(upbeat music) - Hello, and welcome back to the Glossy Weekend Review Podcast. I'm your host, senior fashion reporter, Danny Parrisi, and I'm here with our international reporter, Zofia Zwiglinska. How are you, Zofia? - Yeah, doing well. Just come out of a heat wave in the UK, so very glad that's over. - Oh, really? How bad is it there? - Well, it was like three days, but UK heat waves are kind of built different. There's no air con anywhere, so it just ends up being you trying to circulate around your house and escaping from room to room to see what's cooler. - I bet your dogs were panting like crazy. - Oh, yeah. - It's been pretty hot in New York as well, but we have a fun episode. We're gonna be talking a couple of things sort of revolving around Sheehan. One, they confidentially filed for an IPO in London this week, which you wrote about, so we're gonna talk about that. We're also gonna talk about Amazon testing and potentially launching soon, a basically Sheehan competitor of low price kind of store, direct shipping from China. We'll talk about kind of the effects of both of those things and how they relate to each other. And then finally, our last topic's gonna be the complete opposite end of the spectrum, the price spectrum, talking about LVMH, which made a bunch of acquisitions recently and will probably make many more. They are so ridiculously huge. Let's start talking about Sheehan though. So as you covered earlier this week, they filed for an IPO in London. There was a whole kind of back and forth where they initially wanted to go public in the US and faced a lot of opposition. And now they are gonna go public in London instead. Although based on your story, it seems like there was some opposition there too. So tell me more about it. Is it, did they have as easy a road there as they would have had here? - I mean, definitely not as easy a road, just because obviously the US side of things there's the whole kind of issue between US and China on the trade agreements. There's the kind of quality. There's also all kinds of production outsourcing issues that are affecting those relationships, like things are trying to move back to American production. Whereas with the UK, the IPO market in general, and to be honest, the stock market is a little bit dead and the UK is desperate for a little bit of a cash influx or something happening in the business sector. So while it might not be the prime location for most companies to go public for a year and after it got like a definitive ban from the US stock market, it makes sense to go to the next biggest one, which is in London, surprisingly. And for that, obviously, the process for going through UK regulatory approval and then also Chinese regulatory approval, because they have to go through that is slightly longer. I believe they said that it was a three month period. So there was an initial kind of announcement, I think back a couple of months ago that it was something that they were considering. And then now they've confidentially filed, which means that basically their financial information and everything to do with like revenue and sales is not public yet. I'm assuming that will come to light at some point or those, again, a very weird kind of thing because she and her so far not published many revenue numbers, not published sales, they don't kind of disclose anything publicly. So to do that, I think it's a big step forward and it could get them some legitimacy in terms of how they're operating globally. - Yeah, I definitely think it's interesting. One of the things I thought about was if they go public, which like you said, it's confidentially filed which means they're not public yet. I think they still need it also approval from the Chinese Securities Regulatory Commission in order for it to go through, which might happen. But if they go public, I wonder if this sort of added to the necessary transparency of being a publicly traded company. You've got shareholders peeking in and looking at how things run behind the scenes. You'll have numbers being reported. I wonder if that will change or alter any of their practices or at the very least change the way the company is viewed if we can kind of get a clearer view of what's going on internally. Obviously, publicly traded companies still have lots of secrets and secretive practices. So it's not like it'll all be out in the open but definitely more so than it is now. Like you said, they have not reported a ton of numbers over the last couple of years. It was reported though that they are valued or at least were valued last year as like a $66 billion company or something. So they're huge and I think this confidential IPO just speaks to how for all the criticism and all the pushback in the US or in Europe and other places, they're still so huge and I'm pretty sure they're still growing. I think the price is just really hard to beat. Like it price is always important and I think especially right now, at least in the US and probably in parts of Europe too, people are extremely conscious about how much they're spending and it doesn't matter how many educational things put out by the British Fashion Council or something. Like a lot of people are just gonna be like, this is cheaper and that's what I can afford and that's what I'm gonna buy. So I feel like they're gonna keep growing just based on that, you know? - Yeah, no, that's exactly the kind of message that I'm a little bit worried about. So obviously the British Fashion Council has had a very kind of longstanding stance on sustainability, on kind of local production. It echoes some of the things that are happening in Europe right now around the kind of Green Claims Act. And it seems like there's a lot more movement towards making sure that, you know, designers are pushed to responsible practices. Like brands are pushed towards responsible practices, like places like misguided and the pretty little thing which are kind of both UK fast fashion brands have been, well, basically like reviled in the British media. Like it's not something that I guess anyone's particularly proud of. There's been kind of labor rights abuses in Manchester where a lot of those clothing pieces were produced. So I guess like having Xi in come in and possibly be successful on the UK IPO scene would be a bit of a blow to UK fashion from like a sustainability and responsibility point of view. But on the other hand, you're thinking about like the technology implementation and like, I guess the efficiencies that a system like that would bring like is very different compared to a lot of these very traditional retailers that are present in Europe and the UK who are basically all trying to replicate that model now. Like faster production at the same time more efficient, try and reduce over stock. Like if this solution, which Xi in is supposedly selling as a B2B solution, if that works out for the industry, like it could be a whole new conversation for how fashion is approached. And it could also be one from the sustainability perspective as well. - I mean, I always think about something you told me on this podcast once about how I think you had just come back from one of the European fashion weeks. And you were telling me that for some people in Europe, sustainability and craft and making things that are not super cheap is not just about the environment or whatever, it's also kind of a point of national or continental pride that, you know, Europe and especially France and Italy are like places where beautiful high quality things are made and like that association of super cheap, fast fashion is not just bad for the environment, but it's also kind of against the cultural like a cache that these places have. Not that there's not tons of cheap stuff sold there and bought there all the time too. But I always think about that, that there's a little bit of a pride element as well. But yeah, like you said, if companies like Sheen still keep growing and still keep getting popular, it's kind of, it is a little bit of a blow to that kind of reputation. Speaking of Sheen and low prices, let's talk about Amazon. So Sheen, they're part of their sort of business model is super cheap products shipped directly from the supplier. And Amazon is now planning to roll out a basically a copy of Sheen, a discount store, a separate section on the website that operates exactly the same way. Extremely low cost goods and shipped directly from China rather than to an American warehouse, which I think or an Amazon warehouse I should say, which is how a lot of their stuff is sold. It's obviously from sellers all over the place, but it tends to all go to an Amazon warehouse first. We're at the very least, someone is looking at it and then it goes to customers from there. And this would be a different kind of model that's much more just directly kind of copying the Sheen model. What's your take on that? I mean, just like we're talking about the model, I think is very attractive to customers, especially price conscious customers, even if it's received a lot of criticism from people in fashion and in sustainability and stuff like that. But the fact that Amazon is kind of going there too speaks to what we were just saying, that it's just, you know, price is hard to beat and a lower price option. I don't know, to me it's like a no-brainer, even with all the bad stuff that comes with it. Anyway, what's your feeling on that? Yeah, I mean, like I think as of this morning, Amazon is now like a trillion dollar brand. So I mean, it's incredible that there are still places that it connects Vantu. But I'm not surprised, you know, I guess like the aspect of quality control that, you know, was I guess a bit of a given with a lot of retailers before these kind of companies came about, you'd always have, you know, some kind of auditing, you know, some kind of quality control before something would go out. I'm not sure if customers are not like okay to take a bit of a risk nowadays as long as their product is cheap, which I find is a really weird equation, 'cause obviously there's been so many different like issues with items that she and has shipped in the past, you know, anything from like heavy metal inclusion, kind of quality control in terms of what's in it. You know, half the stuff is unwearable after you wash it. Like the idea that Amazon would be going into that, you know, beyond what it already does, which I'm sure that there's a lot of kind of suppliers who are bringing in kind of a lower quality product onto the platform. I just, I don't know if that's going to be a beneficial thing or if everything will end up become very, very average in quality. Like you already see that on like TikTok Sharp and like all of these like social comments platforms where some of the product can look really nice, but then it comes to you and it's like, it doesn't match the description or like ends up staining because, you know, it's not really washable. Like the idea that Amazon would kind of lower their quality bar by looking at direct shipping from suppliers is just, yeah, it just doesn't seem like the right way for me. But again, business expansion is business expansion. And if customers are willing to take the risk, then yeah. - No, I had the exact same thought which was about quality control and that like I was saying, when you're shipping through the Amazon warehouse at, you know, there's still tons of low quality kind of garbage basically on that platform, but at the very least, it's all going through the same places. It's got some sort of eyes on it before it makes its way to you. So there definitely, I think like the direct shipping model is part of the reason she can be so cheap because it's like fewer hands change, like fewer times that's changing hands, fewer people involved go straight from the supplier to the customer. So it's just cheaper, like I get that, but I think you're totally right that it's, it's definitely going to sacrifice some quality control. - Yeah, I was going to say that just like, it came to me that how are they going to be able to do this? Because usually with Amazon warehouses, the whole idea is that shipping is done, I think through more eco-friendly ways, which I'm assuming is kind of trucking rather than, you know, flying things over. Whereas if you're doing it from suppliers directly, that would mean a lot more flying. And there's already been like reports that like a lot of airline companies are doing really well in China because of the amount of product that is being flown out of there right now. And the emissions on those things are huge. So if Amazon ends up contributing to that even more, I'm just like, sustainability targets are like way, way down in the rear view mirror. - Yep, yeah, that's exactly right. And from what I know about freight, the different kind of methods, unfortunately the slowest ones are also the most sustainable, like shipping by sea is much more sustainable. It has a lot less emissions, but it also takes forever. And then flying is the fastest, but like you said, it has a ton of emissions. So I think it's very clear that emissions reduction and sustainability is not a priority here. The other thing is I saw that Amazon had already made some other changes, like reducing the fees for sellers of very low price items to just sort of encourage more of that to be on the platform. And I also think Amazon has already kind of undercut so many other businesses with the free two day shipping for prime members, which multiple brands have told me that that's completely rewired a lot of people's brains and anything over two days is just untenable to them now. And it's making everyone really have to work hard to get to the level that Amazon has of speed. And so now if we've got ultra cheap prices as well, I wonder what further effect that we'll have on sort of consumer mindset, like why buy from anywhere? I mean, a lot of people will still buy invest in higher quality goods, but I think there's an argument to be made like why buy from anywhere else if you can get it in two days and it costs $1 from Amazon. Probably not good for the world, but I can see like if you're really, your wallet is really tight, that has a lot of appeal. Any other thoughts on Amazon as she in before we move on to talking about LVMH? - No, I think that like it's, it's just a crazy like weld out there and I'm very worried about these kind of moods. - Yeah, yeah, me too. Okay, let's talk about our last topic. Complete opposite end of the spectrum here, but LVMH made the latest of several big acquisitions this week, there's a lot to unpack. They've also just been on a crazy acquisition spree, which we can talk about more, but the most recent one is Lepe, 1839, which is a Swiss clock maker. LVMH bought them and announced that. I think Wednesday morning, it's make a maker of luxurious high-end clocks. Obviously, I think part of LVMH is a very clear ongoing effort to improve their sanding in like the watches and orological kind of world, which we've talked about on this podcast. Frederick Arnow is the newly appointed head of LVMH's watches division as of January, and he's immediately done, I think, a lot of work to kind of increase LVMH's standings in the watch world. They increase the prices and cut the number of models at LVMH, or sorry, at Louis Vuitton watches. They've bought people like Lepe, 1839. Frederick Arnow has talked a lot about his sort of ambitions for watches. There's a couple other acquisitions to talk about too, but first, what's your take on them buying this clock maker? - Yeah, I mean, it's really interesting, 'cause obviously a lot of the times you're looking at watchmaking rather than clockmaking. So it feels like it's a bit of a different acquisition. You're not really looking at kind of fashion product. You're actually kind of going more into the like craft heritage, almost collectables around ticks, those are the kind of areas that you're looking at. If you're going for such a story brand and a lot of the times it's kind of special keepsakes or mementos, I think the photo they used to kind of promote it was in the shape of like a hot air balloon. So it's not exactly the things that you'd wear on your wrist and wear every day. I think these are kind of special objects, basically. - True, but I do think that just having the clockmaking sort of expertise in the portfolio, I would imagine that they will take some of that Swiss expertise over to the watch brands too. But I think you're right, I don't think they're going to stop making beautiful clocks, like display clocks. But I just think it probably is going to be rolled into there, maybe not rolled in, is not the right word. Like, I can't imagine that they're going to have these skilled clock makers from Switzerland and not use some of that knowledge or expertise ever for their watches. The other thing is they have acquired, so a bunch of stuff recently. Another recent one, I think from last week, Shay Lamy-Louis, which is a bistro in Paris, that's not very big, but is famous and Bernardo No apparently is a big fan of it. And we've talked on this podcast also about how they're very close to buying Paris Match, which is a famous magazine. I feel like LVMH just has a finger in every possible thing that could be luxury, hotels, restaurants, magazines, like clocks. You know, they're so expansive. I almost wonder if it's going to turn Paris into Louis Vuitton Disney World, where it's like you eat at the Louis Vuitton restaurant and then you sleep at the LVMH Hotel and then you buy some LVMH stuff. I don't know, it's like you could go, you could do a whole trip to France and just do LVMH related stuff the whole time, probably. - Oh my God, yeah. And like if you think about the like international potential of that, like there's been so many different like luxury brand cafes and experiences. And obviously like LVMH, I got them, I think it's the Dior Museum. Like they're doing so many different things. It really does feel like, you know, it's just an LVMH world and we're all just living in it. I'm really hoping that they don't turn Paris into that. Like this year alone is, it's quite visible that with the Olympics, they're really pushing that kind of agenda and obviously the fact that LVMH is the most valuable company in France, like total is really driving that change. I think a lot of the times it's very, very enmeshed with like the government and kind of the way that France wants to present itself to the world. I think there's a lot of kind of tie-ins there with like luxury and fashion and trying to appeal to tourists that way. I guess like on an interesting front, like Disney World isn't getting any smaller. So like perhaps that's the model to follow. You know, people are always going to be keen to come back for more. And it does give you opportunities to refresh, you know, all of those different things regularly to try like different things from like astronomy to like entertainment. Obviously they've got that whole partnership with like Hollywood, like there's a lot going on there. - Yeah, yeah, they're making movies. I forgot there's a whole other element of their kind of portfolio now. Another interesting sort of investment-related thing with LVMH kind of on a different level, but also from this week is that Bernard Arnow is now a minority stakeholder in Rishmong, which he said was just a personal investment. It's not supposed to be reflective of any larger LVMH strategy and didn't say this, but basically was like, no, we're not trying to acquire them. So like don't think of it that way. But I mean, they got to be thinking about it. I'm sure they would love to, at the very least just to get Cartier, which again, going back to their watch kind of ambitions, they would probably love to have Cartier in the portfolio. So, but I can't imagine any world in which an LVMH acquisition of Rishmong does not get challenged by regulators because that would be such a huge consolidation of luxury. Rishmong is a lot smaller than LVMH, but still pretty big and owns a bunch of competitors, the competitive brands to LVMH's brands. We talked about tapestry and capri and that merger being challenged by the FTC here in the US. And both of those companies are a lot smaller and have a lot less market share of luxury than LVMH does. So I think if or Rishmong, if LVMH tried to buy Rishmong, I mean, I think that would be really hard to justify on monopolistic grounds, that would be an insane level of consolidation. - Yeah, I think like the whole kind of anti-competitive movement that's happening in tech could very well move over to fashion as well. Like there's so many things that LVMH is basically doing to dwarf all of these other companies, even if they do already have, you know, a lot of major important brands, kind of under their wing and Rishmong's definitely been, I wouldn't say performing anywhere near as well as it should be for such a like, big house with so many different brands. But yeah, I mean, it's an interesting kind of time right now. I don't know if you also saw the Dior news with regulators in Italy cracking down on them. Apparently there was some issues with manufacturing. So I'm wondering if like creating this like French Disney world LVMH engine is also going to cause problems for other countries where, you know, that regulatory aspect will start coming down a little bit higher to try and take some of these penalties away from LVMH. But yeah, very, very interesting. - Yes, definitely. I think that's all the time we have, but thank you for being here Zafiyan. Thank you for sharing your expertise as always. For those of you listening, don't forget to give us a rating and a review on Apple Podcasts or Spotify or wherever you listen to this. That helps us out so much. I don't use Apple Podcasts or Spotify. So I don't know why those are the two I always say. I use pocket casts, just not an ad. I just, I like that one. Anyway, if you give us a rating and a review that helps us out a ton, don't forget to subscribe to the Blossy Podcasts. Also, because you'll hear interviews with industry insiders every Wednesday and we can review episodes with me every Friday. And until then, that's all we got. So thanks for listening. And thank you for being here Zafiyan. - Thank you so much. (upbeat music) (upbeat music) (upbeat music)
