Tag: LVMH

• France’s luxury goods empire

  The US has tech and France has luxury goods:

  The roots of French dominance lie in a luxury ecosystem that dates to the court of Louis XIV, and a culture of corporate raiding that began with Bernard Arnault. After gaining control of LVMH in 1989, he set out to build the first house of luxury brands through serial acquisitions. Rivals followed his lead. Increasingly, the global luxury industry is based on goods that are still made by small Italian firms but sold by big French conglomerates. Gucci, Bulgari, Fendi — all are Italian brands now under French owners.

  While US tech firms overshadow all rivals, the same can be said of French luxury. Among the top luxury firms, the French have annual sales three times higher than the Swiss, more than four times the Americans and Chinese and 12 times the Italians.

  One of the most interesting things that LVMH is doing, though, is a combination of tech and luxury goods. In 2021, they announced, along with founding partners Prada and Cartier, a new luxury goods blockchain called Aura.

  The idea behind Aura (an appropriate name, in my opinion) is to create a kind of digital passport that proves authenticity and ownership, and also allows for traceability. So if you want to sell one of your luxury items or you need to service it, now someone can easily see the chain of ownership and determine that it’s real.

  This to me is a perfect use case for the blockchain technology and, as of March of this year, the group was reporting 24 brands on board. At the same time, they also announced a new feature that allows brands to participate through public chains such as Ethereum or Solana.

  All of this is probably still very esoteric to most. But eventually the tech will recede into the background and most will probably just see it as, “I’m buying this expensive purse and along with it I get this digital passport thingy that lives on my phone. I don’t know or care how the tech works, but it makes me feel even more special.”

  However, a big question remains: What does all of this innovation do to industry concentration? (Which is one of the main points of the above article.) One promise of crypto is that it will be a decentralizing force in our economy. And while I believe this to be directionally true, I obviously understand that LVMH has an empire to maintain here.

  For those of us who deal in real estate, it is also interesting to think about this topic of brands and authenticity when it comes to property. And so we will talk about that later this week on the blog.

  2023.06.04

• LVMH’s Cheval Blanc Hotel faces opposition in Beverly Hills

  I am sure that most people aren’t going to feel bad for LVMH, but it is facing some opposition in trying to bring the first Cheval Blanc Hotel to North America. Last year, Beverly Hills City Council approved the hotel development on Rodeo Drive, but since then, enough signatures were collected that a special election is going to be held later this month for the ~22,000 residents who are registered to vote in Beverly Hills. And from the sounds of it, the results will decide the fate of the project.

  As I understand it, there are two mains groups that are upset:

  1. A union representing hotel workers
  2. Local area residents

  The official message from group #1 is that they want affordable housing. But there is speculation that they just want the hotel to be unionized. I don’t don’t, so let’s move on to group #2. Why would residents be opposed to this project?

  One way to think about this is that LVMH is trying to build a fancy new $2,000 per night hotel in one of the richest cities in the US, on one of its most luxurious streets. So, you would think that there would be a fit and that more than a few rich people would be excited about such a development. I guess this is true — and Council did vote in favor last year — but clearly there are other concerns:

  …some people were unhappy a 109-room hotel, framed by Rodeo Drive, Little Santa Monica Boulevard and Beverly Drive, would rise nine stories on one side and tower over surrounding retail and commercial spaces sitting at three and four stories high. Four buildings would have to be razed, and the idea of more traffic coming to the area was unsettling.

  It seems to be about scale:

  …Cheval Blanc opponents want to keep that small town vibe. “The area is charming and beautiful right now, and, if and when they are able to put that project out there, it will not be. It is very nice to be around low-rise buildings. You can sit at a sidewalk café in Beverly Hills and look across the street and see the hills. It is a very good feeling,” said Darian Bojeaux, an attorney who has lived in the city for 35 years and signed the petitions launching a special election. “Let them build a code-compliant hotel that is three stories high. Let them build something nice that doesn’t ruin the city.”

  Here’s an aerial of said small town vibe for context (I’ve marked the number of proposed storeys):

  

  What’s interesting about this situation is that it seems to isolate the concerns. Because what is being proposed here is an obviously compatible use. It is a rich thing in an area for rich people. Residents don’t seem to be saying that this is a problem. Instead, it is height that could potentially “ruin the city.” (Ignore for a second that there’s already an office building of similar height across the street.)

  What this tells me is that if you’re thinking about proposing nine storeys of Ferragamo and Balenciaga, that’s probably not small town enough. Saint Laurent needs to be no more than three.

  2023.05.10

• Louis Vuitton, Frank Gehry, the Impressionists, and NFT art

  

  La Foundation Louis Vuitton (which is housed in a building designed by Frank Gehry) has an exhibition on right now that displays the art collection of two brothers: Mikhaïl Abramovitch Morozov (1870-1903) et Ivan Abramovitch Morozov (1871-1921). The collection contains mostly early modernist work from the late 19th century and includes pieces by Cézanne, Van Gogh, Renoir, Monet, Matisse, Picasso, as well as others, including some Russian avant-garde work. We went through the exhibition last week when we were in Paris. Partially to see the collection and partially to see the architecture, which is, you know, very Frank Gehry. See above photo.

  As I was going through the exhibition I was reminded of how much I like the Impressionist movement. I like the work, but I also really love the story. The Impressionist movement started in Paris in the late 1800s and many consider it to mark the beginning of modern art. It broke free of tradition and violated the rules of what was considered to be proper art work at the time in France.

  Because of this, the Impressionists were heavily criticized at the outset. So much so that they were routinely rejected from exhibiting in the traditionally accepted art venues in Paris. The annual Salon de Paris was the big and most prestigious one as I understand it. This forced the group to organize their own exhibitions and circumvent the incumbents in order to get their work out into the world, which is pretty much what any “startup” has to do. Obviously the rest is history and now people to go to museums like La Foundation Louis Vuitton to look at Impressionist art work and talk amongst their friends about how we don’t make art like they used to back in the late 19th century.

  I mention all of this because of what is happening today in the world of NFTs. Non-fungible tokens and their application to digital art feels to me like history is repeating itself. We are at the dawn of something new and a lot of people seem to think that what’s happening today is pretty stupid: Why pay thousands or even millions for a JPEG? I can just download a copy to my computer for free. This is not art. How do you even display it? I don’t get it.

  I am sure that most of the NFTs that people are buying today will go to $0 in value; just like a lot of the paint that has gone onto canvasses over the years hasn’t created much value. Art is a funny thing. But that doesn’t mean that cultural value will not be created over time. When people are talking and they think what you’re doing is dumb, you may actually be on to something. The Impressionists taught us this important lesson well over a century ago.

  Photo: La Foundation Louis Vuitton

  2021.10.03

• NFTs, luxury brands, and reclaiming ownership

  Here is an interesting interview discussion about NFTs (non-fungible tokens) and the world of luxury brands. It’s a conversation between Benoit Pagotto, cofounder of the NFT brand RTFKT Studios, and Ian Rogers, who is Chief Experience Officer at the blockchain startup Ledger (he was previously the Chief Digital Officer at LVMH). Below is an excerpt that stood out to me. It starts to speak to the potential of NFTs for fashion/luxury brands. Rogers also makes an interesting comparison to the music industry in that things are playing out very differently today compared to what happened back in the late 90s.

  Benoit is proving that he can basically sell a $4,900 digital good alongside a $100 physical good. Now imagine when the lightbulb goes off in Adidas’s head, that the item on adidas.com comes with a digital collectible and the item at “retailer dot com” does not. It fits with their focus way more than the internet did. The internet didn’t fit in any incumbent’s focus. It was the opposite. It was like, “Oh my God, this threatens our monopoly in some way,” right? For the music business, it was, “Wait a minute, we want to sell a $17 compact disc, not a $1 digital file.” They got dragged into that world. 

  On a related note, it was recently announced that model Emily Ratajkowski has made an NFT containing a photograph of herself standing in front of a Richard Prince print that had previously appropriated one of her photos. (Richard Prince’s artwork is known for appropriation.) So this is an exceptionally neat idea. Here she is using an NFT to try and take back some control. Basically: You took my photo and then profited from it. So now I’m going to stand in front of that image, take a new photo, and then reclaim some ownership using the blockchain. Is this the future?

  2021.04.27