What Luxury's Winners Are Getting Right | The BoF Podcast

ELI5/TLDR

A BoF panel with Gildo Zegna, Ralph Lauren’s CEO Patrice Louvet, and Art Basel’s Noah Horowitz on why some luxury houses are growing while LVMH shrinks. The short answer: clear identity, a real value story, and experiences you can walk into. Logos are out. Queues are out. Restaurants, coffee shops, art fairs, and factory heritage are in.

The Full Story

The divergence at the top of luxury

The backdrop is a split screen. LVMH’s fashion and leather goods just contracted 2% again. Brunello Cucinelli posted +14%. Ralph Lauren printed +12% revenue, +29% earnings, growth in every region including China, and raised guidance three times in the year. Zegna is in the middle — expanding Tom Ford and Thom Browne from a New York-listed base, with about 40% of the group now US-facing. The question the panel circles is why the winners are winning in a market that is supposedly exhausted.

Zegna’s answer is structural. Stop being logo-driven. Watch the pricing perception. Stay focused on a clear brand.

“In order to be resilient, you have to be very focused… have a clear brand strategy. And you don’t have to be as logo-driven as used to be.”

He also plays the vertical integration card — “sheep to shop” — with 60%+ of production in Italy, a 116-year-old wool mill in the mountains, and a sustainability argument that cuts through the usual greenwashing noise:

“You are the most sustainable brand in the world because you last forever.”

The Ralph Lauren formula: value over price

Louvet runs one of the cleaner operating playbooks in the industry and offers a literal equation. Value equals quality of storytelling, plus quality of product, plus quality of shopping experience, divided by price. The luxury business keeps collapsing that into “what does it cost,” and he thinks that’s where most of his peers are losing the plot.

He comes from FMCG — Procter & Gamble for two decades — so the word “value” sits naturally in his mouth in a way it doesn’t for a lifer from the Place Vendôme. Three things his elevated consumer ($100k+ household income average) is telling him: lean into quality, be clear on who you are, deliver a value perception that holds up under scrutiny. Consistent across Chengdu, San Diego, and everywhere in between.

The tagline he keeps returning to is that Ralph Lauren isn’t an apparel company.

“We’re in the dreams business. Like Disney… He is closer to a movie director like Martin Scorsese or Steven Spielberg than he is a traditional designer like Christian Dior or Yves Saint Laurent.”

Inclusive luxury vs the velvet rope

The most pointed moment is Louvet on the queue-outside-the-store trend. Imran describes being barked at by a burly guard in London, blocked behind a barrier in LA. Louvet’s reply is close to a mission statement.

“Luxury has often been defined as a $4,000 handbag. That’s not luxury. That’s a very lazy definition of luxury. If I’m a consumer and I’m buying a $120 polo shirt, for me that may actually be a luxury based on my income level.”

Ralph Lauren sells a $320,000 watch and a $12 pack of tennis socks. The store concept isn’t “welcome to our store,” it’s “welcome to our home” — rooms modelled on Ralph’s actual houses in Bedford, Telluride, Jamaica. Browsing like an art gallery and leaving empty-handed is fine. Opposite philosophy to the allocation-by-scarcity crowd, and the numbers are backing it.

Experiences, monetised

The conversation’s real thread is how experience converts to revenue when margins on a latte are nothing like margins on a tuxedo. Louvet’s argument: e-commerce is already 25% of the business, AI agents will make frictionless buying even more frictionless, so the physical store has to do work that a website can’t. Ralph’s Coffee wasn’t supposed to become a brand — it became one. Hats and aprons walking out the door. Five restaurants opening, one in London soon.

Zegna parallels this with Villa Zegna — an invitation-only personalisation club for “Zegna friends” with product you can’t find in stores, made-to-order all the way down to bespoke. Affordable entry, in Zegna’s world, is around $1,000. Costly, he insists, not expensive.

Art Basel and the mythology business

Horowitz’s frame is the most philosophically honest. Art is, he says flatly, valueless. Everything is mythology — a Cézanne landscape is a story about what Cézanne meant at a moment in time, a relationship to a relationship. That doesn’t stop the market from having structure. The late ’80s bust was Japanese money on Impressionists. The 2000s saw post-war artists overtake early moderns. Post-COVID speculation on hot contemporary names has cooled, and money is flowing back to well-priced masterworks and discovery from outside the Western canon — Art Basel Qatar, MENA artists, Southeast Asia through Hong Kong.

On whether art is an investment class again:

“The beginning of art investing as an institutionalised practice actually took hold [in the ’70s stagflation]… I think we’ll see it again to some degree now.”

Hong Kong just pulled 91,000 visitors. Art Basel went from 3 fairs to 5 while the industry is drowning in 400+ fairs. Same winners-take-more dynamic as in luxury clothing.

Community as the real product

Both men end up in the same place. Phones have atomised everyone. A hat, a polo, a gallery visit, a coffee counter — they’re all membership tokens in a community. Horowitz: “a sense of place, community, and connectivity.” Louvet: people want “much more grounded” things, “much more values-driven.” The younger consumer has no patience for fickle, and the brands that survive are the ones selling belonging, not just objects.

Key Takeaways

Logos are dead weight. Zegna and Ralph Lauren are both winning with lower-key identity signaling. The visible-logo cycle is closing.
Louvet’s value equation: (storytelling + product quality + experience) / price. Luxury keeps ignoring the numerator.
Inclusive luxury beats velvet rope. Queues outside, empty stores inside — “it’s cold and it’s not engaging.” Ralph Lauren’s full-price ladder from socks to watches is outperforming single-tier houses.
Vertically integrated heritage is back in style. Zegna’s 116-year-old wool mill is a durable moat, not a museum piece.
Middle East is 9% of Zegna sales (up from 3% pre-COVID). Geopolitics is a real headwind; they’re redirecting into the US and waiting out China’s plateau.
Art Basel thesis: stagflation-era pattern may repeat — art as institutional investment comes back when equities feel fragile. Great wealth transfer + reset prices = buying window.
Experiences aren’t a margin business, they’re a frequency and identity business. Ralph’s Coffee printed a sub-brand by accident. Restaurants next. The point isn’t the coffee P&L, it’s the store traffic and the apron walking out the door.
Flight to safety + discovery is the art market’s dual mode right now: masterworks on one end, non-Western emerging names on the other. The middle (hot contemporary speculators) is getting squeezed.

Claude’s Take

The conversation is good on ideas, soft on specifics — standard conference-panel rhythm. Zegna is charming but evasive on the price-inflation question (“hard to compare because we don’t have similar product” when asked how much prices have gone up is a dodge). The most useful material is Louvet’s. His inclusive-luxury thesis is the rare operating philosophy that’s both articulated clearly and backed by ruthless numbers. The FMCG-brain-applied-to-luxury framing is underrated; most heritage luxury CEOs come from the creative-director lineage and can’t talk about value without sounding like they’re apologising.

Horowitz’s mythology line is the quote to steal. It’s also the thing most luxury executives would never say out loud about their own product.

The BS filter: “we’re in the dreams business” is a line that sounds profound until you notice every fashion CEO says it. Ralph Lauren has actually earned it through 50 years of disciplined world-building; plenty of competitors use the line as a substitute for having a world at all. And the “AI will add jobs not cut them” aside from Zegna is the polite version of a question no luxury house has answered — if store associates are the experience, what happens when the associate is an AI agent?

Score of 7. Good density for 33 minutes, two genuinely useful frameworks (Louvet’s value equation, Horowitz’s art-as-mythology + flight-to-safety pattern), but the format limits depth on any single idea. Worth it for operators thinking about pricing ladders and store design.