, I know that they have traveling, um, museum ex exhibits that, which is great, are incredible.

Like you may remember the Dior that was in Brooklyn. I. Oh my God. One of my favorite exhibits ever. That was unbelievable. It is. It was, it really, really was. Um, they have a Dior museum right behind the flagship on Boulevard Montag, which takes your breath away. Um, but the, the Brooklyn Museum, that is an incredible place for a fashion exhibit.

Right. I think you have three or four stories. It’s, it’s just. You are awestruck. Um, I think I took like a thousand pictures the day I visited. Like I and I, I look at them all the time. I use ’em in class, I show students. It’s just an amazing Right, uh, way to kind of talk about the Christian New York brand and the heritage of that brand.

Right, right. And frankly. I really got turned on to Lou. Like of course I knew about Louis Vuitton as a brand, but when I went to Paris, say in 2005 or oh six, and I was visit, coach was opening up at Proton, um, and I was speaking with their head of international, he told me to go visit. The Louis Vuitton exhibit at the City Museum in Paris and I went there and you know this museum is like from the 17th century

It had very low ceilings, lots of long walkways. But it told the story of Louis Vuitton and it told the story of the innovation of the brand like Louis, Louis Vuitton. The man created, and this is probably told on podcasts now, and, and makers stories, but before, um, Louis Vuitton created the flat tra um, trunk.

And before that they were curved. And when they were curved, it was difficult to stack one on top of another. This was innovation. Oh, yeah. Um, and, and if you think about travel in the, um, 19th century when he, when the brand was created, it was really the wealthy, the royalty, the celebrities, the opera singers, the theater people that travel, um, also the artists.

So he would make. Bespoke for his clients, um, travel utilities that were specific for them. So for someone who was travel for the writer, it was set up for, for a typewriter. Um, I remember somebody had a hammock and for, you know, there was special things set up for, um. For, for the opera singer. Like Spy

Yeah. Just, and that’s when I fell in love with the brand. I didn’t fall in love with the brand because of the lvs and the fact that, you know, people on Fifth Avenue were carrying the bag. It was that, look at the creativity in how this brand became meaningful. And then, you know, they still use travel as a source of inspiration and in their marketing.

Right. And, uh, so now I’m gonna transport you from this vision of people carrying these huge chest on ships. These huge, you know, travel bags. They were actually like, uh, chess that were carried on to. I’m gonna fast forward you into 2025 TikTok, right? Which is a completely different model. So what’s LVMH doing in terms are, are they trying to get that younger market and are they using platforms like TikTok?

Has it been successful? Yeah, sure. And they, they are, and I think they, like in, in my article I wrote, how many, um, they have hundreds of thou, they have millions of followers, right? They have millions of likes. They’re one of the most liked brand. It’s not, they are, people know who they are. Like everywhere you go, people know.

Um, Louis Vuitton. The thing with the TikTok crowd is there’s, you know. You are flick, it isn’t necessarily a path to purchase. It may be um, awareness, but it’s awareness for three seconds. How, and a longer TikTok, maybe 30 seconds, you’re not really staying there. So, no, um, it really, I. What, what all of you know, the brands that have really benefited from TikTok are when consumers either buy in it very quickly or if you move and, and you go and discover it in, in real life, you go to the store

But it became, so I’ve. You know, I do teach fashion retail at Parsons, and I’ve had students that have discovered Abercrombie, and you and I know how Abercrombie was so out of favor for many years. Well, then they discover it because some influencer says. These are the only, um, jeans that fit my long legs.

That’s right. The girl relates, she goes to the store. She didn’t really even, it was not part of her consideration set so that if you can actually in a moment con, um, click, you know, con connect with a consumer on something that’s relevant, that’s contextual. It works. It’s not really, other than that, it’s just awareness.

Continued brand awareness, right? Yeah. So yeah, that’s a great example. So thank you for that. I can’t believe we’re running out of time, so I’m gonna ask you one other question of if you’re up for one more question. Yeah, yeah. Um, and it’s about LVMH is what are they doing in terms of emerging markets, um, and how does that impact US operations?

I, you know, um, you may remember that, um, on the inaugural on, um, the inauguration of President Trump, um, Bernard AAU was right there. So I did notice that. Right. And he was very, um, positive on America. Is spending hundreds of millions of dollars here expanding in America. He’s not getting, you know, whatever’s happening this year.

It, it’s with tariffs. Things will write themselves out, and it’s not just tariffs. It’s a slowing. Of consumer demand, they will stay relevant. Um, there is, you know, you do hit a law of large numbers. How big can you grow? I’ve spoken with luxury professionals around the world, and that’s one, like I sometimes say, I think they broke their promise, um, with these prices and, and the, but they’re also big as the enemy of cool.

And you are too big. How do you remain cool? One of the ways you do it is with these limited additions. Um, and so. And, and then you and I experience fomo, like, let me get that. Of course. And you keep creating demand that way. Like, but obviously they have to think about other regions. China has really, um, which China, which was driving luxury sales for most of this century is weak and continues to be weak and weaker than the United States.

Um, and their economy is. Going through its own issues with real estate, most of, most of the Chinese consumers value is tied up in real estate. So the aspirational shopper there is really not shopping. Um, and the wealthy. They are. Um, but so you have to move to other regions and Abu Dhabi like next year, right?

Abu Dhabi I think is becoming that and India will become a growth area and Latin America and Africa. I mean, one truism of luxury is. The world continues to get wealthier and as the world gets wealthier, there’s more people entering the middle class and the middle class will buy aspirational luxury products.

So long-term secularly luxury will do well. That’s great. Well, Marie, you’ve been a wealth of information as you always are. I always love seeing you at conferences and chatting with you ’cause I always learn a lot. So thank you so much. Yeah. And I love seeing you too. And I love seeing you at FIT. It’s like we’re right there together.

I know. Isn’t that fantastic? Yes. Yes it is. Alright, thank you so much and I wanna thank our listeners for tuning in. If you have any suggestions on upcoming podcast, please use contact us in our website. Site the ro report.com. Thanks so much. Thank you for listening to Retail Unwrapped. We’ll be back in one week with another podcast.

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