WSJ : Where to Look for the Next Wall Street Blowup

Where to Look for the Next Wall Street Blowup
The tide’s definitely gone out in markets this year, but finance has come through with few problems—so far

When the tide goes out you find out who was swimming naked, Warren Buffett memorably said. The tide’s definitely gone out in markets this year, but finance has come through with few problems. Is it possible that this time not many were skinny-dipping?

The optimistic view is that the typical culprits—speculators using borrowed money—had been caught out already in the past two years and so weren’t up to their usual tricks. The pessimistic view is that the blowups are still to come.

Start with the positive: the list of recent crises that made investors reassess the dangers. The shock of the pandemic in early 2020 revealed serious problems with leveraged trading and overnight borrowing in Treasurys. The Federal Reserve stepped in and backstopped the market, but fixed-income hedge funds that lost big as Treasurys moved in the wrong direction cut back.

In January 2021, short sellers were hit as Redditors piled into meme stocks such as GameStop, driving up their prices and causing multibillion-dollar losses for those betting against them. Melvin Capital, which was heavily short GameStop, finally shut down this year. Other hedge funds took note, and concentrated short positions were rethought.

Then in March last year—when the market was still super-bullish—hedge fund Archegos blew up, causing $10 billion or so of losses to investment banks that had unwisely lent it money. Soul-searching at the investment banks means they have re-examined their hedge-fund lending, while Credit Suisse decided to pull out of the business altogether. Again, greater powers given to risk managers mean there is less risk of a repeat.

Roll forward to the autumn and currency and bond traders began preparing for rate rises, led by surprisingly hawkish talk from the Bank of England. But prices snapped back abruptly in November when the Bank didn’t follow through with the expected tightening, again giving funds that trade on macroeconomic news a dry run for the volatility that has dominated markets globally since.

All of these big but not huge shocks helped ensure that risk-taking was cut back, meaning there were fewer highly leveraged players who might be taken out by the extreme moves of 2022 in stocks, bonds, commodities and currencies.

So far there has been only one true catastrophe in traditional finance, the freezing of the nickel market when the London Metal Exchange foolishly decided to save a Chinese firm caught out by massive wrong-way bets. But bad as that was, it was never going to be enough to take down important parts of the financial system.

There have been some total disasters in crypto, notably the collapse of the Terra “stablecoin,” but the links to traditional finance remain small enough that this matters little to the mainstream.

The other important pillar of support is that banks are significantly stronger than in the past couple of decades, thanks to post-2008 reforms. They can weather bad times more easily as a result.

So much for the good news. The prevailing mood of finance executives I’ve asked about the lack of trouble is summed up by a repeated response: “So far.”

Long before Mr. Buffett discussed naked swimmers, economist John Kenneth Galbraith invented the “bezzle”—fraudulent losses accumulated in the good times that are only discovered when the economy weakens. After a decadelong bull market with only the briefest of interruptions in 2020, there could be plenty of bezzles yet to emerge.

The biggest bezzles in recent history took painfully long to emerge. After the bursting of the dot-com bubble in March 2000, it was 18 months before accounting fraud took down power company and leveraged energy trader Enron in what was then the biggest-ever bankruptcy. After the 2008 financial crisis, scandals continued for years across both finance and real-economy businesses.

The feedback loop from finance to the real economy and back to finance takes time to create serious problems, too. Already the weakest and most indebted developing countries are in trouble, with Sri Lanka in crisis and Ghana imposing fierce austerity to keep finances in order. The rising dollar and higher U.S. bond yields hurt governments and countries that chose to borrow in dollars and have a mismatch of dollar costs and local-currency income.

In 1994 and 1997-1998, it took more than a year for emerging-market crises—in 1994 Mexico’s “Tequila crisis,” in 1997 the Asian devaluations followed by Russia’s domestic-debt default—to feed back to Wall Street. When they did, Wall Street’s financial stability wobbled. More worryingly, the loss for investors in benchmark 10-year Treasurys from their peak is already much bigger than the shock of 1994.

There are two new risks that history doesn’t help with. The first is the unprecedented amount of liquidity that has been pumped into finance by central banks buying bonds. A lack of liquidity is what usually creates financial problems, as it prevents debts being rolled over. As the Fed and other central banks drain liquidity, problems might reveal themselves.

The second is that there’s a massive, and unknown, amount of private debt issued by lightly regulated shadow banks. My worry isn’t mainly that the lending turns sour (although it might). Rather, the danger is that the private-debt boom turns out to be a function of easy money. If investors prove less willing to lock up their money in private-debt funds as interest rates make mainstream investments more attractive, there will be a steady withdrawal of lending capacity. That could hold back the economy and make it harder for companies to refinance loans. These sorts of knock-on effects could take years to feed through into financial trouble.

I suspect there are plenty of underdressed bathers still to be exposed. I hope the crisis practice runs of the past two years mean there is less risk of Wall Street coming to a sudden stop.

FT : Inside EY’s break-up plan: why it could radically reshape the Big Four

Inside EY’s break-up plan: why it could radically reshape the Big Four
Splitting the audit and advisory businesses faces significant hurdles but other firms could follow

When EY’s global chief Carmine Di Sibio boarded the accounting firm’s private jet out of Davos in the early hours of Thursday morning, the Italian-American executive had already embarked on a more daring journey.

Sitting aboard EY One, as the Bombardier jet is known within the accounting firm, the auditor was steering a plan to break up the Big Four group that would reshape the oligopoly that has dominated professional services since their rival Arthur Andersen was brought down in 2002 by the collapse of US energy group Enron.

Di Sibio and his most senior colleagues are weighing a historic separation of EY’s audit and advisory businesses after years of criticism over perceived conflicts of interest between the two. Auditors are tasked with holding companies’ management to account and resisting pressure to sign off on numbers without proper evidence while their advisory colleagues prefer to keep clients sweet to generate fees in areas such as tax, deals and consulting.

“It surprises me that it’s taken this long,” says Fiona Czerniawska, chief executive of consulting sector analyst Source Global Research. “It’s becoming increasingly difficult for any accounting firm to offer a multidisciplinary service, which includes audit . . . I imagine that every other firm is looking into [restructuring] too. ”

Rationale for a break-up
For Big Four advisory practices, restrictions on working for audit clients are a drag on growth while investments in audit improvement have sapped capital investment from their consulting businesses.

“Most non-auditors would love to be free from the independence restrictions on what work we can do,” says one EY partner not involved in the restructuring planning.

Selling advice on digital consulting and M&A has helped drive the Big Four’s revenues to record levels but their advisory arms face competitors that are not constrained by audit conflicts. Accenture, which became independent from auditor Arthur Andersen in 2000, reported revenues of $51bn last year, almost double EY’s advisory sales.


Despite tightening the sale of advice to audit clients the Big Four still face questions over the quality of their audits.

“We feel we’ve been investing in audit quality but it still feels like we’re in the same place,” says a person with direct knowledge of EY’s plans.

A second factor, says the person, is that conflicts have become harder to manage as the Big Four push into multiyear managed service contracts for large corporate groups, which they deliver in tandem with tech companies through contractual alliances.

Auditing a tech provider, or even a private equity fund that invests in it, can throw up fresh conflicts and stifle the consulting arm’s growth in the rapidly expanding digital consulting market.

A partner at another Big Four firm says the problem is more pressing for EY because it dominates the Silicon Valley audit market, checking the accounts of Amazon, Google, Oracle, Salesforce and Workday.

Under the plans being drawn up by EY, its business would be split into an audit-focused partnership and a separately owned advisory operation encompassing most of its consulting and deals advice teams. The options under review include a public listing or the sale of a stake in the advisory business, with Goldman Sachs and JPMorgan advising the 312,000-person firm, according to people familiar with the matter.

The audit business, which would remain as a partnership, retained the EY brand when the firm sold its consulting practice to Cap Gemini for $11bn in 2000 before rebuilding it from scratch. It has not been decided which business would keep the EY brand this time, says the person with knowledge of the plans.

In recent years, the Big Four have opposed a repeat of the break-ups that took place two decades ago, but they have carried out contingency planning in case regulators were to force them to do so, according to senior accountants and consultants.

PwC considered options including an IPO of part of its business in 2019 but decided not to pursue a split partly because of the cost and complexity, says a person with knowledge of its planning.

PwC and Deloitte said on Friday they were committed to keeping their audit and advisory practices while KPMG stopped short of doing so, saying a multidisciplinary model “brings a range of benefits”.

Break-ups would give clients a wider choice of advisers and auditors, by reducing the risk of conflicts of interest but there is debate about whether big clients want this.

“I don’t believe the market wants a pure player,” says a senior auditor at a midsized firm. But a partner at a different mid-tier firm thinks the rest of the Big Four will follow EY’s lead. “This will trigger a series of events, whereby all professional services firms will urgently reconsider and evaluate their structures,” he says.

Selling the split
For Di Sibio and EY’s global leaders the decision on whether to recommend a split to the firm’s nearly 13,000 partners in the coming weeks will rest not just on the attraction of a break-up but on which forms of restructuring are deliverable.

“You can see the strategic wins but they’re not necessarily practically achievable,” says the person with knowledge of EY’s planning. “That’s what we’re trying to work out because if it doesn’t work, we won’t do it.”

A break-up would require approval from hundreds of regulators globally and would take years, say partners at other firms.

The more immediate challenge would be to win backing in a vote by EY partners in different business lines and countries, whose interests will be hard to align.

Partners at other accounting groups say key battle grounds would include the relative valuations of the audit and advisory businesses, whether audit partners believe their income would fall after splitting from the more profitable advisory practice and who would take on liability for lawsuits arising from EY’s alleged failure to raise red flags on frauds at Wirecard in Germany and NMC Health in the UK.

Liabilities arising from the Wirecard audits and other legal claims were not a driver for the planning, says the person with knowledge of the talks.

Auditors question whether a standalone audit business would be viable and could compete for recruits without the promise of varied career options.

The newly autonomous audit arm would retain experts in other disciplines to help with audit work, say people briefed on EY’s planning.

In the meantime, there is a risk of instability. In a note to staff on Friday, Di Sibio said talk of an overhaul “may be distracting” but asked them to stay focused.

“They’ve painted a great big target on their backs,” says a senior partner at a rival firm, who predicted any decision to split would encourage competitors to swoop for EY partners who fear a raw deal in the carve-up.

“[We] are going to go and try and find every single decent partner that they’ve got who is necessarily unhappy with the process over the next 12 months and try and steal them,” he says.

There will be “a bit of limbo” until details are thrashed out but after that, EY’s pitch to recruits will be clear, says the person with knowledge of its plans.

Deals wave?
An IPO would be more difficult to pull off than the sale of a stake to a private equity investor, say partners at several firms. A public listing would be “probably the most complicated deal in history but if the money is big enough, maybe [they can do it],” says a former Big Four partner.

“I can’t see an IPO. This is very attractive to private equity,” says a UK partner at another firm.

Private equity firms funded buyouts of KPMG and Deloitte’s UK insolvency and restructuring practices last year while Clayton, Dubilier & Rice paid $2.2bn for PwC’s global mobility services business in a deal struck in October.


A sale by EY could lead to further activity emulating the big accounting firms’ sell-off of their consulting businesses more than two decades ago. The deals included PwC’s disposal of its consulting division to IBM. KPMG’s consultants were split between Bearing Point and Atos while EY sold to Cap Gemini.

The only holdout was Deloitte, which continued to expand its consulting enterprise. The rest of the Big Four rebuilt their advisory arms but never managed to catch up.

But Czerniawska believes there can be a first-mover advantage for EY this time around.

“Do you really want to be the last firm to do this or would you prefer to be at the front seizing the initiative?” she says.

“If I was running [a firm] I would want to be on the front foot and in some way shaping the agenda in which future changes take place, not waiting to have to react.”

FT : UK Infrastructure Bank criticised for investing in third party funds

UK Infrastructure Bank criticised for investing in third party funds
Institution was set up last year to back projects that support transition to net zero and ‘levelling up’

The UK’s new infrastructure bank has been heavily criticised for channelling millions of pounds of taxpayer money into third party investment funds rather than projects that support “levelling up” and tackling climate change.

Based in Leeds, the UK Infrastructure Bank was set up last June with £12bn in initial funding to draw private sector finance into infrastructure projects that support the transition to net zero carbon emissions by 2050 and boost regional and local economic growth.

It has not yet published a full strategy but has invested in six projects. This includes £50mn as co-lender to the broadband provider Fibrus, which is delivering high-capacity internet in Northern Ireland, and a £107mn loan to the Tees Valley Combined Authority for its South Bank quay development.

However, it is also investing in third party funds, including a £100mn contribution to a new infrastructure fund managed by Octopus Investments, called the “Octopus Sustainable Infrastructure Fund”. It has also signed a deal to invest up to £250mn in NextEnergy Capital’s £500mn solar fund.

Lord Aamer Sarfraz, the prime minister’s trade envoy to Singapore and a former Conservative party treasurer, said he was sure the bank could play a “valuable role”. But he added: “We need UKIB to do the difficult direct deals, not outsource their responsibilities to third party fund managers as once you invest in a fund you have very little influence over it.

“The point of the bank is to address a market gap in infrastructure investing and it’s not at all clear that it is doing that,” he added.

The comments follow the second reading in the House of Lords last week of a bill that will ensure the bank’s “long-term purpose as an enduring institution”. It is intended to guarantee that the bank is not sold off as happened with another government initiative, the Green Investment Bank, which was sold to the Australian infrastructure investor Macquarie in 2017.

Steve Coulter, head of industrial strategy at the Tony Blair Institute, said the bank was a “big bet by government that they throw a bit of public money at the private sector and it will bring in investment when in all likelihood they risk competing with existing investors, which are already willing to put capital into projects”.

At least two groups of potential investors are understood to have expressed their concerns over the bank’s decisions so far to John Flint, the former HSBC boss who is the institution’s chief executive.

One institutional investor described the decisions as “a bit of joke”. “It’s unclear why they would get a third party manager to raise funds to invest in these projects,” she said. “There is plenty of capital to be deployed out there — the Saudis and Australians are queueing to get into the UK as it’s still a good place to invest.”

Infrastructure investors say that they need the bank to act as a broker — finding, developing and reducing the risk in construction projects and producing a pipeline of projects in which they can invest.

UKIB said that it aims to work with project sponsors such as private companies or local authorities to unlock investment and is planning to publish its strategy within weeks.

“We have sought to deploy our capital sensibly and strategically across a range of product sectors and, as you’d expect, we have partnered with established companies with a track record to make an immediate impact and start delivering on our mandate,” it said.

The bank, which already employs about 120 people, is aiming to more than double staff numbers over the next year. Its initial £12bn in funding was made up of £5bn in equity and £7bn in debt from the Treasury.

A further £10bn will be provided through the existing UK guarantees scheme, which has been used to draw private finance into projects such as the Northern Line Underground extension. However, that was criticised by the National Audit Office in 2015 as delivering poor value for money for taxpayers.

Robert Skinner, head of alternative Investments at Octopus Investments, said the bank’s commitment would be match-funded and that there was a “significant funding gap” in emerging sectors, including green data centres, battery storage and electric vehicle charging, which are “currently not seen as core infrastructure investment opportunities for many institutional investors”.

“With our sustainable infrastructure fund, we are hoping to unlock that much-needed capital,” he said.

NextEnergy declined to comment.

WSJ : Robots Pick Up More Work at Busy Factories

Robots Pick Up More Work at Busy Factories
Workplace robot orders jumped by 40% during this year’s first quarter; ‘Before, you could throw people at a problem’
At Athena Manufacturing in Austin, Texas, the company has spent more than $800,000 on robots, including this robotic welder.

Robots are turning up on more factory floors and assembly lines as companies struggle to hire enough workers to fill rising orders.

Orders for workplace robots in the U.S. increased by a record 40% during the first quarter compared with the same period in 2021, according to the Association for Advancing Automation, the robotics industry’s trade group. Robot orders, worth $1.6 billion, climbed 22% in 2021, following years of stagnant or declining order volumes, the group said.

Rising wages and worker shortages, compounded by increases in Covid-19-related absenteeism, are changing some manufacturers’ attitudes about robotics, executives said. “Before, you could throw people at a problem instead of finding a more elegant solution,” said Joe Montano, chief executive officer of Delphon Industries LLC, a maker of packaging for semiconductors, medical devices and aerospace components.

Delphon, based in Hayward, Calif., lost 40% of its production days during January when the coronavirus spread through its workforce. The disruption accelerated the company’s purchase of three additional robots earlier this year, Mr. Montano said.

Manufacturers in the U.S., where workers typically have been abundant and wages stable, have been slower to embrace robotics than those in some other industrialized countries. The number of robots deployed in the U.S. per 10,000 workers has traditionally trailed countries such as South Korea, Japan and Germany, according to the International Federation of Robotics.
The use of industrial robots in North America for years had been concentrated in the automotive industry, where robots took on repetitive tasks such as welding on assembly lines. While auto makers and manufacturers of auto components accounted for 71% of robot orders in 2016, their share declined to 42% in 2021, the automation association said. Meanwhile, robots made inroads into other sectors including food production, consumer products and pharmaceuticals. Executives said improved capabilities are allowing robots to be programmed for more-complex tasks requiring a mixture of strength and nimbleness.

At Athena Manufacturing LP, a fabricating and machining company for metal equipment used in the semiconductor, energy and aerospace industries, Chief Financial Officer John Newman said customers have been ramping up orders, but Athena has struggled to find enough workers to staff a second weekday shift and a weekend shift.

The Austin, Texas, company purchased seven robots in the past 18 months, including one that grinds down the welds on steel frames for holding semiconductor equipment. Mr. Newman said Athena has spent more than $800,000 on robots, including about $225,000 for the grinding robot alone. The investments aimed to increase Athena’s capacity to handle orders, he said, more than lowering costs.

Grinding the welds on a rack typically took an employee about three hours to complete, but the robot is now able to do it in 30 minutes, he said.

Mr. Newman said the robot can apply more force with a grinding tool than a human can, reducing the amount of time needed to create a smooth welded joint. “The robot doesn’t stop to rest, and that’s understandable for a human because it’s a hard job,” he said.

Acquiring the grinding robot took Athena about four years of research and engineering, Mr. Newman said, including help from 3M Co., which supplies the abrasive materials used in the grinding tool wielded by the robot. Athena has deployed six other robots, four of which weld the racks and two that load metal into machines. Most of these off-the-shelf robots were delivered in a few weeks and can be programmed remotely from a phone app, he said.

“The robots are becoming easier to use,” said Michael Cicco, chief executive officer of Fanuc America, a unit of Japan’s Fanuc Corp. , a major supplier of industrial robots. “Companies used to think that automation was too hard or too expensive to implement.”

Daron Acemoglu, an economics professor at Massachusetts Institute of Technology, said factories’ increasing reliance on automation will lead to an oversupply of human labor that will drive down wages in the years ahead, unless other U.S. industries can absorb displaced manufacturing workers.

“Automation, if it goes very fast, can destroy a lot of jobs,” Mr. Acemoglu said. “The labor shortage is not going to last. This is temporary.”

At Delphon, Mr. Montano said the company started leasing robots about four years ago to reduce the initial expense. The company now has 10 robots, including four so-called cobots that operate side-by-side with employees.

Delphon’s TouchMark subsidiary applies printing to the surfaces of medical devices, such as catheters. Cobots now are turning and holding the devices while a worker operates a printer that applies the ink to the device. Mr. Montano said two cobots reduced a three-person printing crew to one, saving the company $16,000 a month in expenses.

Two other Delphon cobots assemble packaging for shipping semiconductors and other fragile cargo, which are shipped in plastic boxes. Robots are now being used to clean the 2-inch-by-2-inch boxes with jets of air, dispense a bead of glue inside them and then install layers of mesh and the company’s silicone film padding.

Mr. Montano said Delphon is scaling up robots to work on larger-size boxes. The robots have improved the company’s productivity, he said, resulting in shipments increasing about 15% in 2021 and 2020, respectively, without increasing the company’s workforce of 200 people.

“We haven’t reduced any head count, but we reassigned them to where we needed people,” he said.

WWD : Brewing Up a Couture-like Coffee Brand in Paris

Brewing Up a Couture-like Coffee Brand in Paris
Momus is the brainchild of fashion and luxury executive Lionel Giraud.

Boxes of Momus coffee fill a bookcase at the brand's launch event in Paris.

People prize Parisian cafés for their history, charm and ambience — not necessarily their caffeinated beverages, which are typically unremarkable and frequently bitter and burnt-tasting.
Which might explain why hipsters endure lines at places like Noir, % Arabica and Ten Belles, among the indie coffee roasters that have sprung up in the French capital in recent years, staffed with groovy-looking young baristas pouring smoother brews.
Now Momus, an upstart French coffee brand, seems poised to further disrupt the scene with its couture-like concept. Inside chic white and color-coded boxes the size of paperbacks are blends created by one of France’s most decorated roasting specialists, by a rotating cast of creative personalities — or one crafted to your individual taste.


Momus is the brainchild of Lionel Giraud, a veteran of the fashion industry perhaps best known for his decade-long stint as artistic director of Chaumet. Having also worked in Cartier’s watch division, fashion house Courrèges, shoe chain André and eyewear firm Vuarnet, he brings a wealth of luxury and brand-building expertise to bear on a long-neglected aspect of France’s renowned culinary scene.

“Even when you go to a three-star restaurant, you are likely to find a menu with 30 pages or more for wine, maybe 10 pages for tea, and then at the end you have one line: coffee,” he says. “The average level of the coffee we have to drink is really poor. It bothers me when you have to pay 20 euros for a coffee and you don’t even know where it comes from.
Lionel Giraud
COURTESY OF MOMUS
“Coffee is not treated as it should be, especially since it’s the number-two drink in the world after water,” he adds. “Also, coffee is a not only a drink, it’s a lifestyle.”
While Giraud and his friends long toyed with the idea of opening a coffee shop, he turned to the project in earnest during pandemic lockdowns, with the ultimate goal of having a beautiful box of Momus coffee supplant Diptyque candles or a bottle of Champagne as the gift of choice to bring when someone invites you over for dinner.
While he swapped diamond tiaras for basic beans, Giraud says he strives to treat the raw material for Momus the same way, asking himself: “How can we make something very special, very delicate, very high-end?”
His concept for Momus is similar to the way Frédéric Malle markets perfume, adopting the language of French publishing houses and inviting notable talents to write their own recipe for the perfect blend. “It’s a coffee collection for collectors,” Giraud says.
He launched Momus last month with “editions” by chef Stéphane Abby, perfumer Fabrice Pellegrin and fashion curator Olivier Saillard, whose “Chapelle des Bois” blend evokes childhood memories of reading the Sunday paper with his mother over a big steaming pot. Giraud plans to invite a sommelier, novelist, painter and musician for future coffee editions.
There are also nine blends credited to Daniela Capuano, who in 2019 was named Meilleur Ouvrier de France in torréfaction, the French word for coffee roasting. The unique and prestigious award for craftspeople, initiated in 1924, only recently added the coffee category.
Daniela Capuano
COURTESY OF MOMUS
For Momus, Capuano sourced beans from prestigious environmentally committed farms in Brazil, Indonesia, Yemen, Panama, Honduras and beyond, roasting them to accentuate notes of caramel, lemongrass, peach, jasmine, chocolate, cinnamon, mango and rose.


Sustainability is intrinsic to Giraud’s concept, with all coffee traceable to a specific plot of land on each farm. “From bean to cup,” he calls it, echoing the farm-to-table movement in restaurants.
To be sure, consumers seem to be turning their backs on wasteful coffee capsules, Giraud says, pointing to a spike in French sales of coffee grinders and coffee makers that use whole beans or ground coffee, the only formats Momus sells.
While his generation of coffee drinkers was weaned on espresso, often excessively roasted to mask defects in the beans, Giraud says that Gen Z and Millennials favor “slow coffee” and long brews that can better exalt the large palette of subtle flavors and aromas fine beans can offer.
For starters, Momus is sold exclusively on its web site, where users can book a free 30-minute video consultation with its in-house barrista, who is stationed in Bordeaux; watch tutorials on using the six main contraptions to brew coffee; read up on all the ready-made blends; put together a selection of 50-gram samples, just like perfume, or create a bespoke blend, with a 400-gram minimum order priced at 45 euros.
The coffee packages resemble novels.
COURTESY OF MOMUS
“We want to be high-end but customer-driven,” Giraud explains. “It’s a question of education, we’re here to educate new generations.…It is really exciting to try to change something which is deeply ingrained in our culture.”
Momus is named after the mythic 19th-century café near the Louvre where the likes of Charles Baudelaire and Gustave Courbet hobnobbed with other writers and artists. It’s one of the key venues in Giacomo Puccini’s opera “La Bohème.”
Giraud hopes to open a flagship Momus store and café in Paris by early next year, and he’s developing a pop-up concept he hopes to install in bookshops and art galleries, in addition to department store gourmet departments.

WWD : Gucci Town Arrives on Roblox

Gucci Town Arrives on Roblox
Gucci Town is home to a broad range of activities and Vault, which will showcase some of Gucci's latest product drops and collaborations.

Gucci Town on Roblox

Gucci is raising the curtain on Gucci Town, a virtual piazza in the landscape of Roblox.
Gucci Town is a permanent destination that interacts with the codes of the house and expresses creative director Alessando Michele’s vision. This follows on the heels of several other immersive experiences from the brand, including Gucci Garden in May 2021.
“We’ve been experimenting with Roblox for years now and in May, 2021, we unveiled the first Gucci-themed immersive experience: Gucci Garden. For two weeks only, visitors had the chance to wander in a virtual counterpart of the Archetypes exhibition in Florence. Part of the success of that experience — which gained 20 million visitors and was recently awarded with a Webby Award — was its ability to build a sense of community around the brand on Roblox, thanks to our partnership with up-and-coming content creators and Gucci’s virtual goods instantly becoming signifiers of belonging to a group of users with shared values,” said Nicolas Oudinot, executive vice president, new businesses at Gucci and Gucci Vault chief executive officer.

“It is a place to reunite with like-minded individuals sharing a passion for self-expression, and to set up open dialogues between them and Gucci,” he said.
Inside Gucci Town.
COURTESY SHOT.
Gucci Town features a slew of activities that will evolve through time. Visitors walking from the central piazza to Mini Game Heights will find a portal transporting them to an arena of Gucci-inspired competitions, such as Tile Takeover or Flashlight Tag. Heading into Creative Corner, they can discover the works of a visiting artist and be inspired to create compositions of their own.
A view inside Gucci Town.
COURTESY SHOT.
Within the virtual Vault Plaza, community members will find an exhibition space inspired by the conversations started within Vault, the house’s experimental concept store. Conceived as its virtual counterpart on Roblox, it will showcase some of Gucci’s latest product drops and collaborations. Around the bend is the Gucci Shop, a boutique where visitors can purchase digital Gucci items to collect or to outfit Roblox avatars, including the new archive-inspired Gucci Blondie bags designed by Michele and limited-edition collectibles. The digital fashion items make the most of the recently launched Roblox “Layered Clothing” technology for hyper-realistic 3D garments that fit any avatar body type.
The Vault in Gucci Town.
COURTESY SHOT.
According to Christina Wootton, vice president of global partnerships at Roblox, the “Layered Clothing” technology closely mimics the way apparel fits and drapes in the real world. Shirts, dresses, sweaters, jackets, pants and shoes created with Layered Clothing can now also be worn in layers that affect and interact with each other in lifelike ways and are crafted with the precision of Hollywood CGI (computer-generated imagery). “The clothing instantaneously responds to infinite combination of body parts, movements and virtual worlds on Roblox. This technology was created to empower digital fashion designers to take their creative expression to the next level and enable limitless self-expression for people within the metaverse,” said Wootton.


The last piece is Power-up Place, a café where community members can take a break and come together with friends to meet and interact with others. As visitors immerse themselves in the various activities within Gucci Town, they are rewarded with the GG Gems, the in-experience currency they can use to purchase power-ups (an object in a video game that instantly adds to the life, armor, strength or score of a player), as well as virtual Gucci items. Each space within Gucci Town will be updated regularly with new content in conversation with the house’s trajectory into the future.
A view of Gucci Town.
COURTESY SHOT.
Products and content were developed with independent content creators from the Roblox community such as Rook Vanguard, Bunnexh and Lirn.
Vault serves as a meeting place and its constantly changing offering includes a curation of vintage Gucci pieces alongside exclusive capsule collections, limited-edition styles and other items from a selection of brands. Web3-based initiatives including NFTs are also on the platform’s virtual shelves as objects from different eras with diverse origins.
Asked what excites Gucci about the metaverse, Oudinot told WWD, “As the metaverse continues to be defined and despite the different meanings that the concept has, we all agree it is a medium making our online interactions more varied, customized and immersive. Inclusivity is a key value to make this possible. In that sense, it is built on an adjacent community to fashion. The function of fashion has always been first and foremost symbolic, empowering individuals to express themselves and project their identities. In a digital environment based on users’ co-presence, there’s a wellspring of opportunities for those sharing our mind-set, as aesthetic is crucial for individuals to create their digital persona, reflecting their taste, their ambitions and their visual horizons far beyond the limitation of the physical world.”
In discussing whom they are aiming Gucci Town toward, Oudinot said, “Gucci Town is first and foremost a virtual piazza, opening its doors to the entire Roblox community. It’s a place inviting its visitors to have a shared virtual experience which can be explored to find inspirations and entertainment in different forms, suitable for a varied audience. Our focus is primarily on building something meaningful, amplifying the voices of talents within the community. This allows us to translate Alessandro Michele’s universe in unexpected ways, adding elements to the multidisciplinary and inclusive approach the brand is now renowned for.”


Wootton said Gucci is the first luxury fashion brand to create a persistent experience on Roblox and utilize the platform as its immersive 3D social channel, building and creating a community it can engage all year long.
Gucci Town is the brand’s fifth collaboration with Roblox. The first step on the platform was commissioning virtual items to its community designers Rook Vanguard and cSapphire, she said. Then there was the Gucci Garden experience open for two weeks in May 2021, and the first-of-its-kind “Achille Lauro Superstar” experience earlier this year, as well as a collaboration with the British Fashion Council on The Fashion Awards.
According to Wootton, more than 50 million people gather daily on Roblox to socialize, create, play, learn, share adventures and expand friendships. She noted that one in five of Roblox’s daily active users updated their avatar on any given day in 2021, expressing themselves through body shapes, sizes, a variety of skin tones, accessories and clothing. “This avatar then becomes a digital extension of the user and empowers them to be whoever they want to be in the metaverse, on Roblox,” said Wootton.
Wootton said they are seeing more and more brands setting up a permanent presence on Roblox to engage new and existing audiences. She said that’s because they are learning that people in the Roblox community want to engage with their favorite brands, artists and celebrities all the time, not just when they have something to offer — similar to other social channels.
Last December, Tommy Hilfiger partnered with eight user-generated content designers from the Roblox community to create and promote a Tommy x Roblox Creators collection, and Ralph Lauren created a Winter Escape holiday-themed experience on Roblox that featured Virtual Polo Shops where users could style their avatars and make purchases. Nike has also worked with Roblox to create Nikeland, patterned after its world headquarters. Companies like Alo Yoga and Forever 21 have entered the metaverse with Roblox, as well.

WWD : https://wwd.com/fashion-news/designer-luxury/gucci-town-roblox-1235186865/

Gucci Town Arrives on Roblox
Gucci Town is home to a broad range of activities and Vault, which will showcase some of Gucci's latest product drops and collaborations.

Gucci Town on Roblox

Gucci is raising the curtain on Gucci Town, a virtual piazza in the landscape of Roblox.
Gucci Town is a permanent destination that interacts with the codes of the house and expresses creative director Alessando Michele’s vision. This follows on the heels of several other immersive experiences from the brand, including Gucci Garden in May 2021.
“We’ve been experimenting with Roblox for years now and in May, 2021, we unveiled the first Gucci-themed immersive experience: Gucci Garden. For two weeks only, visitors had the chance to wander in a virtual counterpart of the Archetypes exhibition in Florence. Part of the success of that experience — which gained 20 million visitors and was recently awarded with a Webby Award — was its ability to build a sense of community around the brand on Roblox, thanks to our partnership with up-and-coming content creators and Gucci’s virtual goods instantly becoming signifiers of belonging to a group of users with shared values,” said Nicolas Oudinot, executive vice president, new businesses at Gucci and Gucci Vault chief executive officer.

“It is a place to reunite with like-minded individuals sharing a passion for self-expression, and to set up open dialogues between them and Gucci,” he said.
Inside Gucci Town.
COURTESY SHOT.
Gucci Town features a slew of activities that will evolve through time. Visitors walking from the central piazza to Mini Game Heights will find a portal transporting them to an arena of Gucci-inspired competitions, such as Tile Takeover or Flashlight Tag. Heading into Creative Corner, they can discover the works of a visiting artist and be inspired to create compositions of their own.
A view inside Gucci Town.
COURTESY SHOT.
Within the virtual Vault Plaza, community members will find an exhibition space inspired by the conversations started within Vault, the house’s experimental concept store. Conceived as its virtual counterpart on Roblox, it will showcase some of Gucci’s latest product drops and collaborations. Around the bend is the Gucci Shop, a boutique where visitors can purchase digital Gucci items to collect or to outfit Roblox avatars, including the new archive-inspired Gucci Blondie bags designed by Michele and limited-edition collectibles. The digital fashion items make the most of the recently launched Roblox “Layered Clothing” technology for hyper-realistic 3D garments that fit any avatar body type.
The Vault in Gucci Town.
COURTESY SHOT.
According to Christina Wootton, vice president of global partnerships at Roblox, the “Layered Clothing” technology closely mimics the way apparel fits and drapes in the real world. Shirts, dresses, sweaters, jackets, pants and shoes created with Layered Clothing can now also be worn in layers that affect and interact with each other in lifelike ways and are crafted with the precision of Hollywood CGI (computer-generated imagery). “The clothing instantaneously responds to infinite combination of body parts, movements and virtual worlds on Roblox. This technology was created to empower digital fashion designers to take their creative expression to the next level and enable limitless self-expression for people within the metaverse,” said Wootton.


The last piece is Power-up Place, a café where community members can take a break and come together with friends to meet and interact with others. As visitors immerse themselves in the various activities within Gucci Town, they are rewarded with the GG Gems, the in-experience currency they can use to purchase power-ups (an object in a video game that instantly adds to the life, armor, strength or score of a player), as well as virtual Gucci items. Each space within Gucci Town will be updated regularly with new content in conversation with the house’s trajectory into the future.
A view of Gucci Town.
COURTESY SHOT.
Products and content were developed with independent content creators from the Roblox community such as Rook Vanguard, Bunnexh and Lirn.
Vault serves as a meeting place and its constantly changing offering includes a curation of vintage Gucci pieces alongside exclusive capsule collections, limited-edition styles and other items from a selection of brands. Web3-based initiatives including NFTs are also on the platform’s virtual shelves as objects from different eras with diverse origins.
Asked what excites Gucci about the metaverse, Oudinot told WWD, “As the metaverse continues to be defined and despite the different meanings that the concept has, we all agree it is a medium making our online interactions more varied, customized and immersive. Inclusivity is a key value to make this possible. In that sense, it is built on an adjacent community to fashion. The function of fashion has always been first and foremost symbolic, empowering individuals to express themselves and project their identities. In a digital environment based on users’ co-presence, there’s a wellspring of opportunities for those sharing our mind-set, as aesthetic is crucial for individuals to create their digital persona, reflecting their taste, their ambitions and their visual horizons far beyond the limitation of the physical world.”
In discussing whom they are aiming Gucci Town toward, Oudinot said, “Gucci Town is first and foremost a virtual piazza, opening its doors to the entire Roblox community. It’s a place inviting its visitors to have a shared virtual experience which can be explored to find inspirations and entertainment in different forms, suitable for a varied audience. Our focus is primarily on building something meaningful, amplifying the voices of talents within the community. This allows us to translate Alessandro Michele’s universe in unexpected ways, adding elements to the multidisciplinary and inclusive approach the brand is now renowned for.”


Wootton said Gucci is the first luxury fashion brand to create a persistent experience on Roblox and utilize the platform as its immersive 3D social channel, building and creating a community it can engage all year long.
Gucci Town is the brand’s fifth collaboration with Roblox. The first step on the platform was commissioning virtual items to its community designers Rook Vanguard and cSapphire, she said. Then there was the Gucci Garden experience open for two weeks in May 2021, and the first-of-its-kind “Achille Lauro Superstar” experience earlier this year, as well as a collaboration with the British Fashion Council on The Fashion Awards.
According to Wootton, more than 50 million people gather daily on Roblox to socialize, create, play, learn, share adventures and expand friendships. She noted that one in five of Roblox’s daily active users updated their avatar on any given day in 2021, expressing themselves through body shapes, sizes, a variety of skin tones, accessories and clothing. “This avatar then becomes a digital extension of the user and empowers them to be whoever they want to be in the metaverse, on Roblox,” said Wootton.
Wootton said they are seeing more and more brands setting up a permanent presence on Roblox to engage new and existing audiences. She said that’s because they are learning that people in the Roblox community want to engage with their favorite brands, artists and celebrities all the time, not just when they have something to offer — similar to other social channels.
Last December, Tommy Hilfiger partnered with eight user-generated content designers from the Roblox community to create and promote a Tommy x Roblox Creators collection, and Ralph Lauren created a Winter Escape holiday-themed experience on Roblox that featured Virtual Polo Shops where users could style their avatars and make purchases. Nike has also worked with Roblox to create Nikeland, patterned after its world headquarters. Companies like Alo Yoga and Forever 21 have entered the metaverse with Roblox, as well.