Though LVMH Moët Hennessy Louis Vuitton Inc. might be known for innovative partnerships and creative collaborations, North America Chairman and CEO Anish Melwani is not really interested in the word “synergies.”
“The ‘S’ word,” as he calls it, isn’t used much at the company. From an American corporate finance definition, it allows one part of a business to lose and another to win, as long as it nets out positive. But that’s “very much not the ethos” here.
“When our brands do things together, it’s because the leaders of both brands genuinely believe that it is value enhancing for each,” he said in a conversation with Robert Frank, wealth editor, CNBC at NRF 2023: Retail’s Big Show.
At LVMH, each “maison” manages its own image and its own brand desirability, and the brands compete with each other. And there’s magic balance between the business leaders of each maison and the creative directors, he said, because creative directors bring a way of looking at the world and shaping culture that business leaders simply can’t do.
Frank began the discussion by noting that the company’s stock was up 16% over the past 12 months, and up 13% “just this month.”
Overall, Melwani said, the company has thrived during the COVID period, and the emergence from the pandemic indicates that strengthening should continue.
Luxury is resilient for two fundamental reasons, he said. First, like all things related to fashion, it’s connected to identity. “Once you adopt luxury, once you start wearing luxury as part of your identity, most people don’t want to go backwards,” he said. In the same way, luxury products are well made, with the best materials and techniques. People don’t want to give that up, either.
That said, “there’s no such thing as being immune from recession. At the end of the day, we’re participants in the economy.”
The LVMH product portfolio includes brands such as Sephora and Hennessy, which are “certainly are more democratic in their pricing and in their audience,” he said. On the other hand, thanks to the leadership in Paris, it’s a conservatively financed company, able to withstand economic shocks.
Melwani and Frank touched on the LVMH Institut des Métiers d'Excellence, which expanded to the United States late last year with Tiffany & Co. in an effort to train the next generation of craftspeople in jewelry design and fabrication. Since starting in France in 2014, more than 1,400 apprentices have taken part in the Métiers d'Excellence program in seven countries.
They also spoke about the way LVMH has increased its presence in luxury hospitality with the acquisition of Cheval Blanc and Belmond. There’s a definite uptick in travel — with “phenomenal” growth in Americans shopping in Europe in particular.
“For people who have achieved success, at some point, the scarcest thing — the most valuable thing to them — is their time,” Melwani said. Experiences relate to “how you spend that time, and how that makes you feel about your own accomplishments.”
LVMH has always been about innovation, Melwani said. More recently, that includes NFTs and blockchain — but only in ways that can enhance the heritage and DNA of the maisons.
Tiffany & Co., for example, had one of the most successful NFT projects in luxury to date with NFTiff. Each NFT, he said, sold for about $50,000. But purchasers received more than a .jpg or token. “What you got was the ability to purchase an actual piece of jewelry that was custom-made for your CryptoPunk.”
Tiffany had to innovate its workshop to make a physical piece of jewelry that accurately reflected the pixelated, 8-bit picture. And that’s what exciting, he said: “How do you embrace the technology, how do you embrace the community that’s super-excited about this technology, but use it to introduce the world to what you’ve always been good at?”
LVMH’s involvement with blockchain, meanwhile, has been about authentication, such as being able to provide a digital certificate that will trace a diamond all the way back to the mine it came from. The company believes younger consumers will care “more and more” about the source of raw materials. LVMH is a founding member of the Aura Blockchain Consortium, a blockchain solution made by luxury brands for luxury brands.