The Economics of Luxury
LVMH and the Luxury Giants
How a few big groups like LVMH, Kering and Richemont own many famous brands, and why the luxury industry has consolidated.
Many famous luxury brands belong to a few big groups.
The giants
- LVMH (Louis Vuitton Moët Hennessy): owns Louis Vuitton, Dior, Tiffany, Sephora, Moët champagne and dozens more. Its chairman, Bernard Arnault, has ranked among the world’s richest people.
- Kering: Gucci, Saint Laurent, Balenciaga, Bottega Veneta.
- Richemont: Cartier, Van Cleef & Arpels and other jewellers and watchmakers.
- Hermès and Chanel: largely independent, family-controlled.
Why consolidate
- Economies of scope: sharing stores, marketing, logistics and data across brands.
- Bargaining power with landlords for prime retail locations.
- Diversification across fashion, jewellery, wines and cosmetics.
- Talent: moving designers across brands.
Brand management
Groups keep each brand’s identity separate, since mixing them could damage exclusivity.
Tiffany deal
LVMH bought Tiffany & Co. for about 15.8 billion dollars in 2021, one of the biggest luxury acquisitions.
The shared store network
LVMH negotiates prime locations in a new mall in Mumbai for several of its brands at once, getting better terms than a single brand could.
Thinking every luxury brand is independent
Many belong to a few large groups like LVMH and Kering.
Key takeaways
- LVMH, Kering and Richemont own many luxury brands.
- Consolidation brings economies of scope and bargaining power.
- Groups keep brand identities separate.
- LVMH bought Tiffany in 2021 for about 15.8 billion dollars.
No recording for this one yet - EconReader can read it aloud for you.