François-Henri Pinault.
Photo credit: InDigital Media Group
Last week I attended an event led by François-Henri Pinault, chairman and CEO of PPR, an international holdings company that operates brands in the luxury, sports and lifestyle markets specializing in apparel and accessories.
Pinault gave his views on a number of topics dealing with the U.S., European and Asian markets. His company—whose brands include Gucci, Yves Saint Laurent, Boucheron and Puma—operate in the exclusive and mass market categories in 120 countries. The one thing all of the brands share is that they are aspirational. This makes his view unique among corporate leaders. Among his observations:
* In 2006, PPR saw that economic growth has shifted to emerging markets—particularly China, India, Brazil, and more recently, Indonesia—bringing 3 billion consumers to the worldwide market, and that this trend will continue. The prior 50 years the growth in population and wealth in the world (800 million consumers) was centered in the U.S. and Japan. This dramatic demographic shift caused an equally dramatic change in the French company’s portfolio of brands. “It means that in the next 50 years the growth is amazing,” Pinault said. “We don’t have any idea what it will be. We are always referring to the past but it’s no use. We cannot compare 3 billion people with more and more purchasing power to 800 million in the past.”
* Stimulating this growth further, is that consumers in these emerging markets are spending more freely on luxury and lifestyle than in Europe and the U.S. and are doing so at a younger age. “They are becoming richer faster. They love brands. They are very strong in aspiration. This is just the beginning.”
* Pinault told me he was in the market for more jewelry and watch brands. In particular he was looking at Asia (meaning China). What he didn’t tell me at the time was how close he was to making a deal. Sunday, the French company announced it acquired a majority stake in the Chinese fine jewelry brand Qeelin. The transaction is expected to be finalized next month.
* Pinault is optimistic about the U.S. consumer and says he is confident that there is desire among Americans, particularly those new to the country and the younger generations, to work for the better things in life, including luxury and lifestyle consumer goods. “Those communities aspire for a better life in America. They are aspiring to express themselves.”
* He also says that he believes that the U.S. will find a pragmatic solution to its economic problems. He is more pessimistic when it comes to the E.U. because ideology trumps pragmatism.
*The U.S. government needs to do more in welcoming visitors from other countries, in particular, from places such as China. That it will not only be good for PPR brands but it will be good for the country. “The luxury industry relies on tourism. This country is one of biggest in the world in terms of tourism. But of course there’s a bit of constraint … The biggest industry in France, by far, is tourism. This should be a priority for this country.”
