Luxury Groups
French Fashion & Haute Couture
Course 1 · Chapter 7 · Luxury Groups and Global Brands
Since the 1980s most of the famous French fashion names have belonged to a few large companies. The founders died or sold, businessmen assembled portfolios of brands, and a house that was once a workshop with a designer at the head became a global business with a creative director on a contract. This chapter covers the two great French groups, LVMH and Kering, the family firms that stayed independent, Hermès and Chanel, where the money really comes from, and the British and other foreign designers who have run French houses. Names, dates and figures are from general knowledge and flagged "check".
The Groups
LVMH
The group was formed in 1987 by the merger of the trunk maker Louis Vuitton and the champagne and cognac firm Moët Hennessy (check). Bernard Arnault, a businessman who had bought the failing textile group Boussac in 1984, and with it Dior (Chapter 5), took control in 1989 after a bitter fight (check). It has since bought Givenchy, Céline, Kenzo, Fendi, Bulgari and Tiffany among many others (check).
Kering
Built by François Pinault from a timber and retail business, the group was known as Pinault-Printemps-Redoute (PPR) until it was renamed Kering in 2013 (check). It bought Gucci in 1999 after a fight with LVMH, and took in Yves Saint Laurent, Balenciaga, Bottega Veneta and Alexander McQueen (check). Pinault's son, François-Henri, took over the running of the group.
The independents
Hermès, founded as a harness maker in 1837, is still controlled by the founding family, and Chanel is owned privately by the Wertheimer family (Chapter 4) (check). Both have stayed out of the big groups, and both are among the most profitable in the industry.
Where the Money Comes From
| Source (check each) | Role |
|---|---|
| Haute couture | Small in sales, large in prestige. It is often described as loss-making or break-even, a marketing cost for the brand. |
| Ready-to-wear | A larger share of sales, but the shows and design staff are costly. |
| Leather goods and accessories | Handbags, belts, shoes and small goods are often the biggest and most profitable part of a luxury fashion house's sales (check). |
| Perfume and cosmetics | Often made and sold under licence, and sold in great volume. Chanel No. 5 is the classic example (Chapter 4). |
| Licensing | Selling the name to other firms for products the house does not make. Cardin carried this very far, and some houses later cut back to protect their image (check). |
| Retail | The group's own shops, which control prices and the experience, and sell to tourists, with Asia a major market (check). |
The catwalk show is therefore partly an advertising event: it costs a great deal, and its purpose is to give the brand attention so that customers will buy handbags and perfume. Critics say this has made the shows more about spectacle than clothes (check).
Hermès and the Bag
- The firm. Hermès began as a maker of harnesses and riding goods for the carriage trade. It moved into silk scarves (the carré of 1937), leather bags and ready-to-wear (check).
- The Birkin. The Birkin bag was named for the actress and singer Jane Birkin, who met the Hermès chairman Jean-Louis Dumas on a flight in 1984 and described the bag she wanted (check). The Birkin and the earlier Kelly bag are sold through waiting lists and at very high prices.
- The method. Hermès makes most of its leather goods in its own workshops in France, using single craftspeople for each bag (check). It uses scarcity as a strategy and does not discount.
- The fight. In 2010 LVMH was found to have built up a stake of over 20 per cent in Hermès without telling the family, who set up a holding company to protect their control. A court dispute followed, and LVMH eventually agreed to distribute most of its shares (check).
Karl Lagerfeld and Foreign Designers
| Designer (check each) | Houses |
|---|---|
| Karl Lagerfeld (German, 1933 to 2019) | Head of Chanel from 1983 until his death, and also of Fendi and his own label. He revived a house that had lost its direction since Chanel's death in 1971 (check). |
| John Galliano (born in Gibraltar, raised in London) | Givenchy from 1995 and Dior from 1996 until 2011, when Dior dismissed him after he made antisemitic remarks in a Paris bar and was later convicted in a French court of public insults (check). |
| Alexander McQueen (British, 1969 to 2010) | Head of Givenchy from 1996 to 2001, then his own house, partly owned by Gucci Group from 2000 (check). |
| Stella McCartney (British) | Chloé from 1997 to 2001, then her own label (check). |
| Marc Jacobs (American) and Nicolas Ghesquière (French) | Jacobs at Louis Vuitton from 1997 to 2013; Ghesquière at Balenciaga from 1997 to 2012 and then at Louis Vuitton (check). |
| Maria Grazia Chiuri (Italian) | In 2016 the first woman to lead Dior's women's collections (check). |
The pattern is clear: "French fashion" is run to a large extent by designers from elsewhere, working for groups that are French-owned. That also means that the products often depend on supply chains in Italy and Asia as well as France (check).
Exercises
Explain in a short paragraph why a luxury house may keep a loss-making couture collection, using the table of income sources.
Compare the strategies of LVMH and Hermès: what does each protect, and what does each risk?
Test the claim "The luxury groups have killed creativity in French fashion" with the six questions.
Quick Reference
- Groups: LVMH (1987, Arnault), Kering (Pinault); independents Hermès and Chanel
- Money: leather goods, perfume and licensing; couture as prestige
- Designers: Lagerfeld, Galliano, McQueen, McCartney, Jacobs, Ghesquière, Chiuri
- Key idea: the house as a brand that outlives its founder