LVMH and Tiffany & Co. make an unlikely match, but the US jeweller and Louis Vuitton’s parent company have one very important common goal: reaching Chinese millennials

Dec 16 , 2020

With their merger now completed, analysts and consumers wait to see how LVMH proceed to handle their acquisition, Tiffany & Co. Photo: Jing Daily

Last month, it was announced that a merger between two luxury titans had finally been concluded. Settling a very long, very public dispute, Tiffany & Co. and LVMH agreed to a price reduction of US$425 million, greenlighting the biggest buyout the luxury world has ever seen. Now, industry experts are wondering what’s in store for Tiffany & Co., with the French conglomerate having taken full control of the American brand – joining its existing empire of more than 70 almost-exclusively European luxury brands.

Tiffany & Co.’s store in Palm Beach, Florida. Photo: Bloomberg

In a 2007 article, Susanne Hilger wrote about “globalisation by Americanisation”, arguing that highly industrialised American companies had “prepared the way for globalisation”. The writer also highlighted how, in post-war Germany, domestic enterprises employed American know-how and management strategies to keep up with their American rivals.

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During the twentieth century, American companies were a symbol of entrepreneurship, industrialism, hard work and trust. But the situation changed in the early 2000s when corporate scandals stained the global vision of American capitalism. Fraudulent accounting methods, unethical behaviour from executives, corruption, moral violations by employees, business ethics abuses, and managerial errors were all uncovered. Accordingly, the global audience stopped seeing American companies as beacons of success and leadership. And just as the world turned away from America, some European powers began promoting Eurocentrism.

It will be interesting to see how two proud cultures – France and the US – can come together and promote an intercultural dialogue. The Harvard Business Review has previously highlighted how cultural incompatibility is a big reason why mergers fail. And although Tiffany & Co. and LVMH might seem like a match made in heaven at first sight – both belong to the “Old Guard” of luxury, have people-centric approaches, and understand how to listen to their customers – the reality is far more complex.

People queue in front of a Tiffany & Co. store in Zurich, Switzerland. Photo: Reuters

All LVMH fashion, leather, watches and jewellery brands are European, except for the Australian boot brand R.M. Williams that LVMH agreed to sell to the private equity group Tattarang this October. And even though LVMH owns brands like Ao Yun and Benefit Cosmetics, and partnered with Rihanna for her hot millennial-friendly Fenty Beauty line, the group remains a quintessentially Western European company, and, above all, the epitome of French culture.

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But one thing that both sides of this merger have in common is an interest in expanding their businesses in China. Tiffany & Co. has an impressive market share in Mainland China, and a recent UBS survey showed that Chinese buyers see Tiffany “as a go-to jewellery brand, second only to Cartier.” Furthermore, Tiffany’s operating earnings for August and September 2020 show that the new Tiffany T1 line has performed well in China, and CEO Alessandro Bogliolo’s ambitious China growth strategy has been a success so far.

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With its “Vision & Virtuosity” exhibition in Shanghai, Tiffany pulled a page from LVMH’s playbook, as the French conglomerate is a pioneer in supporting artists, regularly engaging in partnerships with museums and art foundations.

The opening of its Tiffany Blue Box Café in Shanghai is also in line with LVMH’s strategy of experiential retail. Last February, their core brand Louis Vuitton opened Le Café V in Osaka last along with a restaurant called Sugalabo.

Additionally, both players moved further from the traditional luxury buyer by chasing the new luxury demographics of affluent millennials and Gen Zers. In an interview with CNN Business, Bogliolo said that “80 per cent of consumers of luxury in China are millennials.” As such, his recent efforts are concentrated on attracting a demographic that values brand recognition, in-store technology and personalised designs.

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Since taking the helm of the company, Bogliolo has further embraced technology with the launch of the brand’s Chinese e-commerce platforms, which are focused on brand design (with the debut of the T1 collection) and have expanded Tiffany’s market share in Asia-Pacific.

So what should Chinese customers expect from the merger? With an infusion of capital and savoir faire coming from LVMH, we anticipate that Tiffany will invest in the expansion of its physical retail footprint. Tiffany won’t be present everywhere, but strategic store openings in lower-tier cities are likely to happen. “If this acquisition can speed Tiffany’s entry into the massive China market, everyone wins,” Cathy Hotka & Associates’ eponymous principle told RetailWire.

Also, it is expected that Tiffany will continue to pursue a marketing strategy focused on emotional experiences and on exhibitions. Blurring the boundaries between art and luxury is a tactical move that will help the American brand communicate its heritage and legacy to a new generation of consumers.

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Lastly, a possible brand relaunch might be in the cards. When LVMH acquired a majority stake in Rimowa, the French conglomerate came up with a new visual identity and voice for the German luggage manufacturer.

If history teaches us anything, it is that Bernard Arnault – chairman and CEO of LVMH and once the world’s third-richest person –is not afraid of taking risks with his brands.

This article originally appeared on Jing Daily.

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Luxury in China

Second only to Cartier for jewellery in China, Tiffany & Co. now joins LVMH’s huge list of European luxury brands including Louis Vuitton, Celine, Givenchy, Fenty – and we can look to the French conglomerate’s treatment of Rimowa for a glimpse of what might come next