LONDON, United Kingdom — Until now, luxury groups have largely been powered by megabrands like Gucci and Louis Vuitton. But these stalwarts are maturing with time and their growth will inevitably moderate.
I have previously discussed two key ways for luxury players to lift sagging returns and rejuvenate growth and ROIC: through increased digital engagement and by transforming small, overlooked brands into success stories. Some companies have already taken the second approach with resounding success. Kering is a sterling example, having put Bottega Veneta and Saint Laurent squarely back in the spotlight. Goyard is also a notable success story. Specialist actors such as Luvanis (the company under which brand revivalist Arnaud de Lummen collects his assets) have been instrumental in revitalising past glories. Roger Vivier is possibly the biggest success in this category. Others, like Moynat, are still in the making.
Against this backdrop, luxury companies focused on growing their smaller labels should scrutinise their portfolios and take a clear-eyed look at where their brands currently stand: are they Cinderellas, Snow Whites or Sleeping Beauties?
Some of today’s mega-brands are revived Cinderellas: Burberry, Gucci, even Louis Vuitton.
Cinderellas are neglected or mismanaged brands, once the main focus of luxury players. In fact, some of today’s mega-brands are revived Cinderellas: Burberry, Gucci, even Louis Vuitton. Cinderellas continue to abound within the brand portfolios of major industry players such as LVMH, Richemont and Kering, which should be credited with having engineered the most successful growth relay in the industry.
Next we have the Snow Whites, forgotten or small heritage brands that boast a pristine image and which have a successful CEO or creative director at the helm. This category has been attracting more attention from luxury players recently. LVMH is attempting to emulate Kering's success with Bottega Veneta with Snow Whites of its own, such as Loewe and Berluti. Independent Snow Whites, such as Lanvin and Goyard, could be interesting targets for groups looking to juice up their portfolios.
And, finally, we have the Sleeping Beauties. These long-dormant heritage brands could be a new frontier for the industry. The shortage of Snow Whites has prompted industry players to awaken their Sleeping Beauties, heritage brands that boast an immaculate image and unique legacy but which have been dormant commercially for many decades. After successfully reviving Roger Vivier by licensing it to Tod’s Group, Diego Della Valle is now trying to breathe life into Schiaparelli.
One important character common to all of our distressed damsels is, of course, Prince Charming — and, by that, I mean the CEOs and creative directors required to animate a brand. Our analysis reveals that Céline and Fendi, both controlled by LVMH, are among the most favourably positioned smaller brands in the industry. Indeed, the evidence suggests that LVMH is building up growth relay momentum that could benefit its fashion and leather goods business in the medium term.
Luca Solca is the head of luxury goods at BNP Exane Paribas.