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Tech and Luxury Seeing Crossover

Headhunters and other industry experts respond to Apple Inc.’s hiring of Burberry ceo Angela Ahrendts.

The luxury and technology sectors are converging.

This story first appeared in the October 16, 2013 issue of WWD.  Subscribe Today.

That’s how headhunters and other industry experts interpret Apple Inc.’s picking of Burberry chief executive officer Angela Ahrendts to become its new senior vice president of retail and online stores, effective in spring 2014.

The hire follows the poaching last July of Yves Saint Laurent ceo Paul Deneve, who is now a vice president at the California-based computer company, working on special projects and reporting to Apple’s ceo Tim Cook.

“Technology giants are at a turning point: Innovative technology is the minimum expectation,” said Floriane de Saint Pierre, who runs an executive search and consulting firm in Paris. “Luxury brands are at a turning point as well. For them, the product is the minimum expectation. The new frontier will probably be from a channel-agnostic, media-agnostic consumer standpoint — to invent what will connect all the dots. In my view, this is the reason why the luxury sector needs more talent from technology giants, and why technology giants are currently hiring the most innovative leaders of the luxury sector.”

She noted that global creative brands in any field share the “same technology-educated, design-savvy audience.”

Strategic luxury adviser Concetta Lanciaux said the hiring of Ahrendts signals that Apple wishes to “capture the aspirational market, which is huge,” and to incorporate the luxury sector’s know-how in retail and e-commerce into its retail business.

“The trend that will influence the future retail market the most is luxury,” Lanciaux said, explaining that accessible luxury brands and masstige players are all borrowing best practices from the luxury sector.

“They want to know how luxury executives create the dream,” she said. “They will become part of think tanks developing scenarios for future products that merge the luxury philosophy and technology. It’s a very efficient way of anticipating the future that players in heritage luxury have forgotten to do.”

Gilles Auguste, a Paris-based luxury advisor and coauthor of the recent book “Luxury Talent Management,” said Apple already behaves like a luxury brand in terms of marketing, pricing and retail formats.

“They invented a new concept store that luxury brands adore and now still copy,” Auguste said. “Recruiting Ahrendts is a sign that Apple is thinking about a new step in the development of the brand.”

Lanciaux noted that following the 2011 death of Steve Jobs, who was both the creative and business head of the company, Apple now needs to actively manage creativity, which is seen as a key skill of executives from luxury goods.

She cautioned that she does not perceive a “huge trend” for tech firms to hire luxury executives. “It is very difficult to adapt to different business practices. It will take a generation for these migrations to really metabolize,” she said.

While compensation levels at Apple for Ahrendts and Deneve were not disclosed, it is understood they would be above what they earned in the fashion industry. In the year to March 31, Ahrendts earned a base salary of 1 million pounds, or $1.6 million at current exchange. Her aggregate earnings for the same period were 3.3 million pounds, or $5.2 million, including a pension cash supplement, cash allowances, an annual bonus and benefits.

According to Lanciaux, “Higher salaries for these executives are compensation for the risk they are taking. It is a risk premium.”