VIDEO TRANSCRIPT:

Let me introduce briefly our guest, so Tony Belloni, who has been with LVMH for a little bit more than 20 years. He's the managing director and he's in charge of the digital transformation and that's why he's here. He's on stage with us and you know LVMH is the number one luxury group in the world with more than 75 maisons, they're called. Next to me is Nigel, Nigel Vaz, who is the CEO of Sapien, Sapien Publicis or Publicis Sapien, and it's the digital transformation hub of Publicis. Its DNA is really in digital, it's helping companies to deliver on the promise of a good digital transformation. He also has been with the company for more than 20 years, he became the CEO three years ago and was born in New York. He has an Indian background, a Portuguese name and he lives in London. Now that I've introduced everybody, let's jump into the subjects of today, which is digital transformation. Maybe the first question for Tony would be, why is digital transformation or digital innovation important for a house like yours, which is in luxury, traditional shoes, leather, alcohol, which in a way I don't have that much to do with digital. You're more into the history and the value of the past than maybe the digital transformation.

First of all, hi everybody. Thanks for the question, which is extremely relevant. We do have indeed an incredible portfolio of venerable brands. When you look at the aggregate age of all our brands, you come to over 8,000 years. So that's why we have an obsession for keeping those brands fresh, relevant, exciting, desirable for the customer of today and tomorrow. So what has to do with creativity, innovation, technology, digital, all of those are engines to be sure that our brands have that process of continuous renewal.

But do you have to include technology in your product? Do you think that's the key or it's more that you have to use the technology as an enabler for what you're doing in general?

We have, let's say, a broader view of, you know, we respond to customer needs. Mr. Arnaud underlined that earlier on today, but we really try to go beyond. And we go beyond with new technology, with new ideas. We have a broader definition of what innovation stands for. So technology sometimes can play a big role, and the awards that we gave away this morning show how you can add through technology. I'll give you one example. In the sustainability category, we rewarded a startup called WeTurn. That leverages actually ancient artisanal savoir-faire from Italian companies, but they make it more intelligent, more practical, more efficient through innovative technology. That's where you combine the two sides.

Nigel, I didn't mention, but you're also the author of a bestseller book on business and digital transformation. If you look at companies in general, what are, do you think, the key trends or the key values that they should use if they want to follow the path that maybe also LVMH is using in its own digital transformation?

Yeah, and, you know, that's why I started talking about today still digital and physical, and we make this artificial separation. I think so many of us who grew up pre the world being entirely digital have that orientation. But more and more, when he talks about customers of the future, I don't think they're going to make that separation. It's one world. Because my world is one world. And in the context of that one world, digital transformation can't be equated to just technology. So my belief in terms of the orientation of how companies who are thinking about transformation need to think is a shorthand I talk about in my book called SPEED. You know, and it's an acronym for five things. So strategy, so having a clear strategy, you know, as you heard some examples there about what the value is to the business and the customer. The second is this idea of product, product as a mindset. You're constantly evolving as opposed to you're static. The experience, so how you design, how you create not just the product, but the entire experience around the product. Engineering or technology that enables so much of this. And then most importantly, data and AI, which allows you to become a living business. So, you know, the watch in my hand is from a luxury brand and a technology company. It's both. Both the experiences, the strap, the device, the thing on the device, all of those create that connected experience. So to me, luxury is all about exclusivity and aspiration, which, you know, Tony, you know, highlighted earlier. But it's also about personalization, relevance, connectedness. And so if my world is increasingly digital, how could I create that separation where the product is the product and the experience is the experience and one is digital and one is physical and there's a big gap between them.

But at the same time, some companies from a non-digital background and some companies are digital natives in a sense. What could traditional, maybe historical companies like LVMH another learn from those that are digital natives?

Yeah, and, you know, that's why I started talking about digital can't be just about technology, right? Tony talked about 8,000 years of history across those brands. Guess what? They were leveraging all kinds of technology when those brands were created. Just technology of the 15th century, 16th century, 17th century, and of the 19th. So today, digital is just what is the world, you know, around us today. So it has to be an intrinsic part of it. So if you think about what digitally native companies do, you know, inherently, they obsess about the experience, which luxury brands, of course, we know also do, right? They also, though, are really focused on how to leverage technology in order to create those experiences and the connection between those two things. But then most importantly, they create living, evolving products that are constantly reciprocating feedback. So if you think about the transformation of a big organization, you know, if your budgeting cycle works on an annual basis, but you want to talk about being agile, then agile just becomes about technology. But if you're constantly thinking about how to prioritize your objectives and think about how your investments will be driven over the course of a year, and those change as you're getting new input from how your business is being run, that's a very different way of working. And if you think about a lot of digital natives, you know, let's use just a simple example for people, right? How many in the audience have used Netflix versus Amazon? And if you look at Amazon's shopping experience, they do an amazing job reflecting your choices. But if you use Amazon Prime and videos content, right? It's not that good. You watch the same thing, and then they're constantly showing you the same movie all the time. Versus if you look at a Netflix, it's looking at your preferences, listening, and then evolving and learning.

Talking about retail, which is because you create product, but then you have to sell them. Historically, retail, there was only one way to do retailing, and now it's the digital transformation. As Nigel was saying, retail is also being totally transformed. How do you see and if you look forward, do you expect this retail industry to be impacted by this digital transformation?

I think Nigel said something which is quite relevant. We were earlier on quite reluctant to embrace virtual selling e-commerce because the technology was relatively basic and because the drivers of success were value and convenience, which are not exactly the drivers of a luxurious experience. As technology has improved, we have embraced and the customer has told us that they want to be able to shop where and when they want. We have responded to that. It's important, and I think you said it, we don't see e-commerce replacing our stores. We have over 5,000 physical stores, and we love them deeply because they really allow full immersion of the customers in the brand universe. Actually, the challenge is that of elevating the experience online in a way that we can create the same differentiation that we have created for many decades in the physical world, also in the digital world. Again, I'll make the example of Toshi, the startup that won today the Innovation Award, because they're really at the core of the elevation of that experience. As you know, they focus on the last mile, and how do I make that last mile not just a small event or a practical event, but a moment of great delight for the customer.

The challenge is how to be luxurious in a retail environment. Digital is difficult, I guess. If you think about retail just more broadly, 20 years ago, as Tony was highlighting, retail used to be about we sell in the stores, and we sell, it was the language was e-commerce, and e-commerce and the stores were separate. The incentives were separate, the way the organizations work were separate, but if you think about us as people back then, our expectations were also different. It was okay to see something advertised, to go online and not find the product, and then go into the store and have the stores not know what you were talking about in terms of what was advertised. That was okay in retail because our expectations were different. Today, I think the average consumer's expectation is you will meet me across that customer journey wherever I am in whatever channel I'm on, and if you're a luxury brand, I expect that same interpretation of luxury across those interactions. It can't be, let's take the airline business, many of us travel to come here, and it's tough right now being an airline with all the disruptions and shortage of staff, but it's very concerning when an airline shows you an ad of a beautiful, wonderful, loving, caring attendant pulling a blanket over somebody, but the same airline which is conveying care and thoughtfulness, when your bag gets lost, says talk to the hand. Because that's cognitive dissonance between the promise and the experience.