Luxury market “a game for the big players,” says president of Valentino and Balmain

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

How do you see the luxury market evolving 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’re already seeing some positive signs in the USA, but they’re very, very tentative. Department stores are struggling but consumption expenditure is slowly picking up. Footfall in Europe has dropped considerably. We’re all waiting for 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 troubled because of serious economic problems. Elsewhere in Asia, countries like Indonesia, Singapore, and Thailand are performing better than expected. These are important markets, but they aren’t really the ones that can make a difference.

Overall, 2024 will be a relatively sluggish year for luxury. But our feeling is that there is enough resilience to take us into a new era.

You have signed a partnership deal with Kering, which bought a 30% stake in Valentino and could acquire a 100% stake by 2028. But the partnership is more far-reaching, and Mayhoola might acquire a stake in Kering. Is this planned for the long term, or earlier?

RMR: Theoretically, we’ll be able to buy Kering shares in future. It will depend on how things will evolve. Ours is a recent relationship, one that we are developing. We believe that the agreement is very positive for both sides, and it will certainly create an environment that will help Valentino expand.

In the last five years (…), the luxury market game has changed dramatically. 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 highly beneficial for the label.

Major 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. It’s a game for the big players now.

We need to carefully reassess our position. We wish to remain an important player in the luxury sector but we are very well aware of what we can do, and what we need help for. And if we need help to grow certain brands, and that means partnering with a major group, that’s an alternative we’re willing to consider.

Could such a partnership be on the cards for Balmain?

RMR: Balmain is a much smaller label [than Valentino]. We still need to take it to a much higher level, until we reach a stage where stronger players can step in. Having said that, I don’t think there will be a need for this in the next few years.

Just to give you a term of reference, Balmain has approximately 40 stores worldwide, while a label like Valentino has 220. Our job of growing Balmain internationally isn’t over. We’re only in the initial stages of making Balmain renowned worldwide.

The brand is very strong in the USA, but less so in Asia and Europe. It’s well-known mainly in France, the UK, and the USA. We have a certain presence across the rest of the world, but we still have a long way to go to fully explore the label’s potential.