Business Breakdowns
· Chris Davies
And that's a dynamic which is quite rare and quite unique to luxury businesses because you have this really perverse setup whereby when you've established this brand with great heritage and credentials, you can put prices up, and that almost helps you grow the business, regardless of what you're doing with volumes. Luxury, I guess, is also just much more visible than it used to be. And that's not necessarily a bad thing, I mean, if you control the scarcity of your products really well. But it's arguably much easier than ever to create that gap between demand—I think back to that Shanghai event, all the hype you can generate through social media—and supply, exploiting that gap is really what you're doing when you're putting up prices, I think, at a high level as well. You've basically got more consumers around the world who can afford luxury than they used to be. I know that's a really simplistic argument, but if you had bet on people liking nicer things as they get wealthier over the last 30 years, you'd probably have done all right. Whether you invested in this brand or that brand that did a good job, you'd have made quite a lot of money. So I actually think that the growth rate and the size of the market is in Moncler's hands here. This is not something where we're going out into the world and basically trying to take share away from another player. This is something new. It's a new phenomenon. And I think that's really underscored by the fact that they say, I think it's 60% or something, of their customers are new customers. So they're still very much in this early phase of growth.
· Matt Reustle
[00:00:00] S0: And there's a foundation of quality in the product. What does that mean for outerwear, specifically Moncler? If I think about some of the other brands, there is both materials and process, sometimes weighted towards more materials or more process, depending on what the brand is. How would you define that and just what makes up the quality of a Moncler jacket?
· Chris Davies
[00:00:00] S1: Yeah, so I tend to think of the quality for most luxury brands in two ways, really. So one is actually the quality of the product itself. And there are many different strands to that. There's the history, the heritage, there's the actual craft that's gone into it. The touch, the feel, the smell, if you're dealing with fragrances. And then there's the experience. And that, I think, is a really crucial part of any luxury brand. You need people to feel that they're experiencing something—this is something that's really special and unique. Now, on the product quality side, Moncler has this really high standard when it comes to thinking about the down that goes into its jacket. So this is white goose down that Moncler uses and these standards are really, really strict. So it has this special down integrity system and traceability protocol, which sounds very complicated and very scientific and in some ways it actually is. For example, they actually do have a third-party auditor that's basically testing the DNA of some of the down to make sure that the species is right, but to go maybe a level deeper on the quality of the down itself. So you've got various standards around fill power. So if you think about the way in which the down is clumped together, the way it's put into a jacket, there's various high standards around ensuring that you've got the right amount of down occupying a cubic inch after it's been compressed. There's actually a lot of detail about this online.
· Matt Reustle
[00:00:00] S0: Yes, we had a very cold winter here in the New York area and I went down the rabbit hole of researching the different types of down insulation. Duck down, goose. There are rabbit holes to go down. So I would agree with you there.
· Chris Davies
[00:00:00] S1: There definitely are. I'm desperately trying to avoid going down one. But basically, with fill power, it's how many cubic inches 1 oz of down occupies after it's been compressed. So higher fill power basically means better insulation and better loft, which is basically how much space 1 oz of down occupies when it's expanded. So higher loft means better warmth-to-weight ratio. So basically more effective at trapping warm air. And you can measure fill power. 300 to 500 is generally seen as lower quality. 700 plus is higher quality. That's the down that usually comes from more mature birds. It's got excellent warmth-to-weight ratio, and that's the down that Moncler is really focused on getting into its jackets. And they will go to extreme lengths to make sure that the jackets are perfect. So avoiding clumping, trying to avoid cold spots, all this kind of stuff, which is incredible. But you've also got this product quality notion extending beyond materials—it's relevant for the animals themselves as well. So they've got very strict standards around how you treat the geese whose down you are harvesting. So there's a complete ban here on what they call live plucking that is just completely unacceptable here. So they use this protocol, they've got a third-party auditor which makes sure that they're following these standards. So that I think is really integral to thinking about the down, and again, it speaks to that technical heritage. And then on the customer experience side, which is the other really important aspect of the quality here, think of some of the other great brands out there. One example would be Panerai, which is a famous watch brand which is owned by Swiss group Richemont. If you're a top client there, you'll get invited to private factory tours in Switzerland. You'll get the chance to buy maybe limited-edition watches with engraving options. It makes you feel like you're part of the brand narrative. Or if you go to Louis Vuitton, if you happen to be a regular customer, you'll have a sales associate that remembers your birthday, that knows your past purchases, this sort of thing. So it's really feeling like you're actually quite special as a client, not a consumer. I've been to a few Moncler stores now.
· Chris Davies
I remember visiting their Galleria store in Milan last time I was out there meeting Moncler, and they've got this really special secluded area upstairs which is for their special clients. They've got all modern technologies that help you trace customers so you can try to create one identity and match that up across the footprint. And I also went walking around the store, just picking things up, having a look, feeling different products, and there was a really diligent employee following behind me who was just putting everything back neat and tidy. If I were to do that in another bog-standard retailer here in the UK, that just would not happen. So there's this attention to detail. They're obsessed with the presentation side of things as well. And also I mentioned the Shanghai event last year. But the stores are also quite unique, particularly the flagship stores where the architecture tends to be really quite special. But also the inside of these stores is different wherever you go. I mean, the Galleria store in Milan, it feels a bit like an art gallery, whereas there's another in Tokyo which has this LED facade that mimics snowfall. So it's a bit like being in this giant snow globe. So it's very experiential. Those two strands I think are really, really important, and those two things I think Moncler does incredibly well.