The steady transition from luxury to lifestyle

Recent revelations that Europe’s richest man, Bernard Arnault, has, over the years, built a small personal stake in Richemont — a direct competitor for his LVMH — has many speculating about his gameplan. But all we can do is speculate, considering neither he nor LVMH are revealing much.

Richemont, the Swiss luxury goods company founded by SA businessman Johann Rupert, owns brands including Cartier, Montblanc, Piaget and Van Cleef and Arpels. It could be an attractive asset for Arnault’s LVHM. The latter owns Louis Vuitton, Givenchy, Moet et Chandon and many other luxury brands, so talks of a takeover are not misplaced, albeit premature. 

Arnault has publicly stated his admiration for Rupert’s leadership at Richemont, and has been known to particularly admire the company’s jewellery profile. Per Vogue Business: Richemont has performed pretty well in recent times, “especially among its jewellery maisons. As analysts said of Richemont’s fiscal-year earnings, the company’s performance was better than expected. Sales were up 8% year-on-year at constant exchange rates to €20.6b in the year ending March 31 2024 (up 3% at actual rates). Sales were up 2% in the fourth quarter at constant rates, and down 1% at actual rates.”

Cartier, the jewel on Richemont’s crown, is seen as probably the most attractive asset for LVMH as jewellery is regarded as a growth area for the company which completed a $15.8b acquisition of Tiffany & Co back in 2021. 

In another acquisition in this category, LVMH announced at the end of June that it had procured Swiza, the owner of L’Epée 1839, a prestigious Swiss manufacturer of high-end clocks.

Still, industry analysts say it’s unlikely that Arnault’s small personal stake in Richemont means he is eyeing a takeover. However, it might be instructive to note some of LVMH’s most recent acquisitions as the world’s leading luxury brands conglomerate appears to be solidifying and diversifying its holdings beyond luxury fashion, leather goods and jewellery. 

Just last month, the company announced that it had added a majority stake in Chez L’ami Louis — the famed 100-year-old Parisian bistro — to its sprawling portfolio of brands in the hospitality industry. Restaurants and cafes are specifically an accessible way for brands to drive foot traffic and reach new audiences. Writing in Forbes Magazine, Patrick Bousquet-Chavanne, a leading expert in global direct-to-consumer e-commerce, said “luxury brands are developing a fully immersive lifestyle to expand brand presence and reach new audiences. It also gives them the opportunity to offer unique and exclusive ‘physical’ experiences that cannot be found in the metaverse or elsewhere.” 

For LVMH, specifically, this includes properties like the Cheval Blanc Maisons — hotel developments in Paris, St-Tropez, St-Barth in the Caribbean, Randheli in the Maldives and Couchervel in the south of France. You may be familiar with Fendi Private Suites in Rome, Italy, or come across news that Louis Vuitton was adding a hotel to its Paris headquarters (scheduled for a 2026 opening).

Many other similar brands like Versace, Bulgari and Armani operate hotels. The Karl Lagerfeld, for example, opened its doors in Macau in 2023 featuring a restaurant by Michelin-starred chef, José Avillezso. Even luxury carmakers are doing the same, most notably Aston Martin, who added a 66-storey residential tower in Miami, just in time to coincide with the city’s leg of the Formula One grand prix on May 5. 

We may not be privy to what Arnault’s play is with his personal stake in a competing conglomerate, but what we do know is that a broad strategy of diversification into lifestyle categories is in full swing across the luxury sector. To quote Bousquet-Chavanne once again: “Brands are no longer content with being simply a part of their very important customers’ closets, dressing rooms, and garages.... This trend is an innovative way to expand [their] profile, attract new, younger acolytes, and drive brand loyalty in a way that transcends the traditional retail experience.”