After building Bulgari into a world class powerhouse, from jewelry to hotels, Francesco Trapani oversaw its sale to world top luxury conglomerate LVMH. He then took on the role leading LVMH’s important and fast growing watch and jewelry division. Recently Elite Traveler Editor-in-Chief Douglas Gollan flew to Rome where he caught up with the CEO to discuss the transition, what’s on his agenda and what’s next in his garage among many topics.
ET: Looking at global luxury market, what is LVMH’s current business outlook?
Francesco Trapani: The last two years have been very good for luxury business in general, partly because we were coming out of the 2009 economic crisis, and that made everything easier, and appear better, by comparison, and also because the Chinese entered the luxury market in a very, should we say, flamboyant way. It is becoming progressively more difficult to stand out now, however, for the opposite reasons. Now the base of comparison is high, and the economic environment has become more difficult, with European debts, a slowly growing U.S. economy and a Chinese change in power all impacting the market. I’m still optimistic about next year, but we cannot expect to achieve the same growth as we did in 2010, 2011 and the first part of 2012.
ET: LVHM creates accessible luxury, as well as pieces that sell for over a million dollars. How does the brand bridge this gap in a struggling economy?
Francesco Trapani: I don’t see huge performance differences among the price ranges, although if you look at watches, the most expensive are the least effected by the economy. Once you go over €8,000 ($10,500) you an enter an area that has been less affected by the economy…though that market has still been affected in China as they had added stress in that area to begin with. Overall, I don’t see huge sales differences, except that the expensive products have been suffering slightly less.
ET: As the CEO of LVMH, what parts of the business do you deal with and what are your goals and objectives?
Francesco Trapani: My responsibility is to oversee all the companies that feature jewelry and watches as their core business; Bulgari, De Beers, Chaumet and FRED, and on the watch side Tag Heuer, Zenith and Hublot watches. My first objective is to help them grow while reinforcing each brand’s image profile within their competitive position. The second, which is also very strategic, is to help the watches and jewelry division to reinforce its industrial position. We have strived to become increasingly independent from outside suppliers for our jewelry and watches, and a lot has been done, but there is certainly more to do in the future. This is something that helps us coordinate the different brands so that the investments and profits don’t belong to one brand, but instead the whole division. Now and then we give one brand permission to make an investment, but that investment will be distributed to the entire division. This is the only way to make the business model work in a profitable way because not all our brands can afford to make the same investments.
ET: For 27 years you led Bulgari to international acclaim and success. What was the transition from being a CEO for a well-known independent company to a CEO of a division for a bigger entity like?
Francesco Trapani: Before being the CEO of the division I was, for many years, the CEO of a single brand, and I was able to develop that brand aggressively, which is good because today I speak the same language of “my people.” I know what they do and the challenges they face, so it has helped me to create a positive relationship with the CEOs of the brands and, therefore, a strong team that understands each other. Of course, my job today has totally changed as it is one thing to be the CEO of a brand and entirely another thing to be part of a big corporation. The experience is new for me, and since I get to work for an incredible company like LVMH, I have enjoyed it even more than I originally thought. Being the protagonist of this business is very exciting.
ET: After the Bulgari sale you could have done anything you wanted, did you ever think about doing something else?
Francesco Trapani: Well there is always the time to retire, but I still think I can add something positive to this industry, so I am still willing and happy to be working with LVMH.
ET: What advice would you give for other CEOs making a similar transition after a sale?
Francesco Trapani: I think you need to be sure of your abilities and qualities—because you were able to develop a successful business—but at the same time don’t be arrogant because there are certain things you can’t learn while isolated at a small company that you suddenly learn by becoming part of a larger team. If I look at myself, I contribute a lot to the division because I have experience with the industry, but I am also receiving a lot because we work with beautiful watch companies and because the entire LVMH group is full of talented people. This gives me the opportunity to talk about projects and plans that may not be specifically related to watches and jewelry. It’s important to enter the new experience with a combination of confidence and open-mindedness so you can bring new things to the table while also learning from others.
ET: Are there any specific instances of this relating to LVMH that you can point to?
Francesco Trapani: I can’t give specifics, but here you are always enriching yourself through exposure to the different business details of different brands, markets and industries. This increases your overall capacity for information because your frame of mind is larger than before. More important than specifics, is the fact that you are now swimming in richer water than before, allowing you to move faster and float better.
ET: Bulgari has been successful in a variety of different markets, from hotel soap to accessibly priced jewelry, and yet still maintains a reputation as one of the premier luxury brands in the world. What is the secret to maintaining the purity of the brand while simultaneously expanding to as many places has Bulgari has?
Francesco Trapani: I think that expanded product lines and distribution networks don’t necessarily damage a brand; it just depends on how you execute things. If you develop a seven-fold tie, and at the end of the day it is the best and most expensive tie on the market, it is just different than if you were making an inexpensive, everyday tie. Overall, I think Bulgari has been pretty good at balancing their products because each time we expanded into new categories and introduced new products—though we made a few mistakes—we tried to do so in an outstanding way. On the other side, our willingness to invest in the upper end of the market allowed us to maintain a strong position in this area, whether in watches, jewelry, accessories, or another major category.
ET: Is there a lot of discussion about the growing importance of Traveling Luxury Consumers, or TLCs who private jet around the world and do lots of shopping?
Francesco Trapani: Travelers are a big component of our business because when people travel they are inclined to spend some of their time shopping. The second thing is that the higher you go on the social pyramid, the more similar individual profiles become. This means when you go to sell fine jewelry, you can sell the same products to the French, the Chinese, the Italians, the French, the Americans, and the Japanese, because, at the end of the day, these people are more or less the same. When you’re selling something like perfume, however, as you move down the social pyramid, locale becomes more important because people become increasingly different.
ET: When you’re not working are there any pursuits or hobbies you like to unwind with?
Francesco Trapani: I don’t have specific hobbies, but I enjoy being with my family and friends…and I also enjoy boats and cars. I owned a 137-foot sailboat that I sold four years ago because the maintenance was just too much. Now I mostly stick to powerboats—I have a new one for next summer that I’m looking forward to spending time on with my family. When it comes to cars, I own a Ferrari but I don’t have a collection. I’m thinking about buying another car but I don’t know if I’m going to buy a Ferarri or a Bentley.
ET: Obviously you a travel a lot. Outside of Bulgari properties, do you have any favorite hotels?
Francesco Trapani: I spend a lot of time at the Plaza Athenee in Paris because it is my home when I am in Paris. I also like the Ritz-Carlton Tokyo, which is a fantastic hotel.
ET: Are there any Bulgari Hotel plans in the works?
Francesco Trapani: We have announced our new Shanghai property, which will open in the beginning of 2015, making it our fourth hotel. We will also be announcing our fifth property, which I can’t talk about yet; I can discuss it sometime next year.