Bulgari CEO: ‘Less But Better’ Driving Luxury Growth

VENICE — Why does the luxury sector continue to grow? Because existing customers are spending more. That was the view of Bulgari chief executive Jean-Christophe Babin, who said in an exclusive interview with BoF that his company was recording “more than double digit” growth, generated by “natural upselling requested by clients.” Customers, said Babin, “want less but better.”

Speaking in Venice at the launch of Bulgari’s Mediterranea high jewellery collection last week, Babin said average retail sales prices were rising in all his brand’s categories, which include jewellery, watches, perfume, accessories and hotels.

And while the global inflation crisis was pushing costs up, Babin insisted this wasn’t the reason for the increase. “Twenty percent [of average retail price increases] is driven by increases to cover our costs, but the other 80 percent is client upselling,” he said.

“Better luxury is not just gold with diamonds added; it’s also better luxury because it’s authentic,” he added. “Our customers tastes have not changed. It’s just that they like the idea that a Bulgari ring has been crafted in Italy and not in another country, and that a diamond comes with a certificate that says ethics have been respected.”

The Mediterranea collection, an assortment of more than 400 one-of-a-kind high jewellery pieces debuted at Venice’s Palazzo Ducale, appeared to offer proof of the trend. According to Bulgari, 90 pieces carried seven-figure price tags. Many were said to have sold at launch.

Babin predicted 2023 would be “another record year” for the brand. “In 2022, we achieved a record with very little tourism and with local clientele,” he said. “In Q1, we accelerated and in Q2, we are still accelerating.”

Parent company LVMH doesn’t break out financial performance for its brands, but in April the group indicated that Bulgari had shown “strong growth” in the first quarter. LVMH watches and jewellery sales grew by 11 percent, as did perfumes and cosmetics, key categories for Bulgari.

“If we have strong growth, it means Tiffany and Bulgari are growing very well,” Babin said.

But Babin acknowledged storms on several fronts. “The consequences of the war in Ukraine, Covid and inflation have created uncertainty and some fears,” he said. “The rise of interest rates is another challenge that we have to tackle because money is more expensive and loans are more difficult to get.”

Babin said rising interest rates were having a negative impact on his US business. “In America, we suffer like everybody else because the restriction of credit is affecting everything from real estate to luxury to cars,” he said. “But we know that as soon as rates stabilise, America has this capability to bounce back quicker than any other country in the world.”

US appetite for luxury remained strong, Babin insisted, adding that he believed Americans would travel to Europe and spend on luxury this summer. “In the short-term, [their] financial position makes it a bit harder,” he said. “But it won’t prevent us from growing even more than last year when America was booming.”

This was because he believed that Chinese tourists would soon return to Europe. China has been slow to reissue tourist visas after three years of lockdowns, but Babin said he was confident that a “bottleneck in visa applications” would be resolved in “two or three months.”

At the same time, Bulgari would remain reliant on growth in e-commerce sparked by the pandemic, said Babin. “Compared to 2019, traffic [in stores] is not what it used to be,” he said. “But the number of clients is overall the same thanks to the exponential growth of e-commerce during Covid.”

“E-commerce is still growing at the same rate as boutiques,” he continued. “If you combine e-commerce clients together with bricks and mortar, you are back to 2019.”

However, he said that while 30 percent of his perfume business had migrated online, other categories had not reached the same level. “E-commerce is quite marginal when it comes to jewellery and watches because people need not only the sizing of a bracelet watch, they need to feel the product,” he said.

He said 70 percent of his watch clients are male and 30 percent female, a higher-than-average split.

The watch industry has yet to learn from the successes of high-end jewellery and fashion houses that have broken into the women’s market, he said. “There are still few watch brands that think of a watch for ladies from scratch,” he said. “This we do, and our jewellery competitors are doing the same, and they are successful with ladies. Other pure players from Switzerland are thinking man first and then try to extrapolate that.”

Babin declined to comment on industry speculation that former Gucci creative director Alessandro Michele is in talks for a role at Bulgari, following his exit from the Italian fashion giant in November.

Turning to Bulgari’s hotels business, Babin said he’d witnessed the same growth trend as in other categories. On June 9, Bulgari is scheduled to open its eighth hotel and first in its home city of Rome, adding to sites in locations including London, Shanghai and Bali. “In our hotels, we sell more suites than standard rooms,” said Babin. “Before, it was more standard rooms than suites.”

Client-led upselling was, he said, a consequence of Covid. “Before Covid, we were immortals,” he said. “Now, people realise that life could be shorter than expected and should be enjoyed at its fullest and best.”

Babin said he believed luxury remained largely unaffected by global economic challenges. “When you look at the macroeconomic, geopolitical position, the overall colour is orange,” he said. “But when it comes to luxury, the reality is it’s green.”

Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholder’s documentation guaranteeing BoF’s complete editorial independence.