Economic Times -10 Apr 2009, 0605 hrs IST, Reshmi Dasgupta, ET Bureau
“I have always been influenced by women,” says luxury czar Francois-Henri Pinault, almost shyly. It is the day before the launch of his new Foundation for Women’s Dignity and Rights, a cause he was made aware of by, who else, a woman in his life. Not any woman though, but the woman he married just this Valentine’s Day: Salma Hayek, the sizzling Mexican-born filmstar and mother of his daughter.
It’s logical, given that his business hinges mostly on women – both as employees and customers – that he focuses on this crucial constituency, which he concedes with another bashful smile. However, the women’s story of the 46 year-old head of PPR, the conglomerate that his father Francois Pinault built up from scratch in 1963 to rival Bernard Arnault’s LVMH, goes back further. Not to the ladies he squired around much to the delight of the tabloids, but to his stepmother who almost made him go vegetarian years ago and his first wife Dorothee who opened his eyes to animal rights.
His interest could just as well have stopped at the women who covet Gucci and Bottega Veneta, Balenciaga or Boucheron. That it did not end there led him to this moment, at the Imperial Hotel in New Delhi on a muggy March evening, to speak about twin consuming passions. It could almost be called a culmination of all the female influences in his life for what Pinault spoke of was not the latest Gucci ‘Sloaney’ bag or Nicolas Ghesquière’s 2009 requiem for YSL at Balenciaga, but the foundation (which has writer Taslima Nasreen among its directors), and a film by Luc Besson and Yann Arthus-Bertrand that he’s financed, on what concerns us all: Home.
Pinault was inspired by the famous French photographer’s stunning aerial shots of the earth to commission Arthus-Bertrand to do a film to drive home the message that the Earth can only be saved by the ones who are killing it – us. But why would the head of a Euro 19 billion retail-to-fashion group be concerned with the Earth, given that PPR has plenty of internal issues to be dealt with? After all, while net profit in 2008 was Euro 924 million or $1.16 billion, it grew just 0.1% with retail ventures Fnac, Redcats, La Redoute and Conforama seeing a fall, and Gucci group sales remaining flat.
The answer lies in the slowdown, which has prompted introspection about the raison d’etre of luxury and its sustainability in this economic hiatus, as incomes shrink faster than the polar ice caps. As ethical business becomes a factor in buying choices, as much as value for money, suddenly, the connect becomes obvious in the otherwise oxymoronic phrase ‘sustainable luxury’. Concern about seemingly unconnected issues – population explosion, biodiversity under seige, climate change and polluted water bodies have actually become ways for the luxurati to prove their true worth.
The independent New York-based Luxury Institute says elite consumers’ preference for socially responsible brands has been growing steadily every year, from 51% in 2006 to 57% in 2007 and rising. “The global crisis of confidence in governmental, financial, and other institutions will drive luxury consumers to demand that luxury brands serve not just them but society as a whole,” says the Luxury Institute report. “They will require luxury brands to be ethical with all constituents, charitable in ways that make a difference to their beneficiaries, and ecofriendly in ways that can be documented.”
Pinault can credibly claim a head start on that count, as PPR adopted an ethical charter in 1996 and in 2007 when he took over and a team was Henri Pinault constituted for corporate social responsibility in seven priority areas. “My father and I want to give a sense of purpose to business besides just profit,” he says earnestly. So energy consumption has been cut by brands from Gucci to Puma, eco-friendly packaging adopted, and suppliers told to employ fair labour practices. Given India’s A-list’s partiality for Bottega’s signature latticeworked leather handbags, Pinault also mentions a school set up to ensure the continuity of that distinctive art in Italy’s Veneto region. “And it’s not merely meant for Bottega Veneta workers!” he clarifies.
Even the carbon cost of Arthus-Bertrand’s travel to 50 countries for Home has been offset by a development initiative with an NGO in Kolar, Karnataka to recycle kitchen waste and animal manure into biogas and compost, to combat depletion of forests and climate change. India also figures on the agenda of the new foundation, which will fund a project in Andhra Pradesh, Gujarat, Bihar and Jharkhand to train 200 women from disadvantaged families in hairdresssing and beauty in 2009.
This clearly points to India being high on Pinault’s radar as an important emerging market for the group – apart from being a place where it sources, for instance, for Gucci, Balenciaga and Boucheron – despite India accounting for just 0.4% of global luxury good sales (according to Bain & Co) and the static caused by the current downturn. The dim economic outlook had Pinault announce 1,200 job cuts this February, lower advertising spending and and slower store openings even though his leather and fashion goods did all right. Reiterating that PPR was “looking east even more,” alluding to the limited growth prospects at present in the US, UK and Japan, he stresses that capex will be more cautious.
The Luxury Institute reports that its 500 high net-worth respondents list quality (82%), craftsmanship (78%) and customer service (60%) as the top three requirements of a luxury brand. No wonder Pinault believes that while PPR cannot ignore smaller pockets as, “in tough times, brands have to remain accessible yet aspirational, and store merchandising has to adapt to changing situations,” he is equally convinced that “expensive items have to be worth their price, particularly if those who buy are buying less. It would be a mistake to lower prices, craftsmanship and service, or cut R&D. A high-end product has to be constantly reinforced with quality and innovation – it cannot depend on the brand to justify its price.”
And from that sentiment it is a short jump to what Pinault says in his speech a day later: “Sustainable development is equally unable to dispense with innovation, if it is to avoid repeating our past mistakes and invent new modes of production, with growing concern for the planet and greater respect for people.”
In Los Angeles a year ago, at the annual Global Green Globe pre-Oscar party, 42 year old Salma Hayek, who serves on its local board had revealed that she was more focused on environmental initiatives since her daughter, Valentina Paloma Pinault, was born in September 2007. “I get a bigger fear of what kind of world she’s going to live in. Is she going to run out of water? What kind of water is she going to drink? It’s really scary and it’s not that far away if we don’t do something about it,” she had said. The imperatives of these two important women in his life, then, will surely continue to influence Pinault’s drive towards sustainable luxury.