Gucci Is Strong And LV Is Nervous. LV Boss Says Every Competitor Is Imitating LVMH.

Bernard Arnault, chairman and chief executive of LVMH, said that in the 90s of last century, the practice of putting many brands together to set up a luxury group was not optimistic, but in the past ten years, every competitor was imitating LVMH.

A galloping Gucci seems to bring a little pressure to LVMH.

According to news, Bernard Arnault, chairman and chief executive of LVMH, the world's largest luxury goods group, said in an interview with foreign media in 90s that the practice of putting many brands together in the 90s luxury group was not good, but in the past ten years, every competitor was imitating LVMH. "I don't think they were successful, but they tried."

In fact, Bernard Arnault's remarks are not groundless.

Dana Thomas, a fashion writer, has pointed out that Bernard Arnault has made the luxury industry its own chessboard and formulated rules for games.

But now the market has changed a lot.

Thanks to the conquest of the millennial generation, Gucci has led luxury for 9 consecutive quarters.

Last year, it entered the 6 billion euro club for the first time and defeated Hermes on the scale of revenue, and there was no sign of slowing growth.

What it means is that Bernard Arnault warned last month's shareholders' meeting that Louis Vuitton is not interested in the size of the brand, but that it will remain the world's most popular luxury brand in the next 10 years.

Some analysts say that the more consumers like it, the greater the scale, of course. Obviously Bernard Arnault feels the threat of Gucci.

Back in 1980s, most European luxury brands were still in the stage of slow development under the family control, and even the Gucci group, which could be called a rival, had just finished the family struggle.

During this period, Bernard Arnault, which owns Christian Dior, wanted to withdraw the Dior perfume department from the newly established LVMH, but was rejected.

He then established a joint venture with the British company LVMH, which owns the shares of LVMH, and became the largest shareholder at a low price after the stock market crash in 1987.

Bernard Arnault completed the massive exchange of blood to its internal members in two years, and finally became the chairman and chief executive of LVMH, and began the plan to build "luxury carrier".

Beginning in the first round of acquisition in 1990s, the representative brands of LVMH's clothing industry include Givenchy, Kenzo, Marc Jacobs, etc. the representative brands of leather products include Fendi, Berluti, jewelry and clock, including Chaumet, Omas and other brands, as well as the representative duty free shopping malls in perfume cosmetics and retail areas, and outline the basic framework covering product to channel.

After the second round of acquisitions in 2000, the cosmetics industry represented by Make Up Forever gradually extended to the emerging fields such as the media, and further expanded the scope of business.

After 2010, LVMH, already in the leading position in the industry, has sufficient capital to continue to acquire Bvlgari and Dior.

Departments and holdings of Hermes are expanding to the group, but also by stripping DKNY and other second-line brands, streamlining the matrix to the field of luxury goods.

Some analysts pointed out that if we want to crack the myth that Gucci is once again passing through the half sky, or that sentence, it has seized the pulse of the times.

There should be another sentence that follows closely. It catches the hearts of young consumers.

LVMH spent thirty years in three rounds of fashion luxury.

The takeover boom, which now has 70 luxury fashion, wine and cosmetics brands, has earned 42 billion 600 million euros in 2017.

But more importantly, its "collectivization" integration mode maximizes the synergy between cross category luxury brands, so far it has been emulated by the industry.

This collectivization of business thinking is first applied to the pformation of personnel structure.

After controlling LVMH, Bernard Arnault adopted the adjustment measures such as the appointment of French businessman Yves Carcelle as chief executive officer and chairman of Louis Vuitton, Procter & Gamble CEO CEO Alan Lorenzo to manage the perfume department.

Insiders pointed out that since the beginning of LVMH, the executive selection mode with no background in luxury goods and proficient in commercial operation has been widely used by the industry.

In addition, Bernard Arnault has created a new way of changing designers among different brands, erasing the imprint of the fashion house and founder style.

In 1997, Bernard Arnault changed Givenchy's carefully chosen successors to John Galliano, which combines romanticism and street punk. Soon after it was pferred to Dior, it turned the image of the brand once elegant and noble.

Since then, Alexander McQueen, which is known as the "bad boy in fashion", has been admitted to Givenchy, and Marc Jacobs, a sportswear designer, has led Louis Vuitton to open up new women's wear series.

In order to compete for young people's market and maintain freshness, LVMH's Louis Vuitton recently made an exception to invite Chao Virgil Off-White founder Virgil Abloh to be the creative director of Menswear, and Hedi Slimane, who specializes in rock and roll style, was appointed the creative director of Celine.

These designers, who are not optimistic about fashion in the early years, have been greatly welcomed by the market because they have continuously injected new vitality into the brand, and the personnel exchange system across the brand within the group has greatly increased the topic and innovation.

Bernard Arnault once quoted the famous saying of Christian Dior that the value of fashion criticism is not to praise or depreciate, but whether it has appeared on the front page.

The second step of LVMH is to bring star brand into full play.

It is noteworthy that Bernard Arnault has seen the synergy effect of creating "star brand" in the mobilization of brand creative talents.

This seems to explain his optimistic view of Christian Dior and Louis Vuitton. In last year's earnings report of LVMH, strong sales of two brands led the sales of leather goods department in the core up 13% to 15 billion 472 million euros.

LVMH has never disclosed the sales of its core brand Louis Vuitton alone, but at the recent shareholders' meeting, Exane BNP Paribas global luxury director Luca Solca expects Louis Vuitton to earn 9 billion 300 million euros last year, while RBC Vuitton analyst expects 9 billion 100 million euros.

Some analysts have pointed out that LVMH follows the "value raising mechanism of enhancing the value of single star brand, enhancing the overall value of the group and making up for other weak brands", which has worked so far.

LVMH last year, the total value of brand value and intangible assets and goodwill reached 13 billion 714 million, accounting for about 30% of total assets.

According to the European brand Institute's analysis of the overall value of the brand owned by the enterprise (Group), LVMH ranked first in the top 2017 luxury brands in the 2017 global brand value list with the brand value of 499.79 billion euros.

The third step of LVMH collectivization is channel sharing.

In 1997, LVMH took over the sale channels of high-end cosmetics and developed it into the global market.

In the same period, Bernard Arnault bought the largest share of the world's duty-free retailer Duty Free Shop (DFS) for $2 billion 470 million to become a real controller, declaring a joint with the top luxury sales giant.

Under the banner of LVMH, DFS is distributed all over the world, and is distributed in Oakland, Bali Island, Guam, Hongkong, Macao and other places, covering an area ranging from 2000 square meters to 16000 square meters.

DFS's shelves are full of LVMH brand merchandise, and also sell Chanel, Gucci and Hing brands such as Kate Spade, Michael Kors, etc.

This strategy of maximizing revenue has been applied to the electricity supplier channel by Bernard Arnault after ten years of development. It has been on the line in June 6th of last year on the 24 LVMH of LVMH's big business platform, which has been covered by the media, covering 150 brands.

In addition to more than 20 luxury brands such as Fendi and Givenchy, 24Serves.com also includes Gucci and Prada.

Through the synergy effect of personnel, brand and channel, Bernard Arnault can quickly pform the brand with declining internal performance, thereby extending its cycle to decline.

The best imitation of this model is LVMH's top competitor, Kai Yun group.

18 years ago, Bernard Arnault sneak attack to acquire the defeated brand Gucci has become the most troublesome competitor of Louis Vuitton.

In 1999, when Gucci put forward the rejection of LVMH's overall takeover, it sold 42% of its total share capital to 3 billion dollars for French PPR Paris spring group (now renamed Kering of Kai Yun group).

After repeated consultations, LVMH finally agreed to pfer the shares of Gucci group to PPR in 2001.

So PPR became the third largest luxury group in the world from a retailer.

PPR and Gucci group reached a strategic agreement to ensure the independence of the latter and allow them to continue to develop multi brand strategy.

Gucci, the core brand of the group, began to be depressed after its departure from the designer Tom Ford. In 2014, its brand income was only 3 billion 500 million euros, which was equivalent to the income level of Prada group.

In order to change the status of Gucci, joining the Marco Bizzarri of the open cloud group for twelve years as the brand CEO, he pferred from Gucci to Alessandro Michele to become the creative director of Gucci.

Thanks to the gold combination of the two in business and creativity, Gucci has become a star brand in the luxury industry. According to the first quarter results released by Kai Yun group, the highest growth rate of Gucci has been recorded in the past 20 years, and its sales rose by 37.9% to 1 billion 866 million euros compared with the same period last year, compared with the 48.7% increase in sales.

According to fashion headline data, brand revenue has increased from 3 billion 500 million euros at the end of 2014 to 6 billion 200 million euros at the end of 2017 in the more than 3 years of Marco Bizzarri's takeover of Gucci over the past year, and its growth rate last year remained between 40% and 50%.

There is analysis that if LVMH can not effectively block the pace of Gucci, according to the current Gucci quarter average is greater than LVMH

The growth rate of leather goods sector is 20%, the number one luxury brand will be located in Gucci in five years.

Needless to say, LVMH first used the collectivization mode to change the rules of the luxury industry. However, in the ever-changing young consumers' preferences, it is too early for Bernard Arnault to judge the unsuccessful imitation of competitors.