This is an episode of the Glossy Fashion Podcast, which features candid conversations about how today’s trends are shaping the future of the fashion industry. More from the series →
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On the Glossy Podcast, senior fashion reporter Danny Parisi and editor-in-chief Jill Manoff break down some of the biggest fashion news of the week. This week, we’re talking about the state of Saks Global and bringing you some takeaways from the Glossy E-Commerce Summit in Miami. Later in the episode, we host a roundtable discussion with luxury leaders about the state and future of the luxury sector.
First, we break down two big pieces of news regarding Saks. The company is reportedly looking to form a joint venture to operate Bergdorf Goodman. It also secured over $300 million in new financing to help it get back to a liquid state. But Saks still reportedly owes more than $700 million in overdue payments to its brand partners.
Saks’s non-payment was a frequent topic of conversation at the Glossy E-commerce Summit held in Miami this week. We share some of our takeaways from the event, including how brands are meeting the demand for content and planning for the holidays.
And lastly, Jill Manoff led a discussion with Bradley Carbone, deputy CEO of luxury retailer Luisaviaroma; Joelle Gruenberg, a partner at McKinsey and head of its apparel and fashion division in North America; and Tanner Graham, CEO and co-founder of the luxury branding agency General Idea. The conversation touched on how luxury is faring, how its reliance on China may have held it back in recent quarters, and how the divide between a high-net-worth luxury customer and a more aspirational customer is impacting the segment.
Below are some highlights from the conversation, lightly edited for clarity.
The state of the luxury business
Gruenberg: “The growth engine of luxury post-Covid has really been China. China has been 40% of the growth of the luxury industry. And as we know, China is at a standstill for different reasons. The second thing is that the aspirational luxury consumer, and more specifically in the U.S., is right now on pause for different reasons, like the employment market of the upper middle class, who is out-priced in most situations. And then there’s a broader change in consumer patterns and people wanting to spend more money on experiences versus buying things. So these three things are at play, which obviously are impacting the industry, but they’re not impacting all the brands the same way.”
Carbone: “The luxury market got over-inflated for a period there. In the pre-pandemic and then during pandemic times, the idea of luxury got expanded much larger than what it traditionally was. It started to encompass categories that were actually not part of the luxury environment. And these brands got audiences that were much larger than traditional. So I think that with this reset, all of these different external and internal factors are going to affect the market size of the industry. We have a wait-and-see scenario in the economics, but I think we’re also looking toward a re-centering of what luxury actually is and who the actual luxury consumer is.”
Graham: “I think there is a little bit of an identity crisis in luxury right now. It’s sort of unclear what luxury means exactly. I think the traditional idea of this rarefied, high-quality object is still true in some cases. But the definition has taken on a much broader scope. And then, along with a changing media landscape — with lots of luxury brands warming up to the ideas of new platforms like TikTok, and then last year, going through moments in which TikTok would potentially go away or not go away — they had to figure out how to invest dollars, how to reach their customer. And then there are new technologies, such as AI, which is affecting not only the media landscape but also content creation. That is another consideration. So I think playing with all of these, along with probably a somewhat fatigued consumer, in terms of generational shifts and prioritizing different aspects of how they spend their money — I think it’s all sort of fueling a real inflection point in luxury.”
