Social inequality threatens the luxury industry.
The President of Richemont warns of the impact the acceleration of social inequality will have on the luxury market in the coming years.
During the Financial Times Business of Luxury Summit held in Monaco, Johann Rupert, Chairman of luxury conglomerate Compagnie Financiere Richemont, said that changes in technology will cause growing inequality which could cause “envy and hatred” towards the rich.
During the summit, Johann Rupert, South African billionaire owner of Net-a-Porter, Alfred Dunhill, Van Cleef & Arpels, Cartier, Piaget, Vacheron Constantin and IWC, said the most important issue for the luxury industry and worldwide economies is at present the structural unemployment caused by robots, artificial intelligence and this century’s new era of advanced machinery.
The South African warned of the acceleration of social inequality in the coming years due to the growth of structural unemployment together with a ‘new wealth’ for a few beneficiaries. This will arouse envy, hatred and social war, he said.
Rupert is not the first billionaire to forewarn the consequences of the growing wealth gap. Billionaires Paul Tudor Jones, Warren Buffett, Jeff Greene and Stan Druckenmiller already warned against the dangers of an economy where a small elite harvests most of the profits. Social inequality is a much greater threat to the luxury goods industry than the current discussions being held on electronic commerce, said Rupert.
“I don’t know what new social pact we’ll have to reach, but you better find one, otherwise, our clients will be the target of hate and disgust,” said Johann Rupert adding “This is really what keeps me from sleeping at night, people with money won’t want to show it. If the parents of your child’s best friend are unemployed, you won’t want to buy a car or anything flashy. ”
Rupert’s comments aimed at other luxury retailers in Monaco suggested that inequality is becoming a concern even for those who have benefited from the expenditure of the rich. “We are destroying the middle class,” he said, adding, “This is unfair and it will affect us.”
Rupert did not elaborate on how Richemont will adapt to this future scenario, but he minimized the threat of smartwatches and other technologies, saying that Apple will sell a lot of watches, but will never replace brands such as Richemont. While smartwatches and smartphones are often disposable, Cartier watches are handed down for generations.