PARIS — For decades, France’s LVMH has been the face of luxury for the wealthy toting Louis Vuitton bags, donning Christian Dior clothes, sprinkling Bulgari perfume and sipping Veuve Clicquot champagne.
This week, the world’s dominant luxury group – home to 75 high-end brands across fashion, jewelry, watches and alcohol – will be the face of a global event for the masses: the Paris Olympics, with billions of viewers across the world. whole planet.
With an important sponsorship role aimed at polishing the image of the Games and the French capital, this is a new chapter in LVMH’s specialty: selling exclusivity on a large scale under chairman and CEO, Bernard Arnault.
By collecting and growing dozens of exclusive labels under one roof, 75-year-old Arnault tops the Forbes list of the richest people in the world. As recently as June 3, Forbes estimated his wealth at $207 billion, narrowly higher than Tesla’s Elon Musk and Amazon founder Jeff Bezos. With ever-changing stock prices, the three men often trade places (according to Tuesday’s Forbes real-time billionaires list, Arnault and his family currently rank No. 3).
LVMH’s cosmetics brand Sephora sponsored the Olympic torch relay. Berluti designed the uniforms for France’s opening ceremony. Jeweler Chaumet made the Olympic medals. These will rest in trunks designed by Louis Vuitton, whose headquarters at 2 Rue Pont Neuf will be hard to miss as the opening ceremony parade floats by on the River Seine.
“We were trying to find a way to do this, to do something other than just signing a check and putting up billboards on the side of the street,” said Antoine Arnault, LVMH’s head of environment and image and the eldest son. from Arnault – to The Associated Press. Monday.
The extent of LVMH’s involvement is “unprecedented for a luxury brand,” said Luca Solca, luxury goods analyst at research firm Bernstein. While such brands used to focus on athletic pursuits more associated with the wealthy – tennis, equestrian and yacht racing – LVMH and its competitors have increasingly used mass sports to reach customers and place a halo of excellence around their products.
“The award is a high-level association with sport as a universal language that all consumers understand,” says Solca.
While his brands take center stage, Arnault’s understated public profile stands in stark contrast to that of Musk and Bezos. Although his company is adept at digital marketing, he is not active on social media himself. He can almost blend in with the crowd, sitting quietly in the front row in his somber suit at fashion shows. Unsurprisingly, however, he is well-connected: he was awarded the Légion d’Honneur in March by President Emmanuel Macron, whose wife, Brigitte, taught French to two of Arnault’s sons.
“He is almost a head of state; he has that level of influence,” said political image consultant Frank Tapiro, who calls Arnault the “godfather of the Olympics.” Tapiro, who worked with Arnault as creative director for the launch of the Miss Dior perfume, compared him to Louis XIV, the 18th-century Sun King who was famous for wielding incredible power over his capital from afar.
Arnault, an engineer who started out at his family’s construction company, began his career in the luxury sector by acquiring Financière Agache in 1984. He dumped the less attractive companies of his takeover and kept only the crown jewels: Christian Dior and the chic department store Le Bon Marché. Within five years, he had taken a stake in LVMH and became CEO of the company, created from the merger of Moët Hennessy and Louis Vuitton – brands that had been created centuries ago.
Arnault made his fortune by defying conventional wisdom and building a conglomerate in a field where rarity and exclusivity are key. The company’s enormous size has led to what Solca calls the “virtuous cycle of megabrands”: its size and big profits allow LVMH to recruit top design talent, open larger and flashier stores in elite locations, and support its brands with marketing and advertising. spending that each of them brand could never achieve this on their own. That drives up profits further and the cycle repeats.
LVMH is three times as big today as it was in 2009. Last year the company reported revenues of 86.2 billion euros ($93.2 billion) and profits of 22.8 billion euros ($24.6 billion) from recurring operations, which amounts to a profit margin of more than 26.5%. that companies in sectors such as automotive, aviation or food retailing can only dream of. It is a limited company, but family run. Arnault’s five children each play a role, leading to media speculation about who will succeed him at the top; However, his decision to extend the retirement age for his job from 75 to 80 indicates that he may be around for a while yet.
Arnault’s strength is balancing heritage with innovation to prevent venerable brands from stagnating and giving top designers the freedom to innovate the classics. Louis Vuitton reinforced its aura of exclusivity by multiplying handbag styles through limited editions, with partners like artist Jeff Koons, giving buyers the feeling they had something different from the rest – an approach Solca called a “multi-pronged innovation engine” which keeps quantities limited and prices high.
“Managing the paradox of star brands is very difficult and rare,” Arnault once told the Harvard Business Review, adding, “fortunately.”
“Our entire company is based on giving our artists and designers complete freedom to invent without limits,” he said. “If you look over a creative person’s shoulder, he will stop doing great work.”
In the topsy-turvy world of luxury retailing, raising prices can actually increase demand — not to mention profits — by underscoring the desirability of, say, a Louis Vuitton handbag that can cost $3,000 or more . The growing number of extremely wealthy people who can afford luxury goods, and the company’s early move into China as it developed into a major luxury market, have also boosted its fortunes.
Given the company’s emphasis on its French heritage, the Paris sponsorship is “quite congruent with LVMH’s image,” said Qing Wang, professor of marketing and innovation at the University of Warwick’s business school. “With the Olympic Games in Paris, this is an opportunity to emphasize that connection.”
After all, the modern Olympic Games were invented by a French nobleman, Baron Pierre de Coubertin, and French remains one of the official languages of the Games.
“We feel a responsibility because our brands are very notoriously French. We are French,” Antoine Arnault told the AP. “My father is very deeply French and loves his country. So we feel a responsibility to do things the right way.”
The company’s financial contribution of 150 million euros ($162 million), a figure reported by the news media and analysts but not confirmed by the organizing committee or the company, would put LVMH at or near the top of the list of the Games’ largest sponsors . The sponsorship helps the organizing committee achieve its stated goal: privately funded Games that avoid the cost overruns of previous Olympic Games. (The budget of 4.38 billion euros for the Games is 96% covered by private revenues, including from sponsors, ticket sales and television revenues. The 4% share consisting of public financing goes to the Paralympic Games that follow .)
There are risks to LVMH’s image investment – for example, if the Games are marred by protests in France’s troubled political climate. “The French are considered world leaders in protesting,” Solca notes. And it is an undeniable fact that, as Solca puts it, “luxury thrives on income inequality” – while Macron has touted the Games as wide open, critics have seized on the inaccessibility of access to many events and the intertwined luxury brands.
One thing is quite certain: Paris won’t see a sudden increase in luxury shopping during the Olympics itself.
The crowds can deter wealthy travelers from coming to spend money, and street closures hinder access to shops, including Avenue Montaigne, home to LVMH’s flagship store.
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McHugh reported from Frankfurt, Germany.
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For more coverage of the Paris Olympics, visit https://apnews.com/hub/2024-paris-olympic-games.
