CEO of Louis Vuitton willing to trade growth for sustainability in the short term; sees fashion as pivotal to cultural exchange between China and the world
- Louis Vuitton has a goal of halving its carbon emissions by 2030, and CEO Michael Burke says rise of the sharing economy that extends its bags’ lifespan helps
- China hasn’t embraced sustainability the same way but will catch up, he says, and adds that ‘commerce is a positive force between cultures and nations’
Louis Vuitton – the top brand at LVMH, the largest luxury group in the world – may have fared well during a major global economic disruption caused by the coronavirus pandemic, but chief executive Michael Burke is not resting on his laurels.
A veteran of LVMH with successful stints at brands such as Dior, Fendi and Bulgari, Burke is today focusing on making Louis Vuitton sustainable.
Sustainability in fashion is a fraught topic. After all, how can an industry built on the idea of constant newness be sustainable?
Louis Vuitton has, until now, been very cautious when it comes to making broad statements about sustainability. However, it has just released a report with “meaningful and measurable percentage changes, which we were not able to do before”, as Burke explains in an interview.
The brand has the ambitious goal of cutting carbon emissions by 50 per cent by 2030 through initiatives such as the elimination of single-use plastic in its packaging, and the reuse or recycling of all materials used for events and window displays.
“We’re very cognisant that it is the key subject for the next 20 to 30 years and we also realised that we’re not going to be around to see the returns of this investment in nature, so it’s very different from what we do on our daily basis as a public company, which is to produce results,” says Burke.
“This is a completely different animal. Up until very recently, it was very difficult – if not impossible – to create measurable results that we agree on and that are not biased. We feel very engaged and want to be committed in the long term, and every employee is proud to be involved, so it’s not a PR activity.”
“Luxury’s primary objective is not top-line growth; that’s a consequence of a luxury strategy,” says Burke when asked about the challenge of balancing growth with sustainability.
“A luxury strategy will generate growth. Why? It’s very simple. It’s based on many people in the world improving their life standards. [Sustainability] may cost us some short-term growth but we’re not interested in [that],” he says, adding that LVMH chairman and chief executive Bernard Arnault has always said he is not concerned with top-line profits in any given year.
“Long-term growth; that’s the rule we live by.”
Like other top luxury brands such as Hermès and Chanel, Louis Vuitton is able to control every step of the supply chain, from “cows grazing in France and alligators in Florida to the final products”, explains Burke.
He says that, unlike 20 years ago, when the life of a Louis Vuitton bag was limited, its lifespan is now much longer thanks to technology such as blockchain and to the sharing economy.
Young consumers in the West have for the most part embraced the sharing economy and sustainability, but what about China, now the largest luxury market in the world and a key driver in consumption of luxury goods – even more so during the pandemic?
“There are different ways to get to the same goal,” says Burke. “In the West, it may start earlier but it’s messier; in the East, it may start later but it’s more organised. We’re going to do [things] differently but we’ll end up in the same place.”
Burke is not a fan of the phrase “revenge shopping”, which describes the pent-up demand that brands have seen from Chinese customers who – unable to travel abroad because of Covid-19 restrictions – have been spending heavily on luxury goods at home.
“I think it’s demeaning to our clients,” says Burke. “It’s a demeaning term that describes amazing growth in purchasing but it’s not because of revenge. Yes, we experienced tremendous growth in Asia but it’s mostly repatriation, on-shoring – and granted, it’s not as sexy as saying ‘revenge shopping’.”
In August 2020, Louis Vuitton hosted its spring/summer 2021 menswear show in Shanghai instead of Paris, a decision that Burke made out of necessity but that also allowed the brand to reduce its carbon footprint.
“It would have generated thousands of people going to Paris,” says Burke, “but the pandemic allowed us to find the silver lining, [which] was that we could create closer engagement with our clients by going to them.
“We didn’t want to cancel the show. We had the props travelling, which was good because they had multiple uses. Nobody from Paris went to China, zero people. The carbon footprint of the show was a fraction of what it would have been years ago.”
Catering to local clients has been a hot topic during the pandemic. Amid travel bans, tourist-driven markets such as Britain, France, Italy, Hong Kong and Singapore, whose luxury stores have always relied on a steady influx of shoppers from China and other emerging markets, have had to pivot to the previously forgotten local customer – but Burke says Louis Vuitton has always paid attention to such customers.
“The tourist client is always local initially; that’s our mantra,” says Burke. “Our business model is to develop a relationship first with our clients in their local environment and only then do we try to satisfy their needs when they’re travelling.”
“People go to Paris, London or Tokyo and see a line outside the Vuitton store and say, ‘Here we go again, all they have to do is open a store and people will wait in line to buy’. They don’t see that we have been engaging with that person for 20-30 years back home.”
“As long as Hong Kong remains different it will remain a very important hub, but if it turns into an average Chinese city, why go to Hong Kong?” says Burke. “It’s that simple. If Beijing maintains a special status for Hong Kong as long as possible, that will generate wealth for everybody. The question is, how do you define special and different looking forward?”
A long-time observer of China, Burke is positive about the future of the country and its global role. He sees fashion as playing a pivotal part in the cultural exchange between China and the rest of the world, as the Fendi show on the Great Wall – which he was responsible for 14 years ago – showed.
Looking back at that landmark event, which happened just ahead of the 2008 Beijing Olympics, he recalls that to make it happen he held countless discussions with officials in Beijing. Ultimately, both sides saw the show as a moment when China would project a new image to the outside world.
“At the end of the day, it’s about sustainable beauty and every consumer relates to that,” says Burke.
“Louis Vuitton has always been the first to go into markets, as we believe commerce is a positive force between cultures and nations. Nations engaging in commerce with each other get along better than those who don’t.”