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The reasons behind Bernard Arnault's new strategy at Louis Vuitton
Analysis 17 September 2011
It all started less than three weeks ago when, following months of rumours on who will take over as creative director at Christian Dior, it was officially confirmed that Marc Jacobs, the creative head of Louis Vuitton was in advance negotiation to take over the position at Dior. In fact, the strategic replacement of Jacobs started with promoting creative coordinators such as British designer Kim Jones who took over the Vuitton men's ready to wear in March this year. This was clearly a new beginning and a new strategic approach to creative management at Vuitton, Marc Jacobs being the only publicly known designer / creative director for the past decade.
But why would Vuitton's owner, Bernard Arnault, the most influential man in luxury nowadays opt for replacing Marc Jacobs, the designer credited for the spectacular development of the Vuitton brand which has reached over 5 billion euros in turnover, becoming the biggest and most successful luxury brand internationally, to date. Could Arnault's motivation be the fact that his favourite brand of his entire group, Christian Dior, needs an immediate creative push and Jacobs is the safest option? Mention should be made that Christian Dior has been lagging behind Vuitton for years, despite the apparent success of John Galliano's haute couture collections which would not make up for the lackluster accessories range which could have ensured the success of the brand in weathering the international crisis.
Then there came the brutal and unexpected announcement, earlier this week, that Vuitton's long time serving CEO Yves Carcelle will be replaced from January 1st 2013 by Spanish Jordi Constans, formerly an executive in charge with fresh dairy products at French food giant Danone. In spite of the company's statement which reassured Constans will have a full year to take over from Carcelle, I cannot help but wonder why Bernard Arnault would opt to replace Yves Carcelle, not only one of the most respected and successful executives in luxury in the past decades but also one of the most relentless and dynamic. Or could it be that Carcelle was becoming too powerful? and another similar ''incident'' spings to my mind and that is John Hooks, Giorgio Armani's key executive who suddenly left the company earlier this year, despite his continuous line of successes, reportedly over disagreements with Mr Armani.
Both Carcelle and Hooks have been instrumental in the immense success of the two companies, yet, they both had probably the most difficult bosses, Arnault and Armani, known for their obsessive need for control. I recall an instance, when I was in Las Vegas, about a year ago and bumped into Bernard Arnault at the Bellagio inspecting the recently emptied Hermes store. The Hermes store was virtually empty and paper was covering windows, yet, Arnault was still looking carefully at some pieces of store decoration left behind. Bernard Arnault was in town to decide upon the relocation of Vuitton's flagship from Bellagio to the Crystals Mall on the strip.
Similarly, in the case of Armani, each time I would have my early morning coffee at Armani Cafe at the brand's flagship in Milan on Via Manzoni and I would bump into Mr Armani would personally arrange and re-arrange the shop windows, always looking nervous and hasty, shouting at the staff ahead of the opening of the store.
No wonder talks between the house of Dior and Jacobs have been reported by international media to be tough and far from reaching a swift conclusion. Apparently, Jacobs has been demanding a staggeting 11 million euros per year for the job at Dior, un unprecedented sum in the industry. Unofficially, Arnault has had unsuccessful discussions with Riccardo Tisci, Tom Ford, Alber Elbaz, to name a few, for the top creative position at Dior.
If indeed Jacobs makes the move to take over the creative helm of Dior, it would make sense for Arnault to opt for the least risky ''option'' for Louis Vuitton and that is to appoint a more ''neutral'' designer, with a less flamboyant character and image. When I refer to ''''neutral'', I am not referring minimalist designers such as Stuart Vevers at Loewe or Phoebe Philo at Celine (recently rumoured to be on Arnault's list for Dior) - both brands owned by Arnault or even the highly successful Tomas Maier at Bottega Veneta whose designs turned Bottega into fastest growing and most successful brands of the PPR Group, the parent company of Gucci. By contrast, Vuitton's DNA is about logomania and its products will always be more distinct, some even flashy. As for Vuitton's ready to wear, the existing design team could easily manage without a star creative director.
It does seem that Arnault is ready for a major change in strategy at Vuitton, and is ready to go all the way! It remains to be seen to which extent his choice for an industry outsider will prove to be a well calculated risk. From a business point of view, Carcelle has created an impeccable ''machine'' which could almost be run by anyone. Many have jumped to compare the appointment of the new Vuitton CEO with direct competitor, PPR Group's strikingly similar choice when opting for Robert Polet, formerly an executive at mass market giant Unilever, a choice which turned out to be failed experiment, till earlier this year, the owner of the company Francois Henri Pinault decided to let Polet go, taking over himself as group CEO. In my view, there are no terms of comparison ! At Vuitton, Arnault and Carcelle have mastered an impossible to replicate business model - full control of retail, all store being developed and run by Vuitton, a policy zero discounting or sales and a timeless marketing approach.
Oliver Petcu