Bloomberg: As Rich Get Richer, Valentino Chairman Sees No End to Luxury Boom

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As Rich Get Richer, Valentino Chairman Sees No End to Luxury Boom

Rachid Mohamed Rachid talks the pandemic, exclusivity, and the power of Zendaya.

By  Sarah Rappaport and Francine Lacqua   26 mei 2022 17:37 CEST

The rich are getting richer, and it’s a boon for the luxury industry, according to Valentino Chairman Rachid Mohamed Rachid.

The Egyptian businessman spoke to Bloomberg TV on the sidelines of the World Economic Forum in Davos, Switzerland. “There’s no doubt that with the pandemic and the way that money has been spent over the past few years, the rich got richer,” he said. “So there’s lots of money within a segment of the population, and they’re trying to spend it on luxury goods.”

The CEO of Mayhoola—the investment fund that owns Valentino and Balmain—added that exclusive products are even more in demand among the wealthy. “With the pandemic, countries have been throwing money in the market. Most of this money ended up with rich people … After the pandemic, rich people are more aware they are going to die and want to spend the money on luxury and more exclusive things,” Rachid said. A Pew Research study suggests that wealthy Americans are indeed poised to emerge from the pandemic in better shape than they entered it.

Becoming even more exclusive is a strategy that seems to be paying off for rival Chanel. The luxury brand is planning an additional $1 billion investment this year after price increases helped it surpass its pre-pandemic profit levels. The company has hiked global prices on some of its classic handbags by almost two-thirds since the end of 2019.

US retailer Nordstrom raised its forecast for earnings and revenue in the coming year, a sign that rich shoppers are continuing to check out luxury goods even in an era of high inflation. “The US is booming for luxury, and we feel like this is going to continue,”  Rachid said. “More and more exclusive things are in even more demand at the moment … The most powerful brands in terms of luxury have seen growth of 40-50% growth in the last two years, Valentino are among them. The most expensive products are more in demand than anything else.”

He also flagged the importance of connecting with young customers—and the power of brand ambassador Zendaya, the Euphoria star who is the face of Valentino’s new campaign. “She’s an amazing person who can create a link between the brand and the new generation,” Rachid said.