Louis Vuitton’s next generation steps up to Kanye’s latest tune
Global luxury tastemaker is reinventing itself again, this time with an eye to the streets
At a recent Louis Vuitton menswear show in Paris, newly hired designer Virgil Abloh sent hoodie-clad models down the runway toting duffle bags made from gleaming high-tech plastic, to the tune of the latest Kanye West album. West, who embraced the tearful designer as he took his bows, was joined by his wife, Instagram super-influencer Kim Kardashian. Seated steps away: Bernard Arnault, head of parent company LVMH, and four of his adult children.
The duffles, embossed with the LV logo, were a far cry from the monogrammed brown bags that helped LVMH define and dominate the global luxury industry. They’re just one of the many ways the company is remaking itself as the next generation of Arnaults carves out a greater role.
Of Arnault’s five children from two marriages, all but the youngest one hold senior positions at LVMH.
Over the past year, the multipronged group has shaken up its ranks of managers and designers, rolled out new e-commerce platforms and launched a makeup line with singer Ri- hanna. It’s become a patron of the French technology scene, subsidizing workspace at a startup incubator and handing out awards to young entrepreneurs. Such moves contrast with LVMH’s long-time modus operandi of acquiring iconic European brands and enhancing their exclusivity.
“Luxury companies are required to engage the consumer in ways they never did before,” said Mario Ortelli, who runs a London-based advisory firm on luxury strategy. “It’s become more of a collaboration” as the response on social media can either boost or sink new collections. The younger Arnaults “can look at this market with the eyes of someone who is closer to it” than their 69-yearold father.
Abloh’s hiring illustrates the transformation. A GhanaianAmerican streetwear designer, he was a creative consultant to West when he was spotted by Delphine Arnault, 43, Vuitton’s executive vice-president, and Alexandre Arnault, 26, head of the Rimowa luggage business. Abloh, who studied architecture rather than fashion, has a following of 2.6 million fans on Instagram, many of them willing to pay as much as $2,500 (U.S.) for a pair of sneakers from his collaboration with Nike.
“What’s exciting about him is his approach, and the fact that he’s so open to the world,” Alexandre Arnault said before the show, standing on the rainbowpainted runway. In a nod to LVMH’s success with classic fashion, he added: “It’s about redefining the codes of luxury, making it more accessible for young people. The products will stay exclusive even if the approach is inclusive.”
Bernard Arnault doesn’t plan to retire for at least a decade, according to people familiar with his thinking, and there’s no clear front-runner to replace him. But as his children expand their influence, and as the serial deal-maker runs out of companies to buy, LVMH is reshaping the brands it already owns.
The luxury business “is not about It bags anymore,” said Federica Levato, a partner at Bain & Co. in Milan. “Streetwear, Tshirts, puffy jackets are becoming an important part of the core collection.” In marketing to these customers, luxury houses have to focus not only on products but also on “communication, visuals, social media, all the touchpoints.”
The company, 47 per cent owned by the Arnault family, posted 43 billion euros ($65.9 billion) in sales last year, nearly three times the figure of its nearest competitor, Kering. Its portfolio of 70 brands, from Vuitton and Dior to Moet & Chandon Champagne and Tag Heuer watches, turned in robust 13-per-cent sales growth during the first quarter. Bernard Arnault is the world’s sixth-richest person, with a fortune of $73 billion.
“Bernard Arnault has a sixth sense about what’s next” in luxury trends, said Ron Frasch, a former president of Saks Fifth Avenue who works in private equity at Castanea Partners in New York.
Still, there are worrisome signs. Gucci, owned by Kering, is outpacing LVMH in the race for younger customers. LVMH can no longer count on acquisitions to supercharge growth. Nowadays, opportunities are few for game-changing deals.
Arnault and his team used to be known as “killers” who stalked the luxury sector for po- tential acquisitions, said Gachoucha Kretz, a marketing professor at French business school HEC. Now, “they are taking another path.”
That path includes new management and design talent.
Abloh, whose appointment was announced in March, caught Delphine Arnault’s attention in 2015 when she made him a finalist in an annual competition to spot promising young designers.
Delphine has become LVMH’s chief scout when it comes to design talent. She’s also inherited for father’s penchant for quality control, popping in unannounced at some of LVMH’s more than 4,000 stores around the world to make sure they’re up to snuff.
Abloh is “a completely different generation,” said Takashi Murakami, who worked with Vuitton on a series of multicoloured handbags in the early 2000s during the brand’s first conversion from stuffy trunkmaker to veritable fashion brand under Marc Jacobs. “When I was collaborating the first time with Marc Jacobs, at this moment the high fashion was the high fashion with very few black people. This time it’s really with the hip-hop movement.”