The other day I came across an article saying Bernhard Arnault was currently the second richest man in the world and the richest man in Europe.
Idle curiosity - I had never heard of him - he is French - how has he made his money? So I did a quick bit of research - ha!.
As with the internet - it was all before me in a few seconds!
Bernard Arnault is aged 70 and Chairman and Chief Executive of LVHM. LVHM stands for Louis Vuitton Hennessey Moet the largest luxury goods company in the world.
That made me smile - took me right back to my school days - studying supply and demand curves - all that stuff about elasticity! I remember my economics teacher Mr Dakin talking about demand in an economic recession and how the luxury goods market was typically recession proof - ie the rich are always rich and spend accordingly.
Clearly Bernard Arnault had listened to Mr Dakin and planned his business strategy accordingly!
Another Mr Dakin parable comes to mind. He told us about the watch seller whose watches were not selling. His adviser said you are selling them too cheap - try putting the price up and of course they immediately started flying out the door! It is a marketing strategy. Price is so often associated with quality. The more expensive - the more desirable - particularly if others cannot afford it.
Many years ago I was at a conference where the guest speaker said he was a consultant to the Swiss watch industry. (the Swiss historically made the best timepieces but sales were stagnant). He told them wake up - you are no longer in the business or selling watches that keep accurate time - you can buy a quartz crystal watch for a fiver that does that - what you should be selling is fashion. He claimed out of that realisation SWATCH was born.
Anyway whether they came from Mr Dakin or not Mr Arnault has put these lessons together and ran with it to incredible success.
According to Wikipedia Arnault did a degree in Mechanical Engineering and worked for his fathers substantial engineering business. Later he persuaded his father to sell up and invest in real estate. Somehow he bought an ailing textile business that owned Christian Dior. He now owns 70 luxury brands - here are some additional names - they don't mean much to me - Givenchy, Guerlain, Marc Jacobs, Sephora, Emilio Pucci, Fendi, Loro Piana, Nicholas Kirkwood, Thomas Pink, R.M Williams, EDUN, Moynat and Donna Karen.
His strategy is to keep these brands separate from a marketing point of view but to use them to support each other and develop. If he sees a new kid on the block emerging he snaps it up.
So in summary Mr Arnault is a very clever man. He has earned his fantastic success by being shrewd and working hard - by having flair and drive.
My issue is with his customers. His materialistic consumers - his fashion conscious designer label fiends!
As someone devoid of designer labels - (unless you include Craghopper, M&S Blue Harbour and the odd Musto item) - I put it to you that Mr Arnauld's fortune has been built because in essence, many people are both shallow and gullible - ha! - (no offence meant!)
Designer labels are expensive - evidently margins are high. Is the price justified? Does their desirability go much beyond some sort of measure of status - of showing off? It would be a great surprise is Mr Arnault's 70 designer companies did not share manufacturing resources - to achieve economies of scale. Of course they must. To what extent are their products really the same? Greatly I would suspect - but with a different label to appeal! So will my gonads be any better modeled and cossetted in a pair of Lois Vuitton undergarments compared to my M&S boxers? Will my locks be even more lovely using Christian Dior shampoo than with my typical £2 brand? Will our Christmas champers from Tesco be any less lovely than a mega expensive bottle of Moet? I doubt it so what is the point?
The point is what it says about you. If you have got it flaunt it. Some people will be impressed.
Mr Bernard Arnault is laughing all the way to the bank. Good on him!
Idle curiosity - I had never heard of him - he is French - how has he made his money? So I did a quick bit of research - ha!.
As with the internet - it was all before me in a few seconds!
Bernard Arnault is aged 70 and Chairman and Chief Executive of LVHM. LVHM stands for Louis Vuitton Hennessey Moet the largest luxury goods company in the world.
That made me smile - took me right back to my school days - studying supply and demand curves - all that stuff about elasticity! I remember my economics teacher Mr Dakin talking about demand in an economic recession and how the luxury goods market was typically recession proof - ie the rich are always rich and spend accordingly.
Clearly Bernard Arnault had listened to Mr Dakin and planned his business strategy accordingly!
Another Mr Dakin parable comes to mind. He told us about the watch seller whose watches were not selling. His adviser said you are selling them too cheap - try putting the price up and of course they immediately started flying out the door! It is a marketing strategy. Price is so often associated with quality. The more expensive - the more desirable - particularly if others cannot afford it.
Many years ago I was at a conference where the guest speaker said he was a consultant to the Swiss watch industry. (the Swiss historically made the best timepieces but sales were stagnant). He told them wake up - you are no longer in the business or selling watches that keep accurate time - you can buy a quartz crystal watch for a fiver that does that - what you should be selling is fashion. He claimed out of that realisation SWATCH was born.
Anyway whether they came from Mr Dakin or not Mr Arnault has put these lessons together and ran with it to incredible success.
According to Wikipedia Arnault did a degree in Mechanical Engineering and worked for his fathers substantial engineering business. Later he persuaded his father to sell up and invest in real estate. Somehow he bought an ailing textile business that owned Christian Dior. He now owns 70 luxury brands - here are some additional names - they don't mean much to me - Givenchy, Guerlain, Marc Jacobs, Sephora, Emilio Pucci, Fendi, Loro Piana, Nicholas Kirkwood, Thomas Pink, R.M Williams, EDUN, Moynat and Donna Karen.
His strategy is to keep these brands separate from a marketing point of view but to use them to support each other and develop. If he sees a new kid on the block emerging he snaps it up.
So in summary Mr Arnault is a very clever man. He has earned his fantastic success by being shrewd and working hard - by having flair and drive.
My issue is with his customers. His materialistic consumers - his fashion conscious designer label fiends!
As someone devoid of designer labels - (unless you include Craghopper, M&S Blue Harbour and the odd Musto item) - I put it to you that Mr Arnauld's fortune has been built because in essence, many people are both shallow and gullible - ha! - (no offence meant!)
Designer labels are expensive - evidently margins are high. Is the price justified? Does their desirability go much beyond some sort of measure of status - of showing off? It would be a great surprise is Mr Arnault's 70 designer companies did not share manufacturing resources - to achieve economies of scale. Of course they must. To what extent are their products really the same? Greatly I would suspect - but with a different label to appeal! So will my gonads be any better modeled and cossetted in a pair of Lois Vuitton undergarments compared to my M&S boxers? Will my locks be even more lovely using Christian Dior shampoo than with my typical £2 brand? Will our Christmas champers from Tesco be any less lovely than a mega expensive bottle of Moet? I doubt it so what is the point?
The point is what it says about you. If you have got it flaunt it. Some people will be impressed.
Mr Bernard Arnault is laughing all the way to the bank. Good on him!
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