The sales results and clout of the brands within these two luxury titans make them well-placed to tackle the next phase of the challenging retail landscape.
Read on to discover the pricing and product data powering LVMH and Kering’s strategies, plus marketing and runway highlights.
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LVMH’s cash cow, Louis Vuitton, is steadily driving the company sales while Kering is experiencing a changing of the guard. Its biggest brand, Gucci, is losing its luster to hyper-innovative Balenciaga, which was recently awarded Q3’s hottest brand by Lyst.
• Kering is reimagining its existing brands to become more sustainable and inclusive through representative campaigns, initiatives and overhauling materials. LVMH is enlisting generational voices who pioneer these issues, such as Rihanna, Virgil Abloh and Stella McCartney, by investing in their respective brands.
• Brands sitting within LVMH dominate in terms of high price points, while Kering leads the way in accessibility. This is also evident in their top-performing products – lower-priced categories like footwear and tops make up a greater proportion of sell outs at Kering than LVMH, which is commanded by leather goods and outerwear.
• The companies each favor vastly different marketing tactics. Celebrity campaigns are utilized at LVMH, with Beyoncé recently starring as the face of Tiffany & Co.’s revamp. Kering look to more immersive experiences with Balenciaga dabbling in gaming and Bottega Veneta in off-the-calendar runways and art installations.
Overall sales performance
Following a record first-half performance as luxury rebounded post-lockdown, LVMH sales growth eased 24% from the previous quarter. For nine months to September 30th, revenue increased 46%, with 11% organic growth vs. 2019. The fashion and leather goods category experienced a 57% increase YoY and 38% vs. 2019, while sales for watches and jewelry were reportedly soft in Asia due to ongoing COVID restrictions. The company press release called out Louis Vuitton and Dior as key sales drivers alongside a good performance from Celine, Fendi, Loewe and Marc Jacobs.
Solid gains were reported for the third quarter, surpassing pre-pandemic levels. For the three months ending September 30th, revenue grew 12.6% YoY. Saint Laurent and Bottega Veneta recorded strong performances, with revenue up 27.8% and 9.3% YoY, respectively. Despite this, shares tumbled as the growth of Kering’s crown jewel slowed. Comparable sales at Gucci rose 3.8% YoY, missing its 9.3% forecast due to restrictions in the Southern Hemisphere, according to its Q3 results. Kering’s biggest brand may be losing its luster, though the upcoming House of Gucci film launching ahead of the holiday season should reinvigorate interest.
Sustainability and D&I
Earlier in 2021, LVMH reimagined its sustainability commitments to create the LIFE 360 environment program. This will direct its focus on biodiversity to prevent deforestation, product circularity and reducing transport and raw materials (Scope 3) emissions. From a brand perspective, Louis Vuitton is committed to the overarching goal of reducing its carbon footprint by 55%, in line with the UN’s validation. Some of the luxury brand’s eco accolades already include reusing or recycling 93% of its event and window materials, converting to 69% renewable energy and using 52% certified-sustainable raw materials. In 2019, LVMH signed a partnership with Stella McCartney to claim a stake in her ethical label and onboard the designer as a sustainability advisor.
A significant movement towards diversity and inclusion at an executive level, LVMH acquired 60% of Off-White, the brainchild of Louis Vuitton menswear artistic director Virgil Abloh, awarding him greater influence within the company to action change. Luxury has lagged behind the rest of the industry’s evolution to become more size-inclusive. At LVMH, brands still have a long way to go. Though Fendi cast its first plus models in Fall 2020, size-diverse bodies only appeared within its collaborative efforts with Versace, which also included mature models. Through LVMH’s stake in Savage x Fenty, a brand lauded for its inclusivity by showcasing models across ages, races, sizes, and abilities, the company can connect with younger generations awaiting representation.
Images via IMAXtree – Versace by Fendi Spring 2022; Stella McCartney Spring 2022; Off-White
At the start of 2021, Kering was named the most sustainable clothing and retail company globally by the Corporate Knights’ Global 100 Index for the fourth year in a row. It has continued to make strides throughout the year, notably going entirely fur free across all its fashion brands. Gucci stands out as one of its most environmentally-friendly brands, optimizing sustainable materials within collections, plastic-free initiatives, renewable energy and greener transportation. Under Alessandro Michele’s leadership, diversity is upheld through inclusive campaigns, showcasing models spanning age, gender, and ability.
The Gucci Equilibrium platform is mobilized to raise awareness and support for marginalized communities. With Demna Gvasalia at the helm of Balenciaga, the brand has seen an eco overhaul, presenting its most sustainable collection to date for Spring 2022, featuring 95% certified sustainable materials, including cactus leather, organic cotton, recycled polyester and nylon, and responsibly sourced viscose. Elevating age and gender diversity on the runway, actors Isabelle Huppert and Elliot Page donned the collection. Like LVMH, size representation is lacking, though Alexander McQueen tapped Jill Kortleve, a brand favorite, for SS22.
Images via Gucci Beauty and IMAXtree – Balenciaga Spring 2022
Fashion week presence
After several seasons dominated by digital shows, in-person runways for Spring 2022 were back in a big way. According to the influencer intelligence platform Lefty, Dior generated the most views. The Tuileries Garden presentation was broadcast across Weibo, Douyin, Tencent, WeChat, Miui and Line Taiwan for showgoers who couldn’t make it in-person. Louis Vuitton’s runway, held in the Louvre, was second from the Parisian circuit.
Images via IMAXtree – Christian Dior Spring 202
Balenciaga’s hotly-discussed collaboration with The Simpsons ranked seventh. Other Kering brands looked to disrupt the status quo, sitting out of the traditional calendar. Gucci plans on showing off-season in LA later in the year. In the meantime, it launched the Gucci Vault, an online concept store stocking one-off pieces from its 100-year history. Bottega Veneta opted to show in Detroit, paying homage to the city’s engineering heritage through the functionality of the garments.
Images via Balenciaga Spring 2022
LVMH brands rank above Kering for premium-priced offerings online. Currently, 11% of Louis Vuitton and 5% of both Dior and Fendi products available are priced above $5,000 when looking into EDITED’s Market Intelligence Platform. In comparison, 2% of Balenciaga, Gucci and Saint Laurent goods sit at this threshold. Breaking down further reveals LVMH brands eclipse the average advertised price of Kering brands in every product category. These retailers rarely advertise discounts, though price inflation occurs as luxury labels offset the rising costs of raw materials. Between 27-30% of Dior products online in the US and UK have experienced a price increase, alongside 34-40% of items at Fendi and 22-25% at Louis Vuitton. This compares to between 37-44% at Balenciaga, 33-36% at Gucci and 16-30% at Saint Laurent.
This is impacting the prices of new products arriving in the market, especially in the handbags category. EDITED data also indicates new Louis Vuitton bags landing on its US site this quarter are 57% more expensive than the last, while Gucci prices have inflated 13% in the UK. Other brands are more surgical with their increases, raising prices on products that have seen viral success. Bottega Veneta has upped its Parrot Green bathrobe, made famous by Travis Scott, from $550 to $680. This product was also available for pre-order at the lower price – a growing opportunity to manage demand amid the supply chain crisis. Retailers can follow suit by rewarding customers who get in early with more affordable prices ahead of a product’s release.
The successful categories
With both companies boasting a rich heritage in leather goods, accessories are the top-invested and top-performing category. Driven by handbags, this is the area where new arrivals are seeing the highest percentage of majority SKU sell outs. According to EDITED data, this category makes up 45% of sell outs at LVMH vs. 34% at Kering, indicative of a more diversified assortment outside of their best-known product types at Kering brands.
The pattern then diverts, with outerwear making up the second-highest proportion of sell outs at LVMH brands at 15% vs. 11%, fourth-highest at Kering. Kering brands have a reputation for creating cult footwear styles, such as the Gucci Ace sneaker, Bottega Veneta terry slides and the Balenciaga Triple S sneaker. This has increased demand for footwear, leading sell outs to outpace LVMH brands at 17% vs. 9%.
Influencers have been shunned from campaigns, with LVMH tapping relevant celebrities instead. Recent marketing efforts have included LVMH’s repositioning of Tiffany & Co., enlisting The Carters to reach a younger audience. This campaign was well-received with strong sales in the US. Fendi has adopted a similar strategy in partnership with SKIMS on an upcoming collection that, when analyzing the success of Kim Kardashian-West’s drop collections, is projected to achieve sell out status. Louis Vuitton signed Jung Ho-Yeon of Squid Game fame.
Images via Tiffany & Co. & SKIMS
Also influencing Bottega Veneta, the brand launched a pop-up art installation called “The Maze” in Seoul, bearing similarities to the one in the hyped series. From Kanye West’s ‘DONDA’ to Kardashian-West’s iconic Met Gala look, Balenciaga has been crowned the hottest brand of 2021. The label’s marketing is becoming synonymous with gaming, using the format to present collections, including a collaboration with Fortnite to sell physical and virtual apparel – an ongoing area of investment as digital NFT technology and fashion becomes more intertwined.
Image via Bottega Veneta
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