Growth of a luxury conglomerate and family stay – The Flagler College Gargoyle

By Julia Corrie

“I’d rather cry in a Rolls-Royce than be happy on a bike.”

Patrizia Reggiani, the infamous ex-wife of Maurizio Gucci, was known for her expensive lifestyle and social standing while part of the Gucci family.

At the exit of The Gucci house on November 24, History vs. Hollywood published an article detailing the plot of the film and its comparison to historical truth.

When Rodolpho Gucci, Maurizio’s father, died in 1983, his brother Aldo fought with his nephew for the future of the business – to keep the traditional and family businesses rather than making deals with outside investors in order to ” increase income.

The Gucci family lost ownership of the company following the legal battle between Moët Hennessy Louis Vuitton (LVMH) of Bernard Arnault and Pinault Printemps Redoute (now Kering) of François Pinault in the 1990s.

LVMH and Kering are two of the most successful luxury groups in the world. Their most notorious acquisitions include Fendi, Givenchy, Bulgari, Gucci and Puma to name a few.

Luxury groups are like an umbrella with exorbitant clothing, cosmetics, accessories, housewares, and alcohol labels all protected underneath.

Like Gucci, many namesake European luxury brands such as Bulgari and Givenchy started with immediate family and manufacturing high quality products. Between the 1990s and the early 2000s, LVMH made significant investments to acquire 15 luxury fashion houses and cosmetic brands.

In the timeline linked above, nearly all of the brands say they started as a family business, until LVMH either acquired it or bought out the majority of its stakes.

Louis Vuitton is the most famous example of the family business model, starting with Vuitton himself in 1854.

Courtesy of Getty Images

Vuitton originally made a name for itself making sturdy, stackable leather trunks. The brand enjoyed incredible national success in France and only continued to spread after Vuitton’s death in 1892.

Louis Georges’ son and grandson Gaston both followed in his footsteps, traveling the world and creating a global buzz around luggage. Gaston was the last male heir to the label’s ownership after George’s death in 1936.

Gaston’s daughter, Odile, eventually married a wealthy steel industry businessman named Henri Racamier, asking him to take control in 1977. From there, luxury fashion houses and goods manufacturers around the world have experienced exponential success.

Bernard Arnault, a French investor, had the idea of ​​creating a “luxury group” in the 1980s. Alongside Alain Chevalier and Henri Racamier, CEO of Moët Hennessy then President of Louis Vuitton, they formed LVMH.

By 2021, more than 75 luxury brands around the world had been bought by LVMH or the majority of their shares had been bought by the conglomerate.

The creation of luxury groups in society has arguably been one of the best business ventures ever. Especially in European countries where, compared to the United States, higher quality products have a larger market.

Fendi, one of the most iconic Italian fashion houses of all time, is an example of a label that was acquired by LVMH, while remaining in the family. It was launched in 1926 by Adele and Edoardo Fendi, as a brand of fur and leather bags. In 1946, their five daughters each took over 20% of the company’s ownership.

The label remained fully owned by the Fendi family until 1999 when Prada and LVMH joined together to buy 51% of its shares. Following this operation, Bernard Arnault and Patrizio Bertelli, then president of Prada and today CEO, took the reins of leadership.

The difference between Fendi and other European fashion houses is that there has always been a member of the Fendi family in a management position for the brand.

Bertelli married Miuccia Prada in 1978, having already developed a solid business relationship in the leather goods industry. He ran a leather factory and at the time Miuccia needed someone to make his bags.

Miuccia had been working in the brand’s accessories department since joining the family business in the mid-1970s. As a fashion designer, she was able to launch her first successful handbag in 1985. From there , she founded the subsidiary brand “Miu Miu”, inspired by her own wardrobe and her long-standing nickname.

Anna Gross of the Financial Times said that “Consolidation is critical to success [of the luxury sector]. “This was obviously the case with the runaway success of luxury umbrellas like Kering and LVMH, which cashed in a total of around € 57.7 billion in 2020, which was a slower year due to the pandemic. of COVID-19.

What’s interesting about the luxury industry is that each brand has been more successful as a result of integrating with conglomerates, ultimately making them more money. Lesser part of the industry depends on customer sales, but more stakes and interests growth than anything else.

If a brand were to remain in the ownership of the original family, they would probably not have as many opportunities for growth, whether it be financial or physical expansion around the world. International financial investors and businessmen are the ones who have propelled all of these brands to new heights in the fashion world, and there is no sign of slowing down any time soon.

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