Twenty-five-year-old Alexandre Arnault took the helm of the 120-year-old Rimowa in January 2017. His announcement made headlines around the world. Why? Simply because Alexandre is the third descendant of Bernard Arnault, chairman of LVMH, the French fashion powerhouse. Passing the family’s sacred sceptre from father to son marked a significant generational transformation in the reign of luxury power.

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Once installed, Arnault immediately refreshed and overhauled the German luggage maker. He introduced a slim new logo using a clean sans serif font, restructured the distribution network, and looked to improve the functionality and style of the products. These are not the actions of a man of privilege resting on his laurels. These are the crucial and timely steps taken by a shrewd young businessman who is mindful of the impact that youth has – from both brand strategy and consumer perspectives – on the ever-evolving luxury industry.

Millennials are the generation who were born between the early 1980s and the early 2000s. In China, millennials comprise two distinct major groups: those born after 1980 and those born after 1990, translated as balinghou and jiulinghou, respectively. B alinghou are more cautious and like to become trendsetters, while jiulinghou advocate individualism and tend to follow trends. Chinese millennials are referred to as “the single most important demographic on the planet today” by Goldman Sachs.

China’s annual spending last year was over 500 billion yuan (US$7.4 billion) and represents almost a third of the global luxury market, according to Mckinsey’s 2017 report. Millennials, who make up one-third of China’s total consumers, were responsible for an uptick in the Chinese market to 142 billion yuan in sales in 2017, about 20 per cent higher than the year before, based on a survey by Bain & Company.

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Matching travel gear! Finally. in selected @rimowa stores April 14!

A post shared by A.A (@alexandrearnault) on Apr 10, 2018 at 3:59am PDT

How do brands compete and win a share of the billion-dollar business, especially as consumers today are a cohort famed for fickleness and low brand loyalty? Eight seconds is the alleged average attention span of a millennial.

It’s no surprise then, that it takes a young mind – or at least, one well-versed with the interests of youth – to tap into this crucial audience.

Just 26 years old this year, Arnault is the youngest CEO in luxury fashion. His most successful move so far was probably putting into place the cool collaborations he has relaunched with artist Olafur Eliasson, Fendi, M/M and cult streetwear brands Supreme and Off-White. A millennial himself, the young Arnault is making the century-old suitcase brand one of the most sought-after names among his peers.

In June, Arnault made his dedication to the brand crystal clear, literally. It released a couple of transparent polycarbonate suitcases costing US$1,000 in partnership with the streetwear sensation Off-White by Virgil Abloh. Since March, Abloh has been moonlighting as the artistic director of Louis Vuitton’s menswear collection. “The collaborations come from a combination of inbound and outbound,” says Arnault at the Business of Luxury Summit hosted by the Financial Times in Venice.

“We look at them cautiously, and try not to do too many, because it’s easy to overkill the idea, and one should always be on-brand.

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“There’s no recipe for it – whenever there’s chemistry, we try to make it happen.”

Rimowa was established by Paul Morszeck in 1898 in Cologne. In 2016, Bernard Arnault’s LVMH bought an 80 per cent stake in the German firm for US$716 million and immediately appointed the younger Arnault as co-CEO, alongside Dieter Morszeck, the grandson of the suitcase’s founder.

Today, it’s extending its reach to become more than a travel companion by marrying the “made in Germany” concept with LVMH’s business acumen.

The collaborations come from a combination of inbound and outbound. There’s no recipe for it – whenever there’s chemistry, we try to make it happen
Alexandre Arnault

Taking a page from the Fendi alliance – a company which belongs to LVMH – many wondered if Rimowa would just become the luggage provider for the luxury giant’s existing brands. Arnault says this is not so. “When we went to the factory in Germany, the workers had such concerns. In a way, it makes sense, but I said to them ‘absolutely not’,” he says.

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Factory day ‍♂️

A post shared by A.A (@alexandrearnault) on Jan 16, 2018 at 7:00am PST

Arnault, who splits his time between Germany and France, says Rimowa was not ready for such a partnership before LVMH bought the company. When Arnault took the helm, he knew precisely when to have this conversation with Morszeck.

The young leader is also deeply aware of his power as a social media influencer with internet-savvy millennials. His Instagram posts are exclusive, first-hand sources for information about Rimowa’s updates. The behind-the-scenes teasers garner attention before his collaborations are announced. The media become curious, and impulsive young shoppers are filled with suspense before the products land in stores. He has made himself and Rimowa a new fashion powerhouse which appeals to youthful customers.

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Balenciaga is another brand that has caught the eye of millennials. In the Lyst Index, Balenciaga raced ahead of Gucci for three quarters in a row to become the most popular fashion brand. According to Cédric Charbit, the brand’s CEO, Balenciaga is also the fastest-growing brand at its parent company, Kering. But Gucci, reinvented by Alessandro Michele and endorsed by millennials, still takes the crown when it comes to the group’s total earnings.

“At Balenciaga’s meetings, we don’t really talk about how to reach millennials,” says Charbit, who had served as the executive vice-president of Saint Laurent in the same group before being appointed in October 2016 to bring Balenciaga back to an international success.

“It’s all about a strong alignment of vision, and the firm support we have from Kering,” explains Charbit, referring to the group’s “empowered autonomy” strategy. He adds that in practice, it’s all down to creative director, Georgia-born Demna Gvasalia. “It’s what he wants to do and what he feels,” says Charbit.

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The results are clear for all to see. Last year, Balenciaga saw a growth of over 100 per cent in several categories, thanks to the millennials who account for 60 per cent of the consumer base of the iconic label.

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#balenciagass17 #balenciaga #demnagvasalia

A post shared by ILVEfashionlikekanyeLVESskanye (@fashi_on_insta_geo) on Jul 27, 2016 at 9:55am PDT

Men’s fashion is also becoming a strength for the couture-turned-edgy brand. In 2016, Gvasalia brought the men’s line back to the house after 17 years away. At the rooftop atrium of Lycée Saint-Louis-de-Gonzague in Paris, his show featuring a group of besuited hippies, models in heels, boxy silhouettes and dance-ready sportswear clearly shows that a new Balenciaga man is born.

The brand is no longer the couture house that Cristóbal Balenciaga founded in 1919, nor the elegant brand imagined by former creative director Alexander Wang. Gone are the structured evening dresses. Think instead flea-market vintage, cool hoodies, big logo prints, off-the-shoulder parkas, all ready for the street.

The Balenciaga products that have made the biggest impression on their followers are the sneakers. Its sock-sneakers infiltrated the wardrobes of celebrities and fashionistas, especially the limited-edition, bright-red pair reinvented by Parisian retailer Colette. The stacked-sole Triple S, which costs US$850, is a global bestseller online and offline.

Nowhere is Balenciaga’s influence more noticeable than among China’s millennials. In late April, an incident involving Chinese customers being mistreated as they were queuing for the new Balenciaga sneakers in a Paris department store went viral on Weibo. It led to a short boycott of Balenciaga, and prompted an apology from the brand.

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Right now, the luxury industry is being universally disrupted by the young game changers, from the sellers to the shoppers. The young, affluent, savvy yet ephemeral millennials have taken the industry off guard. The Chinese cohort will continue to dominate the market as the nation’s economy booms and the balinghou and jiulinghou take over as the consuming class. Capturing the coterie is crucial for luxury companies. A distinctive brand identity with high-quality products is just an essential start; a cultural understanding of their needs and desires is the key for brands to win the battle in this hefty fashion reshuffle.

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