LVMH’s potential acquisition of jeweler Tiffany & Co. could be the shot of adrenaline the group needs to stay competitive against its bolder rivals, Richemont and Kering.
Tiffany & Co., despite being one more than 150 years old, has mostly avoided the trap that many old luxury brands tend to fall into: stagnation. Luxury fashion brands tend to be resistant to change, like Chanel and its utter refusal to sell online. But Tiffany & Co. has made significant advances in technology, both online and in-store. As luxury customers increasingly embrace technology, LVMH, which offered a $14.5 billion takeover of Tiffany on Monday, could benefit from Tiffany’s savvy in the space — not to mention its strong reputation and broad customer base.
Since Tiffany & Co. CEO Allesandro Bogliolo came on in 2017, he’s made it a priority to revamp the brand’s image and target a younger and more hip consumer. Tiffany has employed virtual pop-up stores in China and partnered with Spotify on marketing activations. It’s also outfitted its sales associates with mobile devices to help pinpoint inventory and track customer profiles.
“Empowering store associates with mobile technology is where a lot of interesting things are happening in retail,” said Phil Granof, CMO at omnichannel platform NewStore. “Tiffany has really embraced that. Every associate in their store has an iPad, so every inch of the selling floor can be a mobile point-of-sale station. [To be successful], luxury businesses need to offer a high-touch experience.”
Tiffany has had success tying its online and offline businesses together. LVMH, meanwhile, has been more guarded around e-commerce. As recently as last year, LVMH CEO Bernard Arnault expressed wariness about e-commerce, worrying that it would damage a luxury brand’s reputation.
“For many years, luxury brands have achieved success through carefully crafting their image and cultivating an affluent aura via the physical in-store experience and high-quality advertisements in prestigious publications,” said Melissa Kelly, COO of creative agency Management+Artists. “Creating a luxury online environment that bolsters a brand’s carefully crafted image is a complex process requiring specific expert talent that understands digital consumers as well as genuinely understanding luxury.”
LVMH as a whole is no stranger to innovation and forward-thinking. In the past year alone, it launched a new luxury fashion line with Rihanna targeting Gen Z, bumped up its digital marketing spending by 15%, and even launched a blockchain in June starting with Louis Vuitton and Dior.
Taking a bolder stance on technology will be necessary for LVMH to stay head-to-head with rivals Kering and Richemont, both of which have acquired innovative young brands and retailers in order to diversify and learn from them. Richemont has invested heavily — possibly too heavily — in e-commerce by acquiring Net-a-Porter, while Kering has taken complete control of its e-commerce efforts in-house.
“The hardest thing for big companies to do is change,” Granof said. “Omnichannel success requires internal organization. It’s one thing to have an omnichannel strategy and another to actually get material benefits from it. If LVMH gets a brand like Tiffany into their portfolio, it can affect the rest of the brands under them. Even if they don’t share the specific tools that Tiffany uses, the philosophy there can still be inspirational.”