Tiffany's: a luxury jewelry brand undergoing a complete metamorphosis
Legendary jeweler Tiffany’s is LVMH ’s biggest acquisition ever . Its future depends on Bernard Arnault’s 30-year-old son, Alexandre.
LVMH strategy applied to Tiffany's
Since transforming Louis Vuitton , Bernard Arnault has pursued a simple but effective strategy. It involves acquiring respected but somewhat out-of-date brands. He then modernizes their management , marketing and operating methods. All of this is then integrated into the ever-growing LVMH empire.
From Christian Dior to Fendi to Bulgari, acquisition prices have continued to rise as targets have become increasingly scarce. Last year, Arnault made his biggest bet with Tiffany & Co. , a $16 billion acquisition that strengthened LVHM’s presence in the fine jewelry market and in the United States.
Alexandre Arnault at the helm of Tiffany's recovery
Alexandre Arnault , 30, the third of Bernard's five children, has been appointed to lead the clean-up operation. He will have to prove that he is capable of turning around one of the company's biggest brands. If he succeeds, he could become the heir to his illustrious father.
Among the Arnault brood, Alexandre is often described as the most enterprising. He cultivates an image of a committed and modern leader , regularly promoting Tiffany on his Instagram account while sharing carefully selected moments from his personal life.
Plugged into the worlds of startups and street culture, Arnault counts Snap Inc. founder Evan Spiegel and Jay-Z among his connections. That gives a sense of how he plans to reshape the company. One priority is to expand the brand’s customer base. Tiffany is still synonymous with jewelry purchased for formal occasions (engagement rings, wedding bands, etc.). The company is largely absent from areas such as luxury watches , handbags and fragrances, strong categories for rivals like Hermès and Cartier.
Major LVMH brands provide insight into strategy
LVMH's other major jewelry brand, Bulgari, offers some clues about where Tiffany might be headed . The Rome-based company has seen its revenue more than double since LVMH bought it in 2011.
Tiffany will launch a new watch model before the end of next year, after hiring a former Chanel executive. Silver jewelry lines, including its Return to Tiffany and heart bracelets, will remain core offerings. There will also be experimentation, for example with Supreme. LVMH understands that shaking up the Tiffany coconut tree will take time. Investors have been warned.
Offering high-end products is important, says Stanislas de Quercize, former president of Richemont (Cartier and Van Cleef & Arpels) in France. While affordable luxury helps attract customers, a successful brand image is fueled by “dream prices,” he says.
Traps to avoid
Dusting off the legendary maker of diamond engagement rings and necklaces is a risky business. The young Arnault has already experienced it. One of the first missteps was a marketing campaign whose name translates to “ Not Your Mother’s Tiffany .” The campaign generated an immediate reaction on social media. It went against the idea of the “family jewel” passed down from generation to generation, which was almost synonymous with Tiffany’s & Co.
The “ Not Your Mother’s Tiffany ” campaign ended after a short run, though Arnault says sales of the silver jewelry spiked shortly afterward. “ It must have been successful, ” he says. “The buzz it generated brought people who had never heard of Tiffany into the conversation.”
Tiffany's: a more popular brand in Europe?
Growth opportunities also lie outside the United States. Tiffany's & Co remains a house with a strong focus on North America. As such, a new flagship store will be created in Paris .
