Since 2014, when LVMH acquired the beauty incubator Kendo, the company has helped grow promising indie brands, including Kat Von D and Bite Beauty. In 2016 alone, the conglomerate’s digital IQ (online performance spanning social media to e-commerce) in the beauty space grew by 5 percent, according to a study from L2, trailing just behind more established competitors like L’Oréal Group and Estée Lauder.
Yet, not many people are aware that Kendo — started in 2010 by David Suliteanu, then-CEO of Sephora Americas — even exists. And it seems that LVMH wants it this way.
“Everything that LVMH does is hush-hush. That’s how [it makes] things seem more interesting and important,” said one source under condition of anonymity, who has worked closely with the company for years.
Consider the recent launch of its multi-brand website, 24 Sèvres, which launched today. Code-named the Babylon Project, WWD leaked the information early in January, causing a fuss behind the scenes at LVMH, said the source.
“I’m sure LVMH has their reasons for keeping things under wraps, but from the point of view of consumers, they really don’t need to,” said Rachel Saunders, an insights and strategy director at Cassandra. “The incubator model is a savvy strategy.”
Indeed, Cassandra’s latest Shop report (a deep dive into data surrounding young consumers’ spending habits) from 2016 found the majority of 14- to 34-year-olds — including 57 percent of the women in the survey — would rather see a major brand partner with an indie brand than a designer brand.
“They love the idea of supporting budding creators,” Saunders said, which is an apt description for more than half of Kendo’s six current brands, which also include indies Ole Henriksen and Formula X. Rounding out the group are Marc Jacobs Beauty and Kendo’s upcoming Fenty Beauty by Rihanna — the only two launched with widely recognizable branding in place.
Not that designer brands couldn’t use a boost from LVMH. Marc Jacobs Beauty has seen a 19 percent year-over-year increase in its digital IQ since Kendo helped with its launch in 2013, according to L2. A relaunched website that savvily leverages the celebrity of Marc Jacobs, the person — quotes on his inspiration behind each product are among the new features — played a big part in that.
The other brands have benefited significantly not just from LVMH’s larger budget, but also its top-tier pool of development talent and global distribution reach. Ole Henriksen’s digital IQ, for example, jumped 24 percent in the last year, per L2, thanks to increased investment in its mobile site and advertisements.
Despite its fairly quiet association with Kendo, LVMH has much to gain from the incubator, as well. “Many luxury brands are behind the curve in terms of innovation or even online product offerings when it comes to e-commerce,” explained Aydan Sarikaya, a client strategy associate at L2. “These smaller, more indie cosmetic brands have been able to find success in areas that traditional large brands have had a harder time infiltrating.”
Kat Von D, for instance, has developed a cult following of customers through Von D’s uncensored, monologue-style YouTube videos — a move that wouldn’t necessarily be on brand for LVMH’s fashion portfolio, which includes houses like Dior and Fendi. Her videos boast over a million views on average, while her social engagement is eight times the average brand, according to L2.
Although LVMH’s fashion brands have inherent luxury clout, the success of companies like Glossier has taught those in the industry that “a social media-evangelized customer base does drive sales,” said Sarikaya. The Kendo umbrella allows LVMH to capitalize on this phenomenon without diluting the exclusivity of its other storied brands.
What’s more, the beauty space is hotter than ever, with everyone from Balmain to Forever 21 to Milk entering the market in the past year or so. “Scooping up these promising beauty upstarts will give LVMH an advantage in the future — or, at least, that’s how the reasoning goes,” said the source close to the company.
“Luxury fashion has long been reserved for those that can, not simply those who desire, making it hard for heritage brands to [tap into the wider market],” said Sarikaya. Makeup, conversely, “is more accessible to the average consumer.”
Bite Beauty image via allure.com