Where Ideas Launch – The Podcast for the Sustainable Innovator had the pleasure of interviewing Isabelle Chaboud on her insights on how luxury brands are becoming more sustainable.
Isabelle is an inspiration to her students past and present, as she does finance with style and flair. Her articles have been viewed more than 350000 times, a testament to the value she brings.
This podcast explores:
- The financial impact of the pandemic on luxury brands bottom line.
- The trends in sustainable change and whats driving it.
- The upskilling needed by people adversely impacted by the pandemic.
Isabelle Chaboud is an Associate Professor in the Finance Law and Accounting department of Grenoble Ecole de Management. Since December 2018, she has been Programme Director for the MSc in Fashion Design & Luxury Management and since September 2019, responsible for the MBA Brand & Luxury Management specialisation.
Her main areas of teaching are financial analysis (especially in the luxury sector), auditing and international accounting.She teaches or taught in Grenoble, London, Paris, Berlin, Marrakech, Moscow, Tbilisi (Georgia) and Singapore.
Before joining Grenoble Ecole de Management in 2001, Isabelle worked for 7.5 years for PriceWaterhouseCoopers in Lyon, France where she was a financial audit manager. She had clients in various industries as well as in services. She was part of the European Internal Audit team of PwC and worked in Spain (Madrid) and Portugal (Lisbon).
Isabelle is a French native but lived for more than three years in the United Kingdom, two years in Germany, one year in the United States, one year in Spain.
She graduated from Grenoble Ecole de Management in 1992 and from the International Teachers Program (ITP) delivered by HEC Executive Education, Paris in June 2014. She regularly publishes intellectual contributions in different media. to read her article on this topic, click here.
Katherine Ann Byam 0:15
I’m really excited to talk with Isabelle today because she was also my professor when I studied for my MBA, in 2016, and she was one of the most transformational leaders I’ve met in my career. So, thank you for joining us and welcome Isabelle.
Isabelle Chaboud 1:57
Thank you so much, Katherine. It’s really nice to hear. It’s my pleasure to see you. This time outside class.
Katherine Ann Byam 2:05
It’s really wonderful to have you. So we’re gonna get started by asking you a few questions about your mission so I like to talk to my clients to tell them that we need a mission statement we need something to drives us beyond the job. Tell us about your mission statement.
Isabelle Chaboud 2:25
Okay, so my mission statement will probably be three keywords, people and sharing, learning, and passion. People have always been for me, probably the most important thing – meeting people, discussing with them, and sharing my own knowledge, not only in my country but internationally, we benefit all the different cultures, and that’s something I always look for. I never stop learning I think since I was little, I always try to read, learn new things, and that was something that really matters a lot to me. It’s probably why I studied Audit.
I work for eight years at PwC. Every week we had to audit a new client, a new business model, new industries, from chocolate to pharmaceutical to perfume, fashion, carmakers, always different, traveling as well. I think when you’re passionate about something, you will always find time even if a day only has 24 hours, you can read more, you are more curious, you necessarily learn more. For me, those are the three most important things from audit to fashion to higher education, those have always been my motto.
Katherine Ann Byam 4:07
It’s so wonderful and refreshing to hear and because I used to be an auditor too and we all know people don’t like auditors. So it’s interesting for you to share how, how you actually used your experience from audit to develop the career design the career that you have now.
Isabelle Chaboud 4:23
It’s true, yeah, people don’t like auditors. Manufacturers don’t like to be controlled by auditors. They are afraid that you will tell them, “Uh-on that is not correct,” “or it’s your fault.” But if you implement a good relationship with them, you try to explain what you are doing and that you want to bring added value, maybe to improve some internal controls in place, maybe to improve some efficiency, some aspects, it becomes different, so when you work on the confidence in the relationship, I think it’s, it’s different.
It’s all a matter of personal contacts you have with people. I learned a lot from a methodological point of view, being very structured, organized, dealing with different tasks, it’s management project. So that helped me a lot when I moved to higher education because it’s managing different courses at the same time different locations. I was teaching in Grenoble, Berlin, London, Singapore, Moscow. Also sometimes may be different subjects with different audiences. So the methodology is the key in sharing the knowledge.
When I was at PwC, I did some training. When we merged with Coopers in 1999, we became PricewaterhouseCoopers. Someone had to teach the new methodology and I volunteered in France in my office. They were looking for volunteers and I volunteered. I like it and it was really interesting to try to explain this new methodology to managers, partners, and I also train newcomers. So, methodology, training, sharing some knowledge were really the common basis that I used in higher education, financial analysis, and they switch to financial analysis of luxury companies. This is how little by little, I came to fashion.
Isabelle Chaboud 6:30
You moved from being an auditor, being a professor to being a specialist in luxury brand management. That’s really interesting. What’s inspired your interest in luxury brand management.
Isabelle Chaboud 6:42
I think it started when I was little, my mother was making bespoke wedding dresses bridal gowns and I used to see her in her atelier or sewing workshop. Sketching, drawing, meeting clients who were explaining what they were looking for and she was trying to draw the perfect wedding dress for them.
Then, she took me to suppliers to buy this silk with her so I went to the region with her. With such wonderful fabrics and then I could see her teaching sewing. There was always something in my mind that I kept for a long time and I always sort of gave birth, I do something related to numbers very structured and then I can use this to be on a more creative side and more creative industry, and I was interested in this craftsmanship aspect, in fact really understanding what’s behind the numbers of these companies and how they are functioning.
Katherine Ann Byam 7:58
I think that there’s always, there’s always a bit of your history and your past and your experiences that come to bear you as you grow and develop in your career so it’s nice to see how you’ve connected that experience with your mom to what you’re doing today, and I think she must be really proud. All right, so I want to pivot slightly and I want to get into the business of luxury brand management. And I think all my listeners are curious to know-how is the industry doing.
Isabelle Chaboud 8:27
But the industry has been severely hit as most industries. BCG was expecting some 30% drops, before the beginning of the COVID. And it is confirmed, even more, if I give you a few numbers, talking about the key players who are LVMH, Hermes, Kering, and company Swiss Richemont. I can just give you some insights. For example, LVMH witness a drop of 38% in Q2 2020, which makes the drop of first-half revenue of 2020, by 28% organic, a constant exchange rate. So minus 28% is around 30%.
For Kering, it’s minus 30%, first half of 2020, and minus 43.7%, for Q2, which is a huge drop. Hermes also witnessed dropped by 40% for Q2 but cumulated is minus 25% at a constant exchange rate. So, Hermes is the most resilient, out of all the key players. Richemont, the Swiss company which owns Cartier, Van Cleef, and Jaeger-LeCoultre witnessed a 47% drop in their first quarter 2020 sales. Richemont closed their books at the end of March so their first quarter from April to June 2020.
Isabelle Chaboud 10:18
So Richemont has been severely hit and so they have to find new solutions to cope with the situation. And this gave a boost to digitalization so those who already had online sales, saw quite a lot, mostly in China. They witnessed a huge increase. Hermes, for example with 100% increase in their online sales in China. Chinese consumers or the tech-savvy buy a lot online.
Those who do not have online platforms had to partner with the marketplaces like for example Farfetch to help them, or they had to develop their own platform online at a rapid pace. In order to cope with the loss of business from closed stores.
Katherine Ann Byam 11:21
I’m also curious to know how they’re going to pivot out. Sustainability is beginning to reshape many industries, and I’m sure not the least of which is the luxury brand industry. Tell us about what, how they’re dealing with sustainability.
Isabelle Chaboud 11:35
Yeah, you’re absolutely right. It’s, it’s one of the top priorities. I think now for most players. It comes from the consumer demands actually. Consumers want to know where they purchase the raw materials and in what conditions, how is the production process,, how do they deal with people have when they treat them, gender equality, hygiene and safety, and all those aspects, also the dyeing chemical for example they use and all those elements, so it’s affecting the whole supply chain, and up to the end, the way they sell it.
This is why also the circular economy is booming. The demand for second-hand is, is absolutely on the rise. Companies like Vestiaire Collective or Rent the Runway are all seeing a huge increase in their selves because more and more people are mostly millennials are interested in buying secondhand products. So, if you haven’t used items or garments that you can resell, you can make money and you can buy also other products, and it can also allow, I would say, other customers who would not be able to afford some luxury product to buy for the first time and some luxury products. I think it’s affecting the whole supply chain, from raw materials production, and then selling channel, also omnichannel, and different, different ways of selling not just in stores but also and the new business model of the circular economy.
Katherine Ann Byam 13:26
Beyond fashion, it’s also having an impact right. there are other initiatives that people are coming up with within the luxury space as well beyond fashion.
Isabelle Chaboud 13:35
Absolutely. To give you an example, a Startup Ledisi is partnering with different companies to rent between so either business to business or business to consumer. For example, they had a partnership with LC and you can rent a suitcase for just a weekend or for two weeks and I think it’s a fantastic idea, imagine you are a student, you live in Paris in a very small place you don’t have enough room to store a big suitcase and you want to go to the US and so you can rent a suitcase just for two weeks (of course not right now probably with travel.)
It’s a little bit difficult but I think there’s a real, real business. People also lots of surveys report show people are more interested in the experience now, more than owning the product. So, this will also allow you to have an experience. I think it’s also part of this circular economy and reducing the waste the pollution and giving a longer lifespan also to objects or different items.
Katherine Ann Byam 14:59
Yeah, it’s so interesting, thank you for sharing that. So, this is the last question so I really want to thank you upfront for all that you’ve given my listeners today. I think the session has been really interesting. But what advice would you give to the ones who are either out of work because of the crisis, or just coming on to the job market, what would you tell them what do you suggest.
Isabelle Chaboud 15:20
Well, first digitalisation as we said, we spoke about luxury that is going online and maybe a little longer than the businesses but all businesses are online now you can buy cars online. I mean who could have imagined buying a car online before. so I think having some knowledge in digital marketing and the different platforms where you can buy in some marketplaces in luxury.
We have work marketplaces for those who are beginners, which means it’s a tripartite relationship between the company producing the goods between the marketplace where you can buy the goods as a final customer. So if the company producing the goods, doesn’t have its own platform, they can use a third party, the marketplace to sell their products. This is the case for Farfetch for example.
And Farfetch is also experiencing a huge, huge increase. You may have heard Amazon is going to launch luxury items. They just announced the first partnership with Oscar dela Renta and this group. And so this is booming in all industries, fashion, luxury carmakers, now you can buy everything online, so I think it’s really important to know this. You can find training also for free online.
There are lots of possibilities now, then sustainability, we mentioned that I’m convinced absolutely key there is I think a shift in the mindset of consumers, but also the need for force for the planet and people profit, the planet which we call the triple bottom line is absolutely fundamental so it covers all aspects as I said from the supply chain, the production, and the final distribution, and it impacts the finance as well.
Of course, sustainability really gaining knowledge on that, and circular economy the new business models, don’t be afraid of being creative and innovate. I think that’s right now really thinking outside the box I think is really, really something important. Being adaptive is very, very important, and having confidence because things are changing, it’s difficult, but we need to keep the confidence and try to really believe in these new business models that are coming out and changing faster.
Katherine Ann Byam 17:53
Thank you so much Isabelle Chabaud. Thank you so much to my listeners, this has been a fantastic day and I hope you’ve got a lot out of the session.