Hermès Sued in Class Action Lawsuit Over the Birkin “Game”

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Welcome to the 30th edition of the Maximalist! Dive into the ultimate guide, filled with insider insights into the world of fashion, art, real estate, travel, jewelry, and horology.

The world of luxury is never boring, and this week is no exception. Let’s dive in!

Markets

On this week’s agenda:

1. Hermès Sued in Class Action Lawsuit Over the Birkin “Game”

2. Bezel Revolutionizes Luxury Watch Buying with New Auction Feature

3. Moda Operandi Ventures into Challenging Waters for Funding Amid Digital Luxury Shifts

4. Dubai's Most Expensive Hotel To Date: Aman 2027

5. Kering's Stock Plummets Almost 12% Amid Gucci's Sales Slump in Asia

6. The $65 Billion Global Art Market Sees a Decline in 2023 Q4

7. Selena Gomez's Rare Beauty Poised for Billionaire Milestone

Hermès Sued in Class Action Lawsuit Over the Birkin “Game”

Hermès, the iconic French luxury brand, is currently embroiled in a class action lawsuit filed in California. The lawsuit accuses Hermès of antitrust violations due to its highly selective process for allowing customers the opportunity to purchase its prestigious Birkin bags. This process allegedly requires consumers to first accumulate a "sufficient purchase history" by buying other Hermès products, such as shoes, scarves, and jewelry.

The Birkin bag, a symbol of status among Hollywood's elite, from Kim Kardashian to Jennifer Lopez, is known for its scarcity and high quality, with prices soaring into the hundreds of thousands. Unlike other luxury brands that have broadened their market, Hermès has maintained a focus on the ultra-wealthy, even as it introduces more accessible products.

The lawsuit highlights the company's sales strategy, where associates are purportedly incentivized through commissions to sell ancillary products but receive no commission on Birkin bags. This compensation structure is said to encourage sales associates to use Birkin bags as leverage, coercing customers into purchasing non-bag items to build the required purchase history for a chance to buy a Birkin.

Plaintiffs in the lawsuit, including Tina Cavalleri and Mark Glinoga, share their experiences of spending significant amounts at Hermès stores without being offered the chance to purchase a Birkin bag. Cavalleri, in particular, was informed that priority was given to clients who consistently supported the business when she inquired about purchasing another bag in 2022.

The lawsuit seeks to represent all consumers who were compelled to buy or were asked to purchase ancillary products as a prerequisite to buying a Birkin bag. It aims to prohibit Hermès from continuing practices that allegedly breach antitrust laws, citing violations of the Sherman Act and the Cartwright Act, which address monopolistic and anti-competitive behaviors, alongside claims of unfair competition.

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Bezel Revolutionizes Luxury Watch Buying with New Auction Feature

Bezel, a prominent reseller of luxury watches, has introduced a groundbreaking auction feature to its platform, transforming the way high-end timepieces are purchased. This new feature aims to make luxury watches more accessible and affordable, addressing common issues faced in traditional auction settings, such as high fees and the risk of counterfeit products. The auction process is designed to be simple and transparent, focusing on three main aspects: time, price, and security.

Auctions on Bezel last for seven days, giving bidders ample time to plan their strategy. This approach is particularly advantageous for buyers looking to acquire luxury watches, which can range in price from $5,000 to $100,000 when bought new. By eliminating buyer's premiums and covering secure shipping, Bezel makes it financially beneficial for consumers to participate in the auction. Moreover, the company guarantees the authenticity of each watch with its team of in-house authenticators, addressing one of the biggest concerns in the luxury watch market—counterfeits.

Adding to its appeal, Bezel has attracted a slew of celebrity investors, including Latin music sensation J. Balvin, who has invested his own money into the company. Balvin, along with other celebrities like Kevin Hart, John Legend, Steve Aoki, Emmanual Acho, and Kyle Kuzma, has lauded Bezel for making luxury watches more accessible to a broader audience and for feeding their own watch obsessions. Their involvement not only adds a layer of prestige to the brand but also highlights Bezel's role in democratizing access to luxury watches.

Bezel's initiative to introduce an auction feature marks a significant shift in the luxury watch market, offering a more inclusive, secure, and financially appealing option for watch enthusiasts worldwide.

Moda Operandi Ventures into Challenging Waters for Funding Amid Digital Luxury Shifts

In the volatile world of digital luxury retail, Moda Operandi is on a quest for financial support amidst a tumultuous market. The online luxury retailer's search for funding comes at a time when consumer caution is high and major brands are increasingly establishing their online presence, distancing themselves from third-party platforms. This shift has led to significant changes within the industry, including Farfetch seeking a bailout, Matches being acquired and then entering administration, and Compagnie Financière Richemont contemplating the sale of Yoox Net-a-porter.

Moda Operandi is currently engaging with private equity firms to secure the necessary capital to achieve profitability. CEO Jim Gold expressed satisfaction with the company's financial progress in recent years and emphasized the need for a modest amount of capital to reach the final stage of their profitability journey. Despite the challenging environment, which has seen competitors falter, Moda Operandi remains optimistic, attributing its resilience to a strategic shift towards profitability, effective cost management, and maintaining high standards of service, curation, and editorial authority.

The company has witnessed a rebound in sales in 2024, with significant growth in its full-price segment and a positive outlook for the remainder of the year. Trunk shows and emerging designers account for a significant portion of Moda Operandi's business, highlighting the company's unique market position. However, attracting new investors has become more challenging than in previous years, reflecting the broader shifts in the digital luxury retail landscape.

As Moda Operandi seeks new funding, it faces a market that has evolved significantly since its last fundraising effort. The luxury online sector has shifted from prioritizing growth to focusing on profitability. The increasing preference of luxury brands for direct-to-consumer e-commerce models adds another layer of complexity to Moda Operandi's fundraising endeavors. The company's efforts to secure new capital underscore the ongoing transformation of the luxury e-commerce space, where the integration of luxury experiences and online retail continues to present both challenges and opportunities.

Dubai's Most Expensive Hotel To Date: Aman 2027

Aman Resorts is poised to elevate Dubai's luxury hotel scene to new heights with the opening of Aman Dubai, slated for 2027. Positioned on the Jumeirah beachfront, this all-suite resort is anticipated to be the UAE's pinnacle of opulence, according to Aman Resorts CEO Vladislav Doronin. With an unwavering commitment to quality, the resort promises unparalleled views, private pools, and lush greenery, justifying its position as potentially the most expensive hotel in the UAE.

Aman Dubai aims to merge the brand's minimalist design ethos with traditional Arabian hospitality, introducing an unmatched luxury experience to the emirate. Central to the resort's design is a vast 3.6-hectare garden, surpassing the scale of Aman's botanical garden in Beverly Hills, designed to offer a unique ecosystem and minimize concrete visibility along the coastline.

Guests of Aman Dubai can look forward to a 350-meter private beach and the country's first Aman Spa, spanning 2,300 square meters. The resort will also feature the Aman Club, an exclusive members-only area, reflecting the successful model of its New York counterpart. Additionally, Aman-branded residences will be available, offering a mix of rental and purchase options.

The resort's architectural design, led by Kerry Hill Architects, will showcase desert-toned hues inspired by the UAE's landscape and panoramic views of the Gulf or Dubai skyline. The suites will offer both city and ocean views. With private pools and expansive terraces, guests are encouraged to immerse themselves in the beauty of their surroundings.

Aman Resorts' expansion into the Middle East doesn't stop with Dubai; the brand also plans to open Aman Wadi Safar in Saudi Arabia in 2027. This move marks Aman's ambitious venture into the region, with both resorts racing to debut the first Aman brand presence in the Middle East.

As Aman continues to grow, its sister brand Janu is also making headlines, with Janu Tokyo set to open its doors soon, offering a more accessible yet equally engaging experience compared to its Aman counterpart. Janu Dubai and Janu Diriyah in Saudi Arabia are also in development, signaling Aman Group's significant investment in luxury hospitality across the region.

Kering's Stock Plummets Almost 12% Amid Gucci's Sales Slump in Asia

Kering, the prestigious owner of the Gucci brand, witnessed a dramatic 11.9% fall in its shares following a warning of decreased profits, attributed to Gucci's declining sales in Asia. This downturn has not only impacted Kering but also influenced the broader luxury market, with notable brands like LVMH and Richemont experiencing declines in their share values.

The anticipated sales drop of nearly 20% for Gucci, which forms a substantial part of Kering's operating income, particularly in the Asia-Pacific region, marks a significant challenge for the company. Kering is in the midst of revitalizing Gucci with new leadership and creative direction under Sabato de Sarno. Despite the positive reception of De Sarno's recent collections, which have been available since mid-February, a tangible impact on sales is still awaited.

Kering's commitment to Gucci's overhaul is expected to impact its financial margins in 2024. This setback contrasts sharply with the success of competitors like LVMH and Hermès, which have continued to report strong sales growth.

The luxury sector is preparing for a slowdown after years of exceptional growth, with sales growth projected to halve to an average of 5% in 2024. Gucci's recent struggles are partly linked to changing consumer tastes and economic uncertainties, especially in China. The brand had previously targeted a younger, trendier demographic under former designer Alessandro Michele, a strategy that is now under scrutiny.

Analysts are watching closely to see if Gucci's new direction under De Sarno will resonate with consumers, particularly in China. "The jury is out on whether the Chinese will like the Sabato De Sarno quiet luxury... We are sitting on the fence waiting for more tangible signs that the new Gucci works," stated Luca Solca, an analyst at Bernstein.

This period of uncertainty for Kering and Gucci serves as a reminder of the fragile nature of consumer confidence and discretionary spending in the luxury sector, with a particular focus on the challenging market in China.

The $65 Billion Global Art Market Sees a Decline in 2023 Q4

The global art market faced a modest downturn in 2023, with a 4% decrease in its overall value, settling at an estimated $65 billion. This slight contraction, as reported by Art Basel and UBS in their annual art market analysis, comes despite the challenges of high interest rates, inflation, and geopolitical tensions. Notably, the market's value still surpassed the pre-pandemic estimate of $64.4 billion in 2019.

Economist Clare McAndrew, the report's author, described the dip as a natural adjustment following the exceptional recovery post-COVID-19, emphasizing that the market didn't experience a dramatic contraction similar to those in 2014 or 2009. The decline was partly due to a reduction in sales of artworks priced over $10 million.

The United States maintained its lead as the top global art market despite a 3% drop in sales, contributing 42% to the global sales value. China overtook the UK for the second spot, buoyed by a 9% increase in sales from their to relaxed COVID-19 restrictions and a vibrant auction scene. The UK, now in third place, saw an 8% decrease in sales, with France trailing behind.

The report highlighted a shift in dealer sales, which decreased by 3% to $36.1 billion, with smaller dealers experiencing growth, contrary to larger dealers, who saw a decline. Art fairs remained a significant revenue source for dealers, despite a decrease in their contribution compared to the previous year.

Online sales saw a 7% increase, reaching $11.8 billion, underscoring the continued importance of digital platforms in the art market. Despite a downturn in art-related NFT sales outside the traditional art market, interest in NFTs remains significantly higher than pre-pandemic levels.

Looking forward, dealers expressed cautious optimism for 2024, with a mix of anticipation for increased sales and concern over political and economic uncertainties. It seems that core collectors will continue to engage actively with the market, while new collectors may stall.

Selena Gomez's Rare Beauty Poised for Billionaire Milestone

Since its launch in 2020, Selena Gomez's Rare Beauty has rapidly ascended to prominence within the competitive beauty industry, potentially catapulting Gomez into the exclusive circle of billionaire beauty entrepreneurs alongside figures like Rihanna and Kim Kardashian. Insights from Entrepreneur and Business Insider reveal that Rare Beauty is currently exploring options for investment or acquisition, with valuations possibly reaching the $2 billion mark.

Amidst a crowded field of celebrity-endorsed beauty ventures, Rare Beauty distinguishes itself with impressive financials, boasting over $400 million in net sales as of early 2024. A standout product, its viral liquid blush, contributed $70 million to 2022's revenue, significantly inflating Gomez's net worth to an estimated $800 million from $95 million in just two years.

The potential sale of Rare Beauty draws parallels to successful exits by other celebrities, such as Rihanna's Fenty Beauty and Kylie Jenner's Kylie Cosmetics, both of which have secured billion-dollar valuations. While the specifics of Rare Beauty's valuation and Gomez's ownership stake remain speculative, the brand's robust performance and market position suggest a profitable future for the singer-turned-entrepreneur.

Rare Beauty's unique approach, emphasizing inclusivity and mental well-being, combined with its strong social media presence, differentiates it in a saturated market. Its exclusive distribution through Sephora signals untapped potential for expansion, with industry insiders pointing to new markets and retail partnerships as avenues for growth.

As the beauty world anticipates the outcome of Rare Beauty's potential sale, the brand's trajectory from its inception to a possible billion-dollar valuation exemplifies the power of celebrity influence, strategic marketing, and product excellence in achieving commercial success. Selena Gomez's integral role has been key to shaping Rare Beauty's identity, and her continued involvement will likely be vital as the brand embarks on its forthcoming phase.

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