Antoine Arnault, chief executive officer of Berluti, doesn’t feel Millennials’ tastes, ideas and purchasing practices pose a threat to the luxury business. In fact, he believes they want similar things to previous generations: Creative, durable, desirable and beautiful products.
Addressing the idea that digital natives would be radically different from those that came before them, and purveyors would have to decipher their strange habits like an occult code, Arnault said, “Frankly, I’m not so sure of it, and I wouldn’t shake our traditions too soon, dispose of all our stores, stop advertising in print magazines, and design only T-shirts or sneakers because we have to attract Millennials.”
Arnault explained that LVMH’s maisons date back to the 18th or 19th century. Over the years, they have had to adapt to technological innovations and to cultural changes that occurred, and they had through creativity to find a “suitable mix between their strong heritage and the new demands or fashions that came up decades after decades.” Arnault said their mission has been to make sure that the maisons are able to remain at the cutting edge of fashion without being “cornered in dead ends: non-diversified product portfolio, non-diversified customer base, non-diversified geographical mix.”
“Christian Dior, Louis Vuitton and Fendi are good examples of brands continuously and profitably broadening their audiences. We manage longevity,” said Arnault.
Arnault said that’s why he criticizes a bit of the concept of Millennials, “which sounds to me more like something crafted by press or consulting firms, like a werewolf we would need to thrill a market situation that is for years exempt of any serious threat.”
He questioned whether Millennials have specific requests and will they have the same requests when they’re 30, 40 and 50 years old? He asked, “Will the generation that will come after the Millennials have requests similar with what Millennials currently require from our brands? Do we have to reshuffle all things for their sake?”
According to Arnault, LVMH brands naturally feel the changes and adapt to them without having to overdramatize them. “Our designers naturally feel — I would rather say naturally anticipate — these changes. When you look at Hedi Slimane, Virgil Abloh, Maria Grazia Chiuri, Kris Van Assche, Kim Jones, Jonathan Anderson, you clearly perceive that the designers are not lagging behind social and cultural changes, but are true major actors of this change,” he said.
As ceo of Berluti and a “privileged observer” of new trends in the luxury market for almost 20 years, Arnault said he’s happy to see that the main demand drivers remain the same. “Millennials want creative, durable, desirable and beautiful products. But they do add a new criterion: Respect. It is not only for me the way to honor the late Aretha Franklin, but it’s a true personal belief,” said Arnault.
Breaking down the concept of respect, he said he has personally engaged his luxury brands to respect the natural proportions of the human body “and not to reshape our natural silhouette by artificial conceptions of thinness or beauty.” Further, he spoke about respecting the environment and becoming increasingly conscious of the impact of one’s activities. “This is a very long process, but we are all conscious that we have to preserve over the long term the resources we enjoyed in the past. We are now all driven by the necessity to be sure that the future life will be at least as happy as ours; we will have failed if we cannot ensure for the future generations as much happiness as we enjoyed ourselves.”
Another aspect is respect of the company’s heritage. “We have received a heritage of craftsmanship, of aesthetics, of taste, of identity,” said Arnault. “Our brands have the duty to preserve and perpetuate it,” he said. “At Berluti, we manufacture wonderfully successful sneakers, which I’m very proud of, but I don’t forget the duty we have to cultivate the prestige of Venezia leather bespoke shoes, because this unique know-how that does not exist anywhere else,” he said.
Further, he discussed the respect of quality and “honest value” of the product. “A product can be expensive since it is perfectly designed and manufactured. In an era of instant communication, a flawed or non-perfect product creates immediate bad buzz. At LVMH, our chief digital officer Ian Rogers is our internal alert on this point: digital information actually creates higher quality,” he said.
Arnault also noted there’s a respect of transparency. “We today are able to partner with organizations that share our values and our very ethically demanding requirements. We are increasingly conscious that our teams and our customers require from companies a full range of good practices; good raw material supply, suppliers having the same policies as we have, respect of freedom and human values, transparency on ingredients,” he said.
Finally, he said that when young people come to work at their brands, they don’t come only as pure workforce “but with their culture, their diversity, their creativity, their entrepreneurship, their social or environmental commitments, their wishes for the planet or the society as a whole.”
“They want us to help them leave a positive footprint on people and nature. We at LVMH take this very seriously into account. For a group like LVMH, retaining talents also means convincing them that they will, within our maisons, have the best position to serve their ideals. With the internal global entrepreneurship program DARE, LVMH gathers and promotes every project coming from our teams. You will not be surprised to hear me say that, most of the time, these projects tackle environmental issues,” said Arnault.
He said that the question is not whether to decipher new codes or not. “There is no such radical change that would urge us to do so. However there is a demand of respect that we hear growing in new generations that we happily and sincerely share. New generations ask luxury brands to be more accessible, to be easier to understand, to let them be deciphered, decoded. The era of occult brands is definitely over. We want doors to remain open,” said Arnault.
Following his prepared remarks, Arnault had a conversation with Miles Socha, editor in chief of WWD, spanning men’s wear at LVMH, streetwear, Loro Piana and digital information.
Discussing whether digital information actually creates higher quality, Arnault said, “I see it as an open source. Whenever you put any product on the market now, you have instantly thousands of comments. Sometimes people do an autopsy on the product.” He said that any little change in the know-how will be out there in the open. “You can not cheat that customer. Not that we want to. If you think it’s simpler to make it this way or it’s almost the same leather, let’s use it, that doesn’t work. They make us do better products,” he said.
Arnault spoke about future generations and whether or not they will be as interested in the legacy, savoir faire and back story of the LVMH brands, considering their attention spans are getting shorter and shorter. “Not only do I believe it, but see it already. Those young Millennials like the high cycle of fashion, they like when it’s golden and has a little bit of logo and it gets your attention. When they ask questions to the sales assistant, they ask about heritage, about longevity, about where the brands come from,” said Arnault. He said that they understand it costs a lot of money and they want to spend it on something with a history. “If on top of that, if it has this little touch of fashion, of an edge, they’ll love it. You see brands without this incredible buzz effect that are doing very well right now. I’m chairman of Loro Piana and you can’t say it’s extremely visible or extremely buzzy, but it’s doing extremely well,” said Arnault.
He anticipates when this cycle of very glitzy fashion dissipates, these customers will gravitate toward Loro Piana, “brands that promote simple, beautiful cuts and extremely durable products and beautiful fabrics.”
Arnault was questioned about the Open Doors event which attracted 180,000 people, showing how strong the interest is in how things are made. The event has no commercial purpose, so Arnault was asked how can he tell it’s doing its job. “We couldn’t and it’s not really the point,” he said. “It’s almost opening up to non-clients. The interactions are incredible. You see people, little girls, teenagers, old ladies, old men who didn’t have access to this behind-the scenes of luxury and who ask incredibly straight-to-the-point questions.”
When some people suggest they could have a little pop-up there, he said it’s not the place to do commerce since they do commerce 362 days a year.
He noted that people are proud to work for such brands as Berluti, Fendi and Dior, and socially in France it’s one of the biggest employers. “We’re not ashamed to be successful in the way we conduct business,” said Arnault.
When told that LVMH is clearly betting on the men’s market and asked what underscores his confidence in this sector, Arnault said, “I’ve been confident for a quite a few years now.” He said they started this project in 2012 and its been growing ever since. Berluti has opened 55 stores and they’re performing really well.
“We’ve had a chance to develop from a brand that had a heritage and had real aficionados loving the shoes and the leather goods. We tried to expand it to make a real silhouette and propose men’s wear.” He said men want to spend their money too. “Let’s try to create within the group one of the biggest luxury men’s wear brands in the world.” He said that LVMH has not only invested in Berluti, but in all the other men’s brands such as Dior and Louis Vuitton. “Virgil [Abloh] of course has arrived at Louis Vuitton and in my opinion, proposed one of the most exciting fashion shows of the past few years. “Last week he opened his pop-up store in London, and I don’t think there’s a product left after 48 hours,” he said.
Arnault noted that Louis Vuitton and Virgil Abloh in men’s wear are extremely well positioned to speak to that customer who wants something a little bit edgy. “Virgil proposes that and is the best to design it. Also you shouldn’t forget that many of the products in the store’s permanent collections are shapes and products that have been made for decades and they continue to perform well. This balance between permanent and seasonal is extremely important for extremely big brands like Louis Vuitton to continue to grow,” said Arnault.
Arnault spoke about how they shuffle the creative deck in men’s wear and was asked whether men’s wear is becoming more like women’s wear, which is driven by fashion and newness.
“I didn’t do it myself. It’s a whole group of people. It’s a very important decision to put the faith of one of your brands, however big it is, into the hands of a designer,” said Arnault. “You really need to strategically think it through and understand where he’s going to go and understand how the ceo or the marketing team is going to be able to deal with him. I love working with creative talent. I didn’t always succeed, but it’s very enriching. I feel this balance between the heritage of the brand and its newness appeal will be the key to success,” he said. He noted that even when one looks at Abloh’s show, it can look completely new and completely different than the clothing before, but it’s always respectful of the brand. “There’s always a twist that will remind the customer that he is at Vuitton, and I don’t mean a big logo, but something around travel or the heritage of the brand that makes it relevant. The customer feels when he’s being taken for a fool.”
With streetwear becoming a big force in the industry and infiltrating luxury, Arnault was questioned whether he sees it as a passing trend, or a structural shift.
“It doesn’t really matter. We’re embracing it. Even traditional brands like Berluti are embracing it, and we propose sneakers.” He said some designers are extremely linked to streetwear, like Abloh, and he’s doing it well. “Kris [Van Assche] at Berluti understands its appeal right now, it’s less in his DNA to make it. He understands it very well. He’s a designer who understands the importance of catering to what the customer wants today. It’s not really important whether I think it’s a long-term shift. It’s important if the designer thinks it is,” said Arnault.
Arnault said that nudging Loro Piana into the wider consciousness is paying off. “I’m not responsible for it. I just took care of basically integrating it inside the LVMH Group for the first couple of years.” They found people who were Italian and had the time and right taste to actually take it further. Arnault acknowledged that the brand is a little bit under the radar, but it’s gotten a little higher profile since LVMH took over with campaigns that started creating awareness. “The customers of Loro Piana like the fact that it’s a bit of a hidden gem,” he said. He added that even though the brand has big stores on the big avenues, the stores are a little empty and you have sales associates to yourself for an hour or two. “That’s how the Loro Piana customer wants to shop. It’s one of those brands that will continue to grow, maybe not like 50 to 80 percent, but it will continue to grow like a beautiful big yacht. I feel as a shareholder much safer to be on a beautiful yacht than a little jet ski, especially if a storm arrives,” he said.
When an audience member asked how he deals with creative personalities and what he’s learned from that, Arnault said, “It’s mostly a question of fit between the ceo and the designer. I try to have an extremely long dialogue and a frequent dialogue with the designer…You have to manage your speech and measure every word. They’re very sensitive guys or girls. They have a talent that we don’t and we have a talent they don’t. Sometimes it can be a very good marriage.”
Finally, when asked by an audience member when you know it’s time to change and when it’s time to hold back, Arnault said, “You don’t. You have to take that risk. In our group, we’ve been big risk takers. It started in 1997 when my father decided to name John Galliano the head of Dior. I was still young, but I was starting to get an interest in this world. There was a panic, what is he doing? He’s crazy. It became one of the biggest successes…It is a very important decision. We do have to base ourselves on a gut meeting. You have to speak to the designers. My sister, Delphine, is very close to them and involved in those decisions. We are all making the decisions together. They are very important ones, and we measure the importance of them via the short, medium and long-term future of our brands.”