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What will people pay? What is it that encourages customers to pay more for a product whose manufacturing cost is identical to that of another product?
We saw what was the answer to this question today: they will pay for prestige.
Prestige as you get by buying products from Estee Lauder (EL). Prestige like buying products from Ralph Lauren (RL). Prestige like buying Apple products (AAPL).
Today we have one of the most impressive prestige prestige displays I've ever seen when we saw Ralph Lauren's, Estee Lauder's and Apple's shares explode upward, the first two on profits above expectations, the latest on an endless parade of purchase.
I have already congratulated you previously about Estee Lauder and his incredible CEO Fabrizio Freda, who comes to dazzle and be dazzled with intelligence, presence and innovation . Let the Clinic Salesperson arrange a clinic during his conference call. The stock of Estee Lauder jumped 15 points after a real eruption and a good orientation.
I would also like to introduce Patrice Jean Louis Louvet, Collaborative CEO of Ralph Lauren, who has reinterpreted the code of prestige wear and who escapes with the crown. His hard work and the incredible reputation of Ralph himself, foolproof – it is so important that the founder always plays a role no matter what – was allowed RL to acquire ten stocks .
And there is Apple who offers a product that could have the most prestige in the range: the watch, which crushes a company with $ 12 billion with a product that looks great (have you seen the brand Hermes?), saves lives, the latest news that I've read, an article from the New York Post This morning, about a 67-year-old Norwegian who had had a serious fall in his bathroom, his Apple Watch automatically contacted the rescue staff. It's a useful prestige that people will pay, not to mention the new iPhones with image quality equal to a $ 1,500 camera that makes you look great on Instagram, which is all people want from our days, or at least people who count, generation XYZ, etc. We need to add a few letters. What about Gen Omega?
Do you know what these brands have for them? First and foremost, they resist in more difficult times. I will quote for a moment the clinic of Fabrizio Freda because it is much more eloquent than me on the subject: "I want to emphasize that, historically, the beauty of prestige is less sensitive to economic slowdowns, because it is an affordable luxury driven by repeated purchases and loyalty. "
There is also a sustainable universality for Estee Lauder brands. As Freda says, "Our sector has a solid foundation in the long run, including favorable demographics that should generate solid growth for years to come."
I adore the arc drawn by Freda: "One of the key strategies of our brand's success is to create a significant base of profitable repeat customers, attracting new users with compelling marketing innovations. then makes durable products. "Fans." Because of these principles, each brand category in its main chains has experienced double-digit growth.
While others struggle in China, Fabrizio records huge numbers. I've heard many stories of woes, but have you heard anyone say this: "Luxury brands are in great demand in China." Our sales reflected this trend by increasing sharply. " Freda knows that Asian consumers are online. It has risen sharply in China and now accounts for more than a third of its sales.
It's an amazing story, just like Freda, who likes to support hero brands with more and more resources, doing what any good portfolio manager should do: put his money at the service of the winners while letting go Losers. I've interviewed Freda this afternoon to help teach you her magic. What lies behind its success? He says combining data badysis and creativity to create a prestigious product and expertise combining the expertise of his experience, brand managers, with youth and creativity. The data, he says, "is the new oil, but it's only when he's connected to creativity" it pays.
I think it's so important because a lot of Silicon Valley think that all you need is data. That's why Freda is such an extraordinary teacher.
What about Ralph Lauren? I've observed how Patrice Louvet has expanded the tremendous brand power that Ralph Lauren has created and extended it to new generations who aspire to the prestige of what Ralph has created. Last spring, Louvet set the course that I thought was too difficult during his day of investors, but he was able to exceed expectations, both in terms of results than on the results.
Many execs retrace these ridiculously high precepts that tend to be inaccessible, but we forget them once they are presented. Not with Louvet. When it addresses the future of the brand, it presents the following objectives: first, to convince a new generation of consumers; second, to boost commodities and accelerate underdeveloped categories; third, stimulate targeted expansion in our regions and our channels; fourth, to lead with digital in all activities; and fifth, act with discipline to fuel growth.
I know, I know, they look like truisms, they look like platitudes and business schools that do not count.
Do you know why they do not count? Because most executives can not deliver them, that's why.
Not Louvet.
He has a whole new fan base that loves Ralph's products. As he stated at the call: One-third of consumers who bought products from their recent vacation offers were new to Ralph Lauren and a significant portion of those new consumers were under 35 years old.
How are you doing that? Celebrities and influencers, such as Priyanka Chopra's wedding with Nick Jonas in India, where the bride was adorned with the first wedding dress that Ralph devised outside of her own family.
I love the list of influencers of this call: Nicole Kidman, Hugh Jackman, Alex Rodriguez, Gigi Hadid, Luck Rap, Chris Pine, Lady Gaga, Lupita Nyong, Emmy Rossum, Rachel Zoe, Cameron Dallas , Olivia Palermo and Lisa Detwiler. . OK, I added the last, my wife, because I needed someone I know.
You combine these influencers with Ralph's clbadic products with the right doors in the right places and you get what could be a multi-year move.
Apple? What can I say? Every day, I have to remind people that they can think that there is nothing innovative about Apple apart from saving lives, as the watch shows. I come back and say that, like Fabrizio, Apple has combined data with creativity to produce prestige products that we will pay. Sorry, there is nothing prestigious about Xiaomi or Huawei. Nothing. Nothing at all.
So here's what I need you to think about. Do you own stocks of companies whose products will cost more because they think they are prestigious, enduring and beloved influencers? If you do, I think you can manage the vagaries of this market and continue to earn you a lot of money in the long run.
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