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The designer references Madonna and iconic perfumes in his one-off couture collection.

Jean Paul Gaultier gave Olivier Rousteing only one nugget of advice for his one-off couture collection at the house of Gaultier: “Just be yourself.”

It’s a profound statement from a French fashion legend synonymous with unfettered self-expression — and foreshadowed a process of discovery for Rousteing, who has spent most of his fashion career at Balmain, which he has overhauled and energized in his image.

“This collaboration helped me to understand who I am without Balmain,” Rousteing mused during an exclusive preview at Jean Paul Gaultier headquarters on Friday, the ateliers at peak concentration realizing his intricate designs. “My femininity here is different than at Balmain. My girl is more tough.”

The designer said he left the “party” atmosphere around Balmain out of the equation, and felt free to play with Gaultier’s innumerable codes, tailoring being a favorite. “I don’t think glamour will be the word that you will use for this collection,” he offered.

Rousteing clearly relished the opportunity, praising the capabilities of the atelier and the design studio, confessing he was sad the project was coming to an end.

To be sure, he came to the task with towering respect for Gaultier’s innumerable contributions to fashion.

“As a designer, he was really inspirational because he was one of the few designers that could be a creative director, but also iconic, known around the world and popular. His face was as known as his clothes,” Rousteing marveled, putting Gaultier in a rare league with Yves Saint Laurent and Karl Lagerfeld.

He also hailed Gaultier as a role model for generations of designers, including his.

“Today we are talking about inclusivity; we are talking about gender; we are talking about binaries; we’re saying that a man can dress as a woman and a woman can dress as a man; about the freedom to be who you want to be without the judgment of society. And clearly Jean Paul Gaultier did that way before all of us,” Rousteing said. “We talk about inclusivity and diversity. Look at his first shows!”

Rousteing also lauded Gaultier’s reputation for superb craftsmanship, and his wide spectrum of expression.

“He’s a perfectionist,” he enthused. “Jean Paul Gaultier can do the most incredible gown, but also the most incredible suit. He can do a corset and then an incredible menswear look for a woman. So I think this is where he’s a genius. There are very few designers who can do so many different garments and still be a perfectionist. His tailoring is as good as his dress; his lingerie is as good as his menswear pants. He can do the most extravagant gown, and also most incredible denim. He was one of the few designers at the time who was actually bringing codes from the street and playing with them in the couture.”

Rousteing also considers Gaultier a pioneer in bringing entertainment to the fashion show, with emotive and campy modeling and guest performers, from dancers and singers to global celebrities.

Cue Madonna, whose 1992 appearance on a Jean Paul Gaultier runway with her breasts exposed made international headlines, including in Rousteing’s conservative hometown of Bordeaux, France.

“When you’re a kid, you don’t really know about fashion, but you know more about music,” he said. “My parents were also obsessed with Madonna at the time. I also remember her wearing the bustier with the cone bra.” He was referring to her landmark “Blond Ambition” tour in the 1990s.

Fast-forward a few years when Rousteing was a young adult and Gaultier released Le Male, a men’s fragrance in a bottle shaped like a muscular male torso dressed in a tight sailor top.

“It was the first time that you could see a male designer who was playing with sexuality…playing with that macho man image that actually is not what you expect, so breaking the codes,” he said. “I think that was genius.”

Gaultier’s bestselling fragrances — Le Male and Classique — will figure as inspirations for Wednesday’s show alongside Madonna, yielding boots shaped like the tin-can packaging of the scents and some glass corsets closely resembling the flacons. Rousteing also found new ways to interpret Gaultier’s pin-striped and caged tailoring, sailor tops, corsets, tuxedos and trompe-l’oeil creations. “What I love about Jean Paul Gaultier is that a jacket can become pants, or pants can become a gown. Don’t take anything for granted,” he said.

Rousteing is the third guest designer — after Sacai’s Chitose Abe and Y/Project’s Glenn Martens — to interpret the rich legacy of Jean Paul Gaultier following his retirement from the runway in 2020 after an illustrious 50-year career.

Like his predecessors, Rousteing also created a ready-to-wear side project: a menswear collection inspired by Gaultier’s spring 1994 show that introduced his iconic tattoo prints, and references to piercings and other body art.

Rousteing confessed that he was initially “scared” when Gaultier approached him to design a one-off couture collection.

“This house is such a treasure that I didn’t want to f–k it up. I just want to make the best. I kept saying to him, ‘I just want you to be proud of this collection,'” he related.

While he offered to show Gaultier his designs, the founder resisted, telling Rousting, “I want to be surprised. But I’m sure it’s going to be amazing.”

Rousteing moonlighted on the side project while preparing multiple Balmain collections this spring, and had sketched about 200 haute couture looks by the time he entered Gaultier’s stately headquarters on the Rue Saint Martin in Paris. He subsequently visited the archive, but did not stray far from his original concepts and sketches.

His impression of the archival garments? “They’re even more beautiful in reality than in pictures,” he marveled. “You’re blown away because the pieces are just insanely well made. And they don’t get old.”

He urged a visitor to spend time with Emilien Boland, the head of the Gaultier studio, and sang the praises of everyone in the studio and atelier. “They are all insanely humble, kind, respectful, helpful and talented. I feel like it’s a family,” he said.

Rousteing is seen as an innovator among fashion designers for fully harnessing the power of social media at a time when many luxury brands were skeptical about Instagram, where Balmain’s creative director has more than 8 million followers.

“I love couture. And I think there was a bit of a confusion these last couple of years when people talked about Gen Z and Millennials and they just associated these people with sneakers and hoodies. I think they’re really mistaken,” he said. “Couture is about aspiration; couture is about breaking boundaries. You can do your craziest dream, what you can’t do in ready-to-wear.

“Also, I don’t think people realize you can achieve a lot of engagement on social media with couture, because the crazier you go, the more people are going to follow,” he added. “Couture is about bringing magic. That’s how I imagine my couture, bringing magic to the City of Light, to Paris.”

Buyers are waiting for prices to reset on acquisition targets.

Fashion and retail’s go-go dealmaking days ended earlier this year as inflation spiked, Russia disrupted the world and markets by invading Ukraine and the robust recovery melted into recession worries.

Two busted deal processes from Kohl’s Corp. and Walgreens last week just confirmed that — although the mergers and acquisition party has morphed into a waiting game that could see more transactions and more down-to-earth prices next year.

For now, it looks to be a quiet summer and fall with perhaps some deals underway wrapping up, but little new activity as the economy sorts itself out. The question is just how long that takes.

Kohl’s Corp. took itself off the auction block on Friday, ending its exclusive buyout talks with The Franchise Group and noting its downwardly revised offer of $6.8 billion reflected “the current financing and retail environment” and “was not fully executable or complete.”

Similarly, Walgreens pulled its British drugstore chain Boots off the market, noting that no one was able to make an offer that “adequately reflects the high potential value of Boots and No7 Beauty Company” and blaming the financial markets.

More indicative of what the market could see in the immediate future is Enjoy — Ron Johnson’s struggling commerce-at-your-door concept that successfully went public via SPAC last year, but fell into bankruptcy last week.

Enjoy was part of a rush to the public market last year that also saw Warby Parker, Rent the Runway, Allbirds, ThredUp and more make their way to Wall Street, taking advantage of sweet valuations only to get caught up quickly in the market whirlwind that is now testing their businesses and brands.

With the S&P 500 down 20.6 percent in the first half, inflation running at a clip not seen in 40 years, the supply chain still backed up and COVID-19 lingering, few companies are looking to do a deal today.

Next year could be another story.

Deborah Weinswig, chief executive officer and founder of the retail and tech-focused Coresight Research, is looking for a direct-to-consumer consolidation as e-commerce brands struggle.

“The companies that are left standing will get stronger because they’ll have cash on the balance sheet and they’ll be able to pick up some of these companies,” Weinswig said. “We’ll see less money being spent on tech and potentially more available for acquisitions.

“Everybody’s kind of building their wish list,” she said. “When the prices hit their expectations … we’re going to see things happen very quickly. It’s not that people don’t have the balance sheet to do it, it’s just that everybody thinks everything is going to get a lot cheaper. We’re not technically in a recession, but it certainly feels like we’re heading there.”

Weinswig said there could be a “very active” deal market in six months or a year.

William Susman, managing director at Threadstone Advisors and a veteran fashion dealmaker, said transactions that are nearing the finish line can still get done, but that few new deal processes would start until there is “more clarity on economic direction.”

Clarity on that score might still take some time — just as it will take a while for owners to let go of the valuations their companies were tagged with last year.

“Seller expectations haven’t changed, but buyers’ expectations are lower,” Susman said. “Additionally, private equity loves reward with no risk and in a cloudy, uncertain market, they sit on the sideline.”

While the beauty market remains hot — as it has been for years — Susman said pure play ecommerce is not.

“The bloom is off that rose,” he said. “Valuations have gone from three-times revenues to less than one-times revenue. And there’s a real sense that e-commerce is not growing as it was during the pandemic. People are talking omnichannel more so than direct.”

And companies are focusing on their core in a world of troubles.

“It’s back to basics,” Susman said. “If you have great merchandise at fair prices and things the customer wants, you’re going to do very, very well.”

An impending economic downturn is top of mind for the sector right now. BoF breaks down the key implications for the industry.

• Luxury tends to fare better than other sectors during a downturn because of its exposure to high-income consumers, but it's not recession proof.
• A downturn will squeeze middle class shoppers and make high-spending clients more discerning, an opportunity for those with strong brand DNA and a challenge for smaller players.
• Changes brought about by the pandemic, like a greater focus on supply chain agility and tighter control over distribution, may make companies more resilient than during previous downturns.

The luxury industry has enjoyed a stellar, “V-shaped” rebound from the pandemic, with sales recovering to $301 billion in 2021, climbing 7 percent above 2019′s pre-crisis levels in constant exchange rates, according to consulting firm Bain & Co. Some of the largest players like Chanel and Hermès surged ahead by as much as 20 to 30 percent.

But there are signs of trouble ahead, with the prospect of an economic recession increasingly appearing to be a question of when, not if.

Inflation and interest rates are soaring in Europe and North America, with rising prices for fuel and food squeezing household budgets. In the US, which has been driving sales for the luxury industry since the pandemic, the economy shrank 1.6 percent quarter on quarter between January and March, the Bureau of Economic Analysis said last week. This is in stark contrast to the fourth quarter last year, when the economy grew almost 7 percent. In Europe, inflation is estimated to have hit 8.6 percent in June, according to EU statistics agency Eurostat — the highest level since records began in 1997.

So far, luxury spending seems to be insulated from the deteriorating economic conditions: sales in the first quarter were up by 17 to 19 percent compared to pre-pandemic levels, according to Bain, despite the outbreak of war in Ukraine and a fresh wave of Covid restrictions in parts of mainland China. This is likely a hangover from post-pandemic “revenge spending,’’ with the resumption of travel, events and socialising fuelling a desire to splurge, especially among those who accumulated a nest egg over lockdowns.

“For now, getting out of the Covid-19 pandemic is working like a massive feel good boost: a global YOLO attitude is creating an outsized luxury demand wave,” Bernstein analyst Luca Solca wrote in a recent note.

But even if this dynamic continues to buoy sales through the summer, eventually the share of people wanting to splash out on a $3,000 bag or $400 sunglasses seems set to decline. Luxury items are the ultimate discretionary purchase and there’s historic correlation between the luxury industry’s performance and GDP growth. A recession is sure to impact sales — the question is how soon, and how badly.

BoF spoke to experts to break down key predictions for how an economic downturn will impact the industry.

Aspirational Spend Under Threat

Luxury tends to fare better than other sectors during a downturn because of its exposure to high-income consumers. Wealthy shoppers do pay attention to their net worth, and are less likely to spend when the market is down, but the impact is often less dramatic than for other groups. Personal luxuries like designer handbags or expensive skin care are often the last things they give up.

Some expect luxury to be even more resilient than during previous crises like the Great Recession in 2008: the current wave of inflation is hitting lower-income and middle-class consumers particularly hard compared to higher earners who have padding in their budgets.

“In previous recessions, the impact on the consumer was more evenly spread amongst income groups, which meant that luxury was more exposed than is likely this time,” said Adam Cochrane, an analyst at Deutsche Bank.

Still, luxury brands don’t just depend on ultra-rich clients: middle-class and “aspirational” shoppers make up a significant share of sales. In recent years, brands have ramped up their business in more accessible categories like streetwear, sneakers, eyewear and small accessories in a bid to appeal to those groups.

“All brands now have a very stretched value proposition and a very stretched product offer towards different price points,” said Federica Levato, partner at Bain & Co.

In 2008, there was a clearer distinction between absolute luxury and more accessible brands. Now, “the segmentation is much more blurred, because all brands try to be relevant to different target [groups] and to different spending powers,” Levato said.

Brands that have strong appeal among high-income clients and can activate the top end of their business will likely fare the best during the recession, while those who rely most on aspirational consumers to drive growth will be hit the hardest.

Over the pandemic, the largest companies with the strongest brand DNA excelled, while smaller players that weren’t as differentiated in the market tended to struggle. Should a recession hit, experts expect the discrepancy between winners and losers in the industry to become even more pronounced.

Analysts at UBS pointed to Hermès as “one of the only companies likely to still report positive organic sales growth in a severe recession” in a recent note. LVMH is also well-positioned to thrive, the analysts wrote. By contrast, they called out Tod’s and Ferragamo as the companies whose forecasts were most at risk.

Scale affords big players a strategic advantage. Deep pockets mean they can continue to invest in brand building, even when the macroeconomic environment is challenging. This is crucial, as value becomes more important when times are tough, even for big spenders, said Daniel Langer, chief executive at luxury strategy firm Equité and executive professor of luxury strategy at Pepperdine University in Malibu.

“In times of crisis, the role of luxury brands as a cultural influence becomes even more important, because people want some kind of emotional payout and emotional connection from a brand. But if you want to be emotional, you have to communicate, you have to connect, you have to be inspiring,” he said. “The brands that can do that will do well in a recession.”

Luxury’s biggest players were already leaning into this strategy during the pandemic. Chanel, for example, upped its marketing spend by 32 percent to $1.8 billion in 2021. At the same time, its revenue rose 23 percent over pre-pandemic levels to $15 billion last year. Another downturn could present industry leaders with further chance to solidify their advantage.

“The opportunity will be for the biggest brands to take even more share during a period of industry weakness, as they continue to invest and trust that if consumers limit luxury spend, the biggest brands will retain a greater share of spend,” said Deutsche Bank’s Cochrane.

It’s impossible to predict just how bad a recession could be or how long it might last. Similarly, it’s hard to say what the impact on luxury will be: Bain expects the luxury industry to grow anywhere between 5 and 15 percent this year, depending on how fast the China market recovers and when — and how severely — inflationary pressure in the West starts to really bite.

But there are some signs the industry is in a better shape to weather the coming storm than during the last major downturn in 2008, in part because of adjustments made in the last two years in response to the pandemic.

For instance, brands are much better positioned to respond to unpredictable demand, after the last two years of crisis forced them to work to optimise their supply chains and lead times to be more agile and responsive to current events.

Many brands have also made a concerted effort to ramp up control over their distribution, bolstering direct-to-consumer channels and strategically shrinking wholesale exposure. That’s in contrast to the financial crisis of 2008, when brands were heavily reliant on department stores that resorted to steep markdowns to move product.

For listed luxury companies, 75 percent of sales came from direct distribution last year, compared with 57 percent in 2007, according to UBS.

This gives companies a higher margin on each sale, padding their bottom lines, as well as a better chance of being able to control discounting that can damage brand equity, encourage comparison shopping and make it harder to close full-price sales.

At times of lumpy demand, a strategic approach to inventory focusing on classic items that can be carried over from season to season can also help avoid costly markdowns. This is especially true for hero categories like bags, shoes and fine jewellery from the strongest brands: in the eyes of consumers, these kinds of products make for better investments longer term, as they will retain value and cultural fashion relevance. As seen over the pandemic, even amid price increases, demand for Chanel flap bags and Cartier love bangles soared.

“A recession scenario is going to separate the best brands from the rest,” said Langer.

A behavior becomes entrenched through what social psychologist Albert Bandura called ‘self-reinforced.’

Nearly 108,000 Americans died from drug overdoses in 2021. That figure is an extraordinary increase in recent years: In 2016, it stood at just over 60,000. It’s been called an epidemic, but its victims weren’t unwitting. They opted into it. Ignoring this distinction has led to drug-addiction therapies that haven’t capitalized on the psychological factors that underlie drug use.

Addictions begin when people start using drugs for medical or recreational reasons, then take additional doses of substances they knew are dangerous. In his 1947 book, “Opiate Addictions,” University of Indiana sociologist Alfred Lindesmith found that human users become addicts when they realize that their painful withdrawal symptoms are the consequence of not having the drug in their bodies.

Apes experience physical withdrawal symptoms as humans do, but they don’t react with the frantic search for an additional “fix” characteristic of human addicts. Why not? Because apes don’t have minds capable of making the connection between their suffering and the drug’s absence. Although animal brains are very much like human ones, animals aren’t capable of thinking about their pain and its causes. Lindesmith believed addiction required an intellectual understanding of what was causing the pain of withdrawal in order to seek a fix. Consequently, he would likely not apply the term “addiction” to a broader category of compulsive behavior, such as gambling, for the pain of withdrawing is merely psychological.

Years later, in the course of studying how children learn, the distinguished Stanford social psychologist Albert Bandura invented the concept of “self-reinforcement.” Bandura’s research clarified how the mind’s first experience with something creates a desire for a second.

Whatever the first experience may be, the human mind can rehearse it in memory, miss it and thereby make the second experience more attractive. Addicted gamblers experience pain when they’re tempted to gamble—but it’s purely psychological. Their thoughts about the pleasure of gambling are similar to the drug addict’s temptations.

The concept of self-reinforcement shows how the first experience with drugs, sex, cigarettes or alcohol can lead to the second. It takes a memory of the experience as being at least partly pleasurable. Self-reinforcement doesn’t make the second experience inevitable, but it is necessary for addiction to occur. Self-reinforcement also reinforces socially approved habits not generally considered addictions. You may become a chronic novel reader after finding your first reading experience enjoyable.

Personal experiments with socially disapproved behavior don’t always begin in isolation, although all of them have to be thinkable before they are doable. Teenage drinking, smoking or drug use may become thinkable because friends talk about these activities or partake in them before the uninitiated youth. If a boy sees his friends taking drugs, and a glazed but happy look comes into their eyes, he can’t avoid concluding that drug use is sometimes pleasant. If he is offered a beer, which others are already consuming, social influence reinforces his curiosity.

The puzzle isn’t why unsavory behavior begins but why such behavior, after becoming thinkable, doesn’t become more frequently doable. A sociological explanation is that the disapproval engendered by conventional cultural and social norms works successfully against disapproved activities most of the time. Nevertheless, subcultures can still encourage generally proscribed activities. Hence engagement with disapproved behavior can arise not only because of individual actors but because of the influence of subcultural groups.

Drug addiction is different from a disease like Covid. Because human addictive behavior must be self-reinforced to become fully established, it is potentially easier to overcome than biological infections. Ultimately, addictions are temptations that have been gratified and remembered. They will never be completely forgotten. But people, unlike apes, resist temptations that they want to resist.

Solar project will test Australia’s ambitions to become a clean energy exporter

Australian energy start-up Sun Cable has hired investment banks Macquarie and Moelis to raise more than A$30bn (US$20.6bn) over the next 18 months to fund a giant solar farm and the world’s longest undersea power cable.

It will be the first time an Australian renewables development worth tens of billions of dollars goes to capital markets for full project funding.

The project is expected to test investor faith in the idea that Australia, a leading fossil fuel exporter, can also be a significant clean energy exporter.

Sun Cable plans to build about 20 gigawatts of solar capacity and 40GWh of battery storage in remote northern Australia, along with a 4,200km undersea cable to Singapore.

It is backed by Australian billionaires Andrew Forrest, chair of iron miner Fortescue Metals, and Mike Cannon-Brookes, co-founder of software company Atlassian, who are both outspoken proponents of Australia’s clean energy export potential.

Sun Cable stands alongside the Asian Renewable Energy Hub, a 26GW wind and solar farm planned for Western Australia, as one of the country’s most ambitious clean energy developments. Oil major BP took a leading stake in the AREH last month.

Neither project has begun construction, but Sun Cable, which last month was declared “investment ready” by the Australian government, is at a more advanced stage of development and has targeted completion for 2029.

Unlike the AREH, which plans to use solar and wind to manufacture green hydrogen for export, Sun Cable plans to export only electricity.

Sun Cable chief executive David Griffin said that when the project was completed, the cable would be the longest undersea power line in the world, dwarfing the 720km North Sea Link, which connects the UK and Norway.

The project’s viability relies on being granted a licence by Singapore’s Energy Market Authority, which has called for tenders from clean energy producers to supply 4GW of continuous reliable supply to the city-state by 2035.

Sun Cable wants to supply half of that energy but will probably face competition from south-east Asian power producers. In the first round of bids, in which Sun Cable did not participate, the EMA said it received 20 bids from power producers in Indonesia, Laos, Malaysia and Thailand.

Griffin said the EMA was “100 per cent in control, so they could say anything” but expressed confidence that Singapore’s electricity demand would support the A$30bn project.

“At the moment, they are looking for 4GW of supply, and that’s a big number,” he said. “But electricity demand is not going to stop growing in Singapore.”

Griffin said the company needed to secure contracts with power purchasers and was talking to customers in Singapore.

Singapore’s current electricity generation capacity is 12GW, more than 90 per cent of which comes from gas, according to the EMA.

David Leitch, a Sydney-based energy analyst and principal at ITK Services, said investors and lenders would want both import licence and binding power purchase agreements before putting up funds.

“The bank is not going to give them money on the hope they will be able to sell the power,” he said. But he said Sun Cable was probably in “pole position” in the EMA’s tender process.

Griffin gave no details on the split between equity and debt but expressed interest in BP’s investment in the AREH.

“The BP angle, and companies like them, they are interesting,” he said.

“Multi-gigawatt scale, multibillion-dollar projects of this nature, that’s the norm for these types of companies. So they actually have quite a lot to bring to the table.”

Griffin said Sun Cable was planning other undersea cables linking Australia, with its huge solar and wind resources, to Asia, but gave no further details.