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. “Adjusting to a more normal environment is causing a lot of soul-searching and 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."
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." 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 compete aggressively for market share. "In order to grow now, brands need to actively win market share from competitors," says Amed. This shift has forced operational changes. "Fashion shows are getting smaller, not just for intimacy, but also to cut costs." Solca agrees: "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 essential. Solca notes, "The nature of the industry is that you need to sell exclusivity or perceived exclusivity." He warns high visibility can backfire: "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 face a glass ceiling around €2 to 3 billion."
- 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."
Additional Resources:
- System Launches New Bi-Annual ‘System Collections’ | BoF
- Inside Luxury’s Slowdown | BoF
- The State of Fashion: Luxury | BoF
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En liten tjänst av I'm With Friends. Finns även på engelska.