The Impact of Heritage and Culture to Fashion and Luxury Industry: LVMH Case

Abstract

Since decades, the definition of luxury has been prominently changed its definition for a number of reasons counting diverseness, complexity, status and rapid and constant evolvement of luxury brands. Given the subjective nature of the term and etymological point of view, the word luxury comes from the Latin “luxus”, which means “overabundance, excess in the way of life". Luxury was first only subjected for the monarchy and aristocracy and revolved around lavish parties, golden plates, big mansions, caviar, champagne and servants. The first notions of luxury began with French monarchy living lavish lives of luxury, which set standards for luxury, being reserved only to a selected few. In our current age and daily life luxury is a term, which can mean differently to different individuals based on their status, taste and preferences. It is, as a completely superfluous, based on the attainment of desires and is not considered a need to our daily life. Luxury is more a psychological need to fill our satisfaction and inferiority. “Luxury is about pleasure and satisfaction of the senses” (Okonkwo, 2010). Setting the definition of the term is the responsibility of brands and consumers, considering the heritage, legacy and history of the brands.

As the consumption of luxury is rapidly changing, the trendsetters are having challenges to play on consumers taste and demand. The biggest conglomerate LVMH (Louis Vuitton and Moët Hennessy) operating in 5 different sectors within 75 Maisons, in 2021 with a valuation of $329 billion became the most valuable company in Europe.

The aim of this research is to analyze the evolutionary context of the luxury sector and investigate what the primary strategies are underlying the exponential growth of luxury brands registered until 2021. The analysis of LVMH Group’s history and strategic choices aims to highlight differences and similarities in the management of the brands and identify those actions that have allowed the brands to differentiate and reinvent themselves. Moreover, it will show how the heritage of these brands has been influencing for the development of the brands.

In the first part of my writing, I want to highlight the challenges and

strategic management of the group in corporate level with focus on how Bernard Arnault became the owner of LVMH and discussing his early takeovers. Following there will be a focus on unique operating model anchored by six pillars approach and fundamental values strategy underling in deep in each of the pillars and values of the company. In the last part, there will be an overview of the group’s supply chain and digitalization following the Covid 19 pandemic.

The second part of the thesis mainly focuses on how the inherited value and culture of the brands can be transferred into business strategy. The heritage will be the main concept of the chapter, following the art of “Savoir Faire” and it’s transmission. Additionally there will be a deep dive into Ethics and Compliance of LVMH group.