A younger Arnault bringing LVMH’s Tiffany’s into the future


EVER since he transformed Louis Vuitton from a venerable maker of steamer trunks into a handbag juggernaut more than 30 years ago, Bernard Arnault has pursued a simple yet lucrative strategy: Buy respected but slightly fusty brands; freshen up their management, marketing and operations; and weave them into the ever-expanding luxury tapestry known today as LVMH Moët Hennessy Louis Vuitton SE.

Over the years the targets got bigger and Arnault became Europe’s wealthiest individual. From Christian Dior to Fendi to Bulgari, price tags kept rising, as shiny new luxe toys became scarcer. 

Last year, Arnault made his biggest bet yet with a US$16 billion (RM70.69 billion) takeover of Tiffany & Co, shoring up LVMH’s position in fine jewellery and reinforcing its presence in the US. But revitalising the brand immortalised by its robin-egg-blue packaging and 1960s icon Audrey Hepburn for today’s more worldly view of luxury will be no small task — especially with a notoriously hands-on owner back in Paris known to keep close watch over the 75 brands in his empire.

Executing the billionaire’s will at Tiffany falls in no small part to Alexandre Arnault (picture), 30, the third of Bernard’s five children, all of whom toil in different corners of their father’s empire. 

Alexandre oversees product and communications at the jeweller, a key position from where he can shape brand messaging, which he concedes is in need of a reboot. Following his stint overseeing much smaller German suitcase maker Rimowa, the Tiffany assignment has thrust him into the limelight, giving him the chance to show he can help turn around one of the company’s biggest brands — and potentially the entire group once his father, 73, retires.

In April, LVMH raised the mandatory retirement age for the CEO by 5 years, to 80. That gives Bernard more time to hold on to power and think about succession

“There are a lot of eyeballs looking” at the Tiffany turnaround, says the younger Arnault during an interview in London, where the jeweller is celebrating the 150th anniversary of Tiffany in the UK capital with an exhibition of 400 objects and high-end pieces. As for his father’s attention, “whether you’re No 1 or No 75, you’re still under his gaze”, his son says.

Among the Arnault offspring, Alexandre is often described as the most entrepreneurial. He cultivates an image of being closely engaged and well-connected, regularly promoting Tiffany on his Instagram account while also offering carefully selected moments of his personal life, such as his trip to the Academy Awards ceremony in Los Angeles in March.

Plugged into the worlds of start-ups and street culture, Arnault counts the likes of Snap Inc founder Evan Spiegel and rap impresario Jay-Z among his connections, influencing how he plans to overhaul the business. One priority will be to broaden the brand. 

Tiffany is still synonymous with event jewellery purchased for engagements, weddings, or baby showers. The company is largely absent in such areas as watches, handbags and fragrances, strong categories for rivals including Hermès International and Cartier.

LVMH’s other big jewellery brand, Bulgari, offers some clues about where Tiffany might be headed. The Rome-based business has seen revenue more than double since LVMH bought it in 2011, estimates Luca Solca, an analyst at Sanford C Bernstein. Bulgari has also expanded into hotels, in line with Bernard Arnault’s strategy of complementing products with experiences.

Tiffany will release a new watch model before the end of next year, having recruited a former Chanel executive to oversee the business. A new leather handbag by a former Marc Jacobs and Louis Vuitton designer will be out before the end of this year, Alexandre says. 

And while silver lines — notably its Return to Tiffany and heart bracelets — will remain core offerings, there’s room to experiment, like the recent collaboration with streetwear brand Supreme on some jewellery items, he says.

LVMH accepts that shaking up Tiffany will take time. On a call with investors in April, CFO Jean-Jacques Guiony called it a “long-term effort”. Key will be focusing on the more affluent end of the brand’s customer base, a big undertaking for a company whose product line-up ranges from US$85 coffee mugs to diamond-encrusted platinum pendants that cost as much as a house.

There’s ample room for financial improvement at Tiffany, which HSBC Holdings plc says is the fourth-biggest among LVMH’s 75 brands. Cartier’s 32% operating profit last year was almost twice Tiffany’s, HSBC estimates.

Prices are moving up, with the cost for one model of the classic Bird on a Rock brooch more than doubling in the US, to US$75,000, since the LVMH takeover. At a recent sales event for super-wealthy clients in Miami, Tiffany pulled in more than three times the sales it achieved at a similar gathering last year, thanks to higher prices and the retreat of the coronavirus.

Offering high-end products matters, says Stanislas de Quercize, the former chairman in France of Richemont, the luxury house that owns such brands as Cartier and Van Cleef & Arpels. While affordable luxury helps bring in customers, successful branding thrives on “prices that make you dream”, he says. “What you want is a stairway to heaven. Tiffany was more like a stepladder.”

Bending the storied maker of engagement rings and diamond necklaces to the family’s will hasn’t been without setbacks, the younger Arnault has learned. 

An early misstep was a marketing campaign called “Not Your Mother’s Tiffany” —which generated immediate backlash on social media for running counter to the idea of heirlooms passed from generation to generation, long an industry trope. Young shoppers who might’ve snapped up relatively affordable bracelets with silver mom hearts felt alienated.

Keeping American customers happy is crucial at a time when Covid-19 lockdowns in China have curtailed demand there. The “Not Your Mother’s Tiffany” campaign ended after a short run, though Arnault says sales of silver products jumped shortly thereafter. 

“It must have had some success,” he says. “The buzz generated allowed people who’d never heard of Tiffany to get into the conversation.”

The new owner wants to supercharge Tiffany by plugging it into the LVMH machine. That means better terms for real estate as Tiffany — still largely a US-focused brand — catches up to LVMH’s global footprint, including a new flagship store in Paris. 

Being part of the luxury conglomerate also opens up a greater talent pool from which Tiffany can recruit. And removing the brand from the quarterly glare of investors gives the executive team more time and flexibility to reposition the business.

Take the flagship store in New York, which was already under renovation when LVMH took over. After the purchase, the new owner brought in Peter Marino, Louis Vuitton’s go-to architect, who threw out most of the initial plans and started over. Now set to reopen by the end of this year or early 2023, the updated store will need to stand the test of time for the next half-century, Arnault says.

For his part, he won’t need to wait quite that long to find out if he might be entrusted with the keys to his father’s kingdom. But it’s unlikely to happen soon, either. 

In April, LVMH raised the mandatory retirement age for the CEO by five years, to 80. That gives Bernard more time to hold on to power and think about succession — and for Alexandre to burnish his own brand alongside Tiffany. — Bloomberg / Pics by Bloomberg