Heritage makes way for bold tactics and a new sense of optimism
It’s one of the biggest lessons learnt from the financial downturn: the smart luxury brands stuck to core brand values and redoubled focus on their heritage. Indeed, there has been so much praise lavished on brands that played it safe and staunchly refused to diversify that it’s escaped notice that these very companies are already moving on and limbering up for a new approach.
As the first major luxury company to step into the fray with its first-quarter results, LVMH emerged significantly toughened with stronger-than-expected figures tantamount to a 13% rise in like-for-like sales growth to $6 billion. Unlike last year, when leather goods from the flagship brand drove profitability, growth was reported across all of the group’s businesses. Clearly buoyed, Bernard Arnault is ready to take a chance in virgin territory. His next move? The hospitality industry. The luxury group plans build up a high-end hotel business with plans for two exclusive Cheval Blanc hotels in Egypt and Oman, with future projects pipelined in "exceptional destinations”.
Another luxury giant to move into new ground is Hermès. Universally admired for not being lured off-course during tough times by entertaining lower price-points or taking a trend-led approach, Hermes has now ripped up its own rule book. The leather goods company is moving into fine jewellery with Pierre Hardy. The result of this allegiance with a high fashion-friendly name is a 14-piece collection certain to leave stylists of glossy fashion pages salivating.
But on closer inspection, perhaps these developments are less a swagger than a tentative step into new territory. Hardy’s designs have an equestrian theme, deferring to Hermès heritage. LVMH dipped its toes in the hospitality market in 2006 with its five star Cheval Blanc hotel in the French alps. What these developments reveal is new confidence, with a lot less looking over the shoulder for reassurance. Bling might not be back, but the financial confidence it symbolised is returning, albeit more considered and thoughtful. And that is certainly a reason to be cheerful.
Sources
Wall Street Journal – 8 April 10
WWD – 5 April 10
Forbes – 13 April 10
Financial Times – 14 April10
