LONDON — That old cliché about family wealth — with the first generation making it, the second maintaining it and the third squandering it — may apply to many an entrepreneurial clan. But the scions of Europe’s biggest fashion and luxury houses, and especially the Millennial members of the family, haven’t been listening.
The twenty- and thirtysomething children of the Arnault, Prada, Bertelli, Zegna, Rupert and Cucinelli families, with their fancy academic degrees, cultural fluency and easy charm, aren’t out to simply maintain — or blow — the family billions. Instead, they’re all about enhancing it with their diplomatic and digital skills, sustainability strategies and insights into their peer group’s wants, needs, spending habits and priorities. Let’s face it, they’re already used to bossing around their often fat-fingered parents, grandparents, aunts and uncles when it comes to buying, selling, connecting and communicating via digital devices.
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Johann Rupert, the 69-year-old billionaire chairman of Compagnie Financière Richemont, is quick to admit how much he relies on his son Anton, referring to him as “the new Google translate to tell us where the world is going,” when he appointed Anton to the board in 2017. He was hoping his son could bring “further insight into changing consumer behavior in our target markets, in particular in the areas of digital marketing and web-based commerce.”
Rupert also admitted that when he asks Anton questions about e-commerce, “He’s very polite to me, but I know he’s asking himself: ‘How the hell am I going to explain these things,’” to my father?
Fast-forward a year, and there was Richemont inking a venture agreement between its Yoox Net-a-porter division and Alibaba, to cater to the traveling and domestic Chinese customer. It was a pivotal deal for Richemont, and something the elder Rupert would likely not have contemplated even five years ago.
Rupert isn’t alone in looking to his children for leadership, guidance and new ideas.
In 2014, Georgetown University graduate Edoardo Zegna was named head of omnichannel initiatives at Ermenegildo Zegna Group, which was founded by his great-grandfather in 1910. Having previously worked in the product and creative divisions of firms such as Gap Inc. and Everlane, he is also in charge of making sure the Zegna stores are up to snuff, and ensuring that employees have a digital mind-set.
His father, Gildo Zegna, said the company would not have been able to move forward without people like Edoardo.
“When I turned 60, I brought in a good number of executives and made sure the second level is Millennial, because unless you understand that mind-set, you cannot transform the brand strategy,” said Gildo, who is chief executive officer of the company, and part of the third generation that runs it.
Sometimes, industry captains look to in-laws and extended family to steer the ship. In March, Brunello Cucinelli, who is chairman and ceo of his namesake brand, said in a year’s time he plans to become executive chairman and creative director. He has chosen co-ceo’s to succeed him: The 38-year-old Riccardo Stefanelli, who is married to his eldest daughter Camilla and who has 13 years’ experience within the company, and Luca Lisandroni, 41, who joined three years ago from Luxottica.
Stefanelli will be based at the company headquarters in Solomeo, Italy, underscoring the family’s attachment to the company and the territory, while Lisandroni will work from the fashion capital of Milan.
Passing the management mantle to the kids is not a new strategy in Europe, with companies such as Chanel and Hermès welcoming younger members to the board or into management positions depending on their intelligence, willing and skill sets.
In May, Alannah Weston was named chairman of Selfridges Group, succeeding her father W. Galen Weston at the helm of the retailer, while James Ferragamo, a grandson of Salvatore Ferragamo, was named vice chairman of the family footwear, ready to wear and accessories firm last year.
François-Henri Pinault, the chairman and ceo of Kering, took over from François Pinault, his father and the company’s founder, while Francesco Trapani, the former ceo of Bulgari, is the great-grandson of the jeweler entrepreneur Sotirio Bulgari. Trapani took his family company public, and later sold it to LVMH Moët Hennessy Louis Vuitton — a company that’s made a habit of relying on younger generations.
Delphine Arnault and her brother Antoine Arnault both hold major management positions within LVMH, as do their younger half-brothers, Alexandre and Frédéric.
The Millennial heirs stand apart, however. They were the first generation to grow up with fingers tapping, swiping and snapping on desktop and mobile devices, and with their brains pre-wired to shop, talk and connect virtually.
They are enormously valuable to the heritage luxury houses in particular as the gulf — in skills, knowledge and lifestyle — between these twenty- and thirtysomethings and their parents and grandparents is vast.
According to a UBS report on European luxury trends, Millennials are more positive about their finances and already have higher luxury budgets than older consumers across all regions. The report pointed out that Gucci and Louis Vuitton are outperforming on social media and ranking highest among European Millennials, while Hermès is popular in particular with Chinese Millennials.
The generation is also hyper-alert to social and environmental issues which, until recently, have been niche causes in fashion and luxury — so niche that the trailblazing Stella McCartney, who is in her late 40s, still refers to herself as an outsider when it comes to animal rights, sustainable sourcing and environmental conservation in the fashion and luxury space.
“We are still weirdos to the majority of the world, and we are fine with that,” said McCartney ahead of unveiling her men’s spring 2020 collection. She called it “Eco Weirdo,” and it was filled with sustainable fabrics and slogan T-shirts urging the public to take care of the planet.
McCartney’s messaging on the environment was so compelling that the company was snapped up in July by LVMH. She will be a sustainability adviser to the founder-owner Bernard Arnault, and has been given carte blanche to educate LVMH managers on the topic.
Lorenzo Bertelli, the eldest son of Miuccia Prada and Patrizio Bertelli, who has been tapped as the next Prada chief, is another member of the next generation aiming to drive his family company’s “green” agenda. The young Bertelli is spearheading digital and sustainable initiatives at the company and working on swapping Prada’s nylon offer with a sustainable version of the fabric that’s made from recycled textiles and ocean waste.
He joined the Prada board in 2015, and in 2017 was named head of digital communication. In his role, the young Bertelli has been ramping up the fashion house’s e-commerce offer, developing digital projects to drive brand engagement and boosting operational efficiency. Earlier this year, he spearheaded a collaboration with Adobe focused on understanding big data and how it can enhance the customer experience. He has also been expanding the group’s omnichannel business in Europe, the U.S. and China.
Industry observers say that while youth, intelligence and digital know-how are assets, homegrown talent can bring so much more to a company.
“I think that when you’re selling a lifestyle, a dream, these children can convey a message — very clearly — of a way of life, of continuity, of a company’s heritage and the promise of longevity. They are an asset,” said Ludovic Grandchamp, partner at Savigny Partners, the boutique mergers and acquisitions firm.
He added that the presence of family members gives companies a whole different dimension, and sense of trust, “when you know the grandfather, the father and the children, the relationship becomes more personal as well.”
Concetta Lanciaux, luxury goods consultant and former senior adviser to Bernard Arnault at LVMH, said talented family members can be critical to a brand’s long-term success.
“They maintain and transmit the fundamentals of the brand, which they have internalized over a longer period of time. I have a keen memory of the internship Antoine Arnault took in my department after graduation. I was struck by his intelligence, distance and capacity to synthesize information, and he made craftsmanship emerge as a key value at LVMH and in the industry,” she said.
Lanciaux argued that family members can be precious to a brand even when they are not serving in management positions. “I remember how Yves Carcelle, the former ceo of Louis Vuitton, always made sure that a member of the Vuitton family was present at important customer meetings. And the customers really appreciated this. We have seen acquisitions that have gone wrong specifically because certain family members — or designers — were let go, meaning that the company lost a significant part of the immaterial quality of the brand.”
Alexandre Arnault may well be the ultimate example of the golden heir, naturally projecting the values, smarts — and entrepreneurial ambition — of his father at LVMH. There was never any stopping this particular Arnault fils, whose mother is Bernard Arnault’s second wife, the concert pianist Hélène Mercier.
A graduate of the Paris Polytechnique and Télécom ParisTech, Arnault started as an investment manager at LVMH, and went on to lead the 800-million euro acquisition of the German luggage brand Rimowa. He now serves as its ceo.
He was also part of the team that led more than 10 minority investments in technology companies based in the U.S., the U.K., Israel and Europe, and was involved in strategic digital acceleration from the LVMH Group on different levels.
The young Arnault leveraged his role as a luxury scion to approach Rimowa, writing directly to the grandson of the firm’s founder, Dieter Morszeck. He later received an invitation to that brand’s headquarters, and reciprocated by walking Morszeck through Louis Vuitton’s leather workshops in Asnières-sur-Seine, near Paris.
Not long after those meetings, Morszeck proposed that LVMH invest in the company, telling the young Arnault he had earned his trust. The young Arnault said he was attracted to the fact that Rimowa, like LVMH, was an entrepreneurial business. He said he was able to build a very strong relationship with the former owner, “who agreed to sell us the company, provided I took it over.”
Caroline Pill, vice president global executive search Kirk Palmer Associates, said these young guns are a boon for luxury brands, if they come with the right skill sets, and the right approach.
“They bring fresh thinking, a point of view of the actual consumer, and they are the target audience for these brands,” she said. “I think they add value all round, and can also learn from the company’s executives who have more experience in the business. I also don’t get the feeling they are there because of nepotism — to the contrary, actually.
“I think their roles are complementary on important topics such as digital and consumer insights. Of course, they need to come in at the right level, and be humble, but if they can gain the trust of their colleagues, working with them can be a win-win approach.”