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LVMH Lesson 1
LVMH Created in 1987
More than 75 Maisons, 6 business sectors, 175 000 employees across 80 countries:
LVMH is an exceptional universe.
More than 175000 employees
179 nationalities, 4 generations, average age 37, 71% woman,
WE inspire, challenge, connect and support YOU
4 values : Being creative and innovative, Delivering excellence, Cultivating an
entrepreneurial spirit, being commited to positive impact
In this chapter, you will deep dive into each of our 6 business sectors - Fashion &
Leather Goods, Wines & Spirits, Perfumes & Cosmetics, Watches & Jewelry,
Selective Retailing, and Other Activities, as well as into some of our Maisons.
Wines & Spirits
Moët & Chandon, Krug, Veuve Clicquot, Hennessy and Château d’Yquem are just
some of the world-renowned wines and spirits brands that have become
synonymous with the most prestigious origins and terroirs.
All the vineyards owned within the division have had sustainable wine growing
certification since 2017.
25 maisons, 5,974 million euros, clos des lambrays founded (1365)
 Fashion & Leather Goods
Preserving an identity and roots, whilst at the same time constantly reinventing
themselves in order to appeal to their contemporaries, has always been the “raison
d’être” of the Maisons in LVMH’s Fashion & Leather Goods sector.
Fendi - Founded by Adele and Edoardo Fendi in Rome in 1925
14 maisons, 30,896 million euros sales (2021), Date loewe founded (1846)
Perfumes & Cosmetics
The LVMH Maisons that are part of the Perfumes & Cosmetics sector benefit
from exceptional dynamism that relies on both the longevity and development of key
lines, and on the boldness of new creations.
The success of the Perfumes & Cosmetics division depends on finding the right
balance between major historic Maisons such as Parfums Christian Dior, Parfums
Givenchy and Guerlain, and younger brands with strong potential like Benefit
Cosmetics, Fresh, Make Up For Ever and, the newest, Fenty Beauty.
These brands are driven by the same values: a quest for excellence, creativity,
innovation and perfect mastery of their image.
House of Dior founded in 1946
15 Maisions, 6,608 million euros sales, 2017 fenty beauty (Rihanna) founded
Watches & Jewelry
The watchmaking side capitalises on the complementary positioning of its
Maisons: TAG Heuer’s international stature, Hublot’s strong dynamic of innovation,
and Zenith’s age-old savoir-faire. In jewelry and high jewelry, the Maisons
of Bvlgari, Tiffany & Co., Chaumet and Fred employ their bold creativity and
perfectly mastered savoir-faire to constantly surprise their customers and offer them
the objects they desire.
8 Maisons, 8,964 million euros, 2021 acquired Tiffany&Co.
Selective retailing (Customer-focused strategy)
The Selective Retailing Maisons in the LVMH Group share the same objective:
to transform shopping into a unique experience. Specialist product selection,
upgrading of stores and services, constant innovation, digitalisation and
personalisation of relationships, these are some of the key drivers for their daily
Operating in Europe, the Americas, Asia and the Middle East, our Maisons are active
in two spheres: retail designed for international traveler customers (travel retail),
with DFS, Miami Cruiseline, and Starboard Cruises; and selective retailing
concepts represented by Sephora, the most innovative name in the world of beauty,
and Le Bon Marché Rive Gauche & La Grande Epicerie de Paris, department stores
with a unique atmosphere located in Paris.
The sector's major strategic priorities are to maintain Sephora’s innovative
momentum in stores and digital content; continue to cultivate a creative and
exclusive offering at Le Bon Marché Rive Gauche & La Grande Epicerie de Paris;
pursue the expansion of DFS, and develop digital marketing initiatives to get closer
to international travelers.
5 Maisons, 11,754 million euros, Le Bon Marche Rive Gauche (1852)
Le Bon Marché: The world’s first department store
Other activities (lifestyle, hospitality, culture and the arts)
This approach is part of the quest for excellence pursued by each of these
Maisons: from the Les Echos group, which includes key titles from the economic and
cultural press, to Royal Van Lent, which markets custom-designed yachts under the
name of Feadship, and Cheval Blanc and Belmond, which bring together a collection
of exceptional hotels.
10 maisons, 5 cheval blanc maisons, Date Royal Van Lent (1849) found
6 pillars of the LVMH Business Model
Promoting risk-taking and perseverance
LVMH’s organisation is agile and decentralised, which
encourages efficiency and responsiveness. Our specific structure and operating
principles ensure that each Maison can be autonomous and responsive at all times
– something that helps us to get close to our customers, and ensures that rapid,
effective and appropriate decisions can be made.
We entrust all our employees with significant responsibilities, which
stimulates individual initiatives, and motivates teams by encouraging them to show
true entrepreneurial spirit.
By promoting pragmatic thinking and the ability to motivate teams, we challenge
ourselves and our talents to achieve, continuously push the boundaries and never
shy away from risk-taking and perseverance - and our decentralised organisation
approach promotes this.
Fostering excellence both upstream and downstream
Vertical integration allows us to control every link in the value chain, from
sourcing and production to selective retailing, which means that the image of our
Maisons is carefully controlled.
Our business model is anchored in this meticulous control, making LVMH the only
global luxury Group to offer such a vast and diversified array of professional
opportunities around the world, all the way from when a product is created to when
it is handed into clients’ hands.
The past lives within us and inspires us, but what motivates us is the future
To pursue our long-term vision, we strive to preserve our Maisons’ distinctive
identities and excellence. We do this by developing forward-thinking initiatives
to transmit savoir-faire and ensure that craftsmanship and creative métiers are
valued by future generations.
We constantly endeavour to cultivate the expertise upon which our Maisons have
built their legacies. This means we hire and train thousands of new employees each
year. The past lives within us and inspires us, but what motivates us is the future:
the next generations to whom we have a duty to pass on the torch of excellence. Our
role is to equip them with the tools and skills they need to attain it.
Sustaining our success for the long term
Organic growth is a key priority for us, and we commit significant resources to
help develop our Maisons, and encourage and protect their creativity.
We know that our employees are the key to this approach, which is why we support
their career growth and encourage them to exceed their potential.
Over time, and guided by our long-term vision, we have reaped the rewards of
ambitious choices, investments and patient developments, often years in the making.
It’s this enduring commitment that sets us apart from the rest and does the following
three things: gives Maisons and employees the time they need to fully express their
potential and talent, drives our ability to adapt and respond to the unprecedented
crisis that the world has been facing since 2020, and underpins the powerful
resilience of our Group, which as always, has risen (and continues to rise) to the
Sharing resources to be stronger
The sharing of resources on a Group scale is part of our DNA. It
creates intelligent synergies while respecting the individual identities
and autonomy of our Maisons. It means that the combined strength of the
LVMH Group is leveraged to benefit each of its Maisons.
On the ground, this translates to sharing best practices. It helps us harness
expertise and optimise the Maisons’ processes to boost their potential.
One way we facilitate this is by connecting our talents to one of the world’s most
creative and innovative communities. We connect through themes, places,
moments and channels to come together, share and grow. We create collective
moments and communities of interest to allow our talents to share ideas and best
practices within or across the different professions and geographic areas.
Withstanding the impact of shifting economic factors
Our Group has the resources to sustain regular growth thanks to
the balance across its business activities and a well-distributed geographic footprint.
This balance means that we are well-positioned to withstand the impact of shifting
economic factors.
Here are some figures:
80 countries and 5500+ stores . Revenue of 64.2 billion euros in 2021, distributed
across geographies: Asia (excl. Japan) 35%, Japan 7%, United States 26% , Europe
(excl. France) 15% , France 6% and Other Markets 11% .
Driving Trends and Challenges
1. Which are the main characteristics of the Luxury industry, and what
makes this sector unique?
2. According to you, what are the three most important factors influencing
the future of Luxury?*
 How to define luxury?
Conception (matter of perspective, “the ordinary of extraordinary people” and “the
extraordinary of ordinary people”)
Exclusive (quality, material, prestige,
Sociologist define luxury to encompasses a social stratification role in
which its function is to demonstrate forms of power)
In economy, luxury centers on expensive products or services d above
their functional value (functional value is not the only form of value
delivered by luxury)
Constantly evolving (Constantly redefines itself to stick to the period, its about
demonstrating knowledge, passion and value in what they buy, luxury is not
merely about possessions but the experience of it)
7 essential characteristics of luxury :
a. Quality (long lasting in terms of design, aesthetic appeal,
craftmanship, Training, e.g. gold plated lock – need more gold to
satisfy longevity expectation)
b. Scarcity (Using rare ingredients and craft, qualitative rarity, limited
editions and collections
c. Delivering experiential rewards (Loaded with positive emotions and
powerful brand associations to ignite an emotional connection, e.g.
packaging, blue box of Tiffany, colours evokes a emotionals to
d. Signed by Brands (Product artistry, brand signature, symbol of
distinction and status, anything sufficiently proprietary to be recognised
as belonging to the brand)
e. Controlled Channels (*Essential in luxury indusy, Helps lower the risk
of counterfeiting and grey markets, conveying distinction, enable
creating and managing a direct link with the customers)
Leading to ..
f. Personalised Services (Develop rich experience delivery, and
“explain” the products to their consumers, creating the stage to express
all the above qualities, nurturing emotions, sublimating and starifying
the offering to highlight its prestige)
g. Prices (Price is uncorrelated with the sole functional performance of
the offering, “dream” created immensely contributes to the overall value
delivered to customers)
Developing brand – Brand power and status is not yet built in the
imagination of the customers, it remains reasonable to consider a degree of
correlation between functional performance and the prices
- Key figures and trends of the Luxury industry:
9 categories of luxury: Automotives, personal goods, hospitality, fine wines and
spirits, gourmet food, furniture, art, private jets, cruises
Core of luxury: fashion, accessories, beauty and fragrances, jewelry and watches
(consistently growing at 6% per annum for the past 20 years until 2019), in 2020, the
market level is equivalent of 2014 performance
Market recovery coincide with profound transformation of luxury landscape, luxury
requires deep reinvention
Understanding the future consumers:
- Market Becoming increasingly local instead of tourist driven (from “when
travel” to “at home”, quasi-frozen touristic flow) (e.g. China by 2025, they will
take up 26-28% of luxury good markets)
Future Dustribution :
2020 – 2025 (23 -> 30% online purchases, largest channel of distibution)
Expect more brands growing fewer stores globally
Wholesale distribution – Declining trend (60% to 40% of total market)
Travel retail is only expected to recover by 2025
Surging Trend: Sustainability and second hand (younger customers) (growing
at 9% rate since 2019, est. 28 million euros)
Erwan Rambourg, top ranked Luxury analyst and renowned author of books about
the future of Luxury, shares optimistic trends and mechanisms that are likely to
support the industry’s growth for the next decade.
Here, Erwan Rambourg shares an optimistic view about the next decade of growth in
the luxury sector and highlight the key topics that will influence that growth.
3 reasons to be optimistic about the next decade of growth in luxury:
1. Ladies first, the Future is Female
Women are already the key decision-makers for households across the planet. Yet
with greater financial autonomy and higher employment participation rates, the
female spending power is on the cusp of becoming much greater. As women get
married later and have fewer children, higher disposable income will support
increased luxury spending.
Societal change around gender inequality seems to have accelerated recently, and
many initiatives are under way to improve the economic position of women. Women
should greatly influence spending in jewelry, cosmetics, handbags, accessories, and
much more.
2. Second, All Points East
China has become even more important for the luxury sector in terms of contribution
to sales. Asia will continue its strong support of the luxury sector, with China as the
main driver of growth over the next decade. Four main trends will be associated with
this growth:
1. Wealth creation will continue to fuel the next generation of Chinese shoppers,
with the number of potential luxury clients close to doubling over the next five
2. The bulk of growth should come from China itself with four good reasons to
shop at HOME: Harmonization of prices, the rapid development
of Omnichannel buying, the administration’s Monitoring of consumer
spending, and increased Education about where to purchase genuine luxury
products. Short term, covid-19 has been an accelerator of this repatriation of
growth in the mainland.
3. China’s luxury market is becoming one of the most profitable after having
been margin dilutive for years.
4. Finally, adoption of luxury in other Asian markets is either reaching a ceiling
(like in Japan), getting mature (like in South Korea), or too small to move the
needle for now (like in India, Indonesia).
3. Third, the power of Youth, Inclusion, and Diversity
Luxury buyers start young for many reasons, but the essential one is human nature
and buying your place in society. Whether in China, the U.S., or emerging markets,
the modal age of the population is much lower than in Japan or Europe. In the West,
youth demographics is increasingly diverse. The young generation of luxury
buyers—including, most notably, people of color—around the world have
transformed the luxury industry and should continue to do so, particularly in certain
areas such as:
Casualization: a more relaxed way of dressing up is a generational shift.
Social media: widespread information and the search for authenticity will put
pressure on brands to have thoughtful, genuine messages.
And values: With climate protests, sustainability issues going mainstream,
and a diverse generation that cares, brands need to behave and respect the
planet as well as cultural differences and sensitivities.
Looking at distribution, although we saw the rise of e-commerce post COVID, Brick
and Mortar is still an important part of the luxury story.
While the consumer world is going online, e-commerce will have some limitations as
a contributor to luxury brand sales, almost by definition. Separately, many luxury
brands might aspire eventually to control their distribution as strictly as Louis Vuitton
does. Brick and mortar is still the future for luxury. Of course, the stores of tomorrow
will not be comparable to the ones you are experiencing today, and as long as your
main target is not just to sell, you should do well as a brand by offering consumers a
unique experience and a place to spend time and socialize, learn, and be
As luxury moves from a recruitment to a repeat purchase business over time, there
will be the potential for substitutes to arise. Let’s focus on 3 substitutes and one key
1. Health
Health is a major concern for many consumers, and they are ready to invest in order
to live healthier lives. Spending on the so-called trinity of health (i.e. diet, exercise,
sleep), as well as on mindfulness products, could divert from spending on traditional
luxury products— especially given the greater overlap today between brands and
experiences. If anything, the CoViD-19 outbreak has accelerated consumers’ greater
focus on health and wellness.
2. The “Premiumization” of Everything
Everything can be premiumized, from coffee to entertainment. The issue the
traditional luxury brands will face is that the next generation of consumers will be
diverting their spending away to free up spending on products or experiences that
they will perceive as being edgier or more in line with their values.
3. Travel
Travel trends are well supported by wealth creation and will be a positive factor for
luxury demand ahead as with travel come bragging rights. Structural factors will
enable travel to thrive, notably the lower costs, greater awareness of destinations,
and increased safety of the world. As with luxury demand overall, the continued
emergence of a wealthy Chinese consumer will dominate travel trends and the
associated spending for the next ten years. This consumer will change destinations
depending on foreign exchange moves, political and security concerns, and fashion
trends. One big concern, however, remains: travel comes with high greenhouse gas
emissions, and being environmentally friendly will be increasingly important to the
up-and-coming luxury consumers.
On this topic, it seems that sustainability will be the most disruptive trend of the
next decade. Ethical transparency, production traceability, and environmental
sustainability are not mere buzzwords for the young generation.
Existing luxury companies need to have alternatives in mind and possibly invest in
them as a hedge for when their own current businesses might be affected by these
emerging categories.
Recognizing the existence of a circular economy, environmental, sustainability, and
governance issues will not be merely a fashionable conversation or an opportunity to
greenwash. A genuine transformation of processes is needed as the next consumer
will not be gullible and they will be asking questions.
As a conclusion, there are many growth opportunities for the sector and COVID-19
has accelerated some key changes in the industry. For brands who are quick
enough to embrace change and willing to take risks and rethink their business
models, there are great success stories ahead.
5 Major stakes shaping the future:
- Sustainability
- New Customer Experience
- Innovation
- Digital Transformation
- China: A leading market
Ways to improve sustainability in luxury products
Rediscover the exclusive value of vintage products
Expected to count between 10 – 20% on the overall luxury market by 2030,
having more timeless pieces (“Classics”)
Rethinking of ownership
Pay per use approach, millennials prefer living through unique experiences
than buying exclusive objects, do not necessarily need to own high-end objects
to feel and signal status, they just want to have access and use it when desired
(“everything as a service”)
Allows to educate a larger portion of demand, pay-per-use (aka renting,
addresses sustainable consumption, renting vs buyer, external observers
will tend to attribute lower status to consumers renting products)
Smart consumers : traditional purchase for iconic timeless pieces, accessbased consumption (rental) for new treneds
When consumers are more aware of responsible consumption, access-based
luxury triggers proudness and word-of-mouth
Tackle the challenge of personalisation
How can brands enhance authentic consumer pride, while preserving their
signaling potential?
 Understand the right balance between customisation and product
recognisability (brand identity).
Consumers desire for self-expression can erode the product’s signalling value
(customisation will require consumers to pay a premium)
For customisation, core features cannot be modified in order to preserve the
customer’s willingness to pay a superior price for luxury items (the more
attributes that can be personalised, the higher the risk of negatively impacting
brand identity)
Strong driver for luxury consumption : Need for Uniqueness (converse
impact, enhance consumer purchase experience)
Traits: Inherent scarcity, self-customisation can positively impact the
uniqueness (letting customers to contribute to the final object configuration –
enhance authentic consumer’s pride)
Inverted U-shaped effect : High level of customisation diminishes the value of
the luxury product
**Need to identify the sweet spot on the design freedom continumm**
Strategies to Attenuate Backfiring Effects
1. Making brand more prominent through overt means (through explicit display
of brand logos)
A customised item is an item which juxtaposes itself against the logics of fast fashion;
requires time to be crafted, designed for one audience
Customisation can be seen as a strategy to fight against counterfeiting (offers
guaranteed authenticity and controlled manufacturing processes
Innovation is a key asset for brands in the luxury industry.
- The idea that technology should be used to break down the doors of more traditional
industries, to refresh and to reinvigorate in order to come up with new solutions that
contribute to a better tomorrow. Innovation is not just about supporting growth but it's
a way to address deep-seated social issues, from sustainability to education to wellbeing.
Two major challenges innovating within luxury sector : time and human integration
within the tech world.
Regarding time, it is about finding the right pace. We’re not here to grab every tech
innovation; we’re here to continue relying on our roots and our history, and at the same
time we need to think forward for our clients. This is key internally as well because
some employees will be really fast at adopting new tools, while others will want to go
step-by-step, so we need to onboard everyone, while still going fast as the world and
competition are speeding up. So it’s really a balance between tradition, innovation and
the future.
As for the second challenge, the human integration within the tech world, the real
concern is going forward with technologies that are really disruptive and finding
how we can integrate the human touch in it. Our aim is clear: integrating human
sensibility within every innovation, whether it involves technology or not.
 Digital Transformation and E-commerce
eLuxury platform in the early 2000’s
Artificial intelligence and machine learning also give client advisors “super
powers” that help them better anticipate their clients’ needs and tastes –
sometimes even before their clients realise it. Physical and visual interactions
share the notion of excellence
For a client to be able to stay in touch with their favorite advisor and continue
to shop even while the store is closed (say, during a pandemic!) is also a
newer facet of luxury. Digital technologies have allowed us to dematerialise
the experience that was once tied and constrained by a physical space, a
cash register, physical products, and an in-person exchange. Most critically,
technology has allowed us to do so without degrading the quality of the
- Focus on China: A key market for luxury
01/01/1994 – China stopped issuing foreign exchange certificates (LVMH enter
China markets)
Dior was the first to enter Chinese department stores
High-end retail is about convincing and communicating
Success is not just about craftmanship and quality, but also from exceptional
retail (China market)
- Spotlight on Chinese consumers
Global Chinese Consumers – Specific group of consumers who tend to have
international exposure and international experience
Frequent outbound travellers – have motivation and a quest for experiences
Nomadic Chinese – international students, professional working in International /
Chinese companies in international states
Overseas Chinese – Particularly referring to the Chinese migrating from China
after 2000 (have more economic power, made the choice to make a different life
and experience, not for escaping inequality, remain very connected through
China digtal ecosystems)
*Focuses on : Frequent outbound travellers and nomadic overseas Chinese
ATTRIBUTES (Global Chinese Consumers) :
- Have purchase power (9% of China have passport to allow travelling)
- Have a global mindset (developing or developed, exposure to new
experiences, culture and ideas)
- Have higher maturity in luxury perception (Studies have found that value
drivers of luxury consumption and buying luxury products have evolved from
mirror of social status to an indication of fashion, taste and expertise, focuses
on style, quality and experiences)
- **Act as Trendsetters and Changes Agents** (e.g. Know yourself, from
international Chinese students who relocated to China)
In turn, Creating a halo effect
Chinese’s State of mind:
Individuality – Chinese have a more collective culture vs Western (Global Chinese
have more fluidity in their perception towards individuality)
Diversity/Inclusion – Neiwai (a lingerie brand to show woman of different shaopes
and forms of Chinese woman embracing multiple perspectives)
Sustainability – 天人合一 Moet Hennessy has made strong commitment in
biodiversity with “Living Soils”
China is a big market with 1.4 billion consumers domestically and a lot overseas