The luxury market is “a game for the big guys,” says the president of Valentino and Balmain

With demand weakening, the luxury goods market is increasingly becoming “a game for the big guys,” said Rachid Mohamed Rachid, director of the Qatari investment fund Mayhoola and president of Valentino and Balmain, speaking to AFP on Wednesday in Paris, during fashion week. .

How do you think the luxury market will evolve in 2024?

RMR: Despite the slowdown we are experiencing in the luxury market, we are talking about a possible growth this year of around 4%, perhaps 5%. Of course, it will not be the same for all brands.

We are already seeing some positive signs in the United States, but they are very, very tentative. Department stores are struggling, but consumer spending is slowly recovering. The influx of public in Europe has decreased considerably. We are all waiting for the Chinese New Year celebrations to try to predict how China will do in 2024. But so far, China's recovery is very, very slow.

Other countries in Asia are doing extremely well. The market in Japan is thriving. Korea is relatively worried due to serious economic problems. Elsewhere in Asia, countries such as Indonesia, Singapore and Thailand are doing better than expected. These are important markets, but they are not really the ones that can make a difference.

Overall, 2024 will be a relatively slow year for luxury. But our sense is that there is enough resilience to carry us into a new era.

It has signed a partnership deal with Kering, which bought a 30% stake in Valentino and could acquire a 100% stake in 2028. But the partnership is broader and Mayhoola could acquire a stake in Kering. Is this planned for the long term or sooner?

RMR: In theory, in the future we will be able to buy Kering shares. It will depend on how things evolve. Ours is a recent relationship, which we are developing. We believe that the agreement is very positive for both parties and will undoubtedly create an environment that will help Valentino to expand.

In the last five years (…), the luxury market has changed drastically. Groups like LVMH, Kering and Richemont are investing heavily and aggressively in advertising, celebrity partnerships and even in terms of stores.

Associating Valentino with the resources of a group like Kering could be very beneficial for the brand.

Large groups such as LVMH, Kering and Richemont are investing significant amounts to create, I would say, barriers to entry for new players. And everything has become much more expensive. Now it is a game for big players.

We need to carefully reevaluate our position. We want to remain a major player in the luxury sector, but we are very aware of what we can do and why we need help. And if we need help growing certain brands, and that means partnering with a major group, that's an alternative we're willing to consider.

Could Balmain have such a partnership?

RMR: Balmain is a much smaller brand [than Valentino]. We still have to take it to a much higher level, until we reach a stage where stronger players can step in. That being said, I don't think this will be necessary in the next few years.

Just to give you a term of reference, Balmain has approximately 40 stores worldwide, while a brand like Valentino has 220. Our job of growing Balmain internationally is not over. We are only in the beginning stages of making Balmain recognized around the world.

The brand is very strong in the United States, but less so in Asia and Europe. It is well known mainly in France, the United Kingdom and the United States. We have some presence in the rest of the world, but we still have a long way to go to fully explore the potential of the label.