Building a career in the fashion industry relies upon both a love of fashion, as well as an understanding of the industry as an economic activity. The global fashion industry is valued at 3 trillion dollars and luxury fashion accounts for 330 billion dollars of this figure, largely ruled with the corporate structure and expertise of luxury conglomerates.
Often confused with a corporation, a conglomerate is a group of different business entities that operate under a single parent company; entities within a conglomerate often span a variety of industries. Whilst a corporation might comprise of various business entities, these entities often focus on just one type of industry. So whilst there are many powerful luxury fashion corporations such as Tapestry, PVH and Capri Holdings, there are only a handful of true conglomerates.
Louis Vuitton Moet Hennessey
With annual revenues totalling more than 30 billion euros year on year, Louis Vuitton Moet Hennessey also known as LVMH is the largest luxury products conglomerate in the world. Owned by Bernard Arnault and headquartered in Paris, the conglomerate spans many areas of the luxury goods industry and owns over sixty brands. By the number of subsidiaries, LVMH’s biggest focus is in the wines and spirits industry where it houses over 15 premium spirit, champagne and wine brands. However, it is best known for the numerous luxury fashion brands that sit under its remit such as Christian Dior, Louis Vuitton and Givenchy. Earlier this year the conglomerate acquired Belmond hotels, expanding its reach within the luxury hospitality sector. More recently, it has also acquired Tiffany & Co, the renowned American Jeweller helping to bolster the conglomerate’s American market share and increase their fine jewellery portfolio.
Richemont is a Swiss-based conglomerate founded by South African businessman Johann Rupert. The conglomerate largely focuses on watches and fine jewellery, with some of the biggest industry brands under its belt – Cartier, Van Cleef & Arpels and Piaget to name a few. The conglomerate also has interests within the Luxury Fashion Market, owning Azzedine Alaia and Chloé. Last year, the group acquired full control of luxury fashion e-tailer Yoox-Net-A-Porter, a strategic move which allowed the conglomerate to enter the high-growth luxury e-commerce space. Interestingly, Richemont also owns a firearms company and has previously had interests in the tobacco industry.
Kering is another French-owned conglomerate with Francois-Henri Pinault at the helm. Revenues for the group also sit around the 13 billion Euro mark, putting it on par with Richemont. Kering began life in construction and wood trade industries and has had interests in business across sporting goods, retail and distribution sectors. However, recently the conglomerate has chosen to focus on luxury fashion, housing millennial favourite Gucci, Saint Laurent and it-brand of the moment, Bottega Veneta. The conglomerate also controls a number of watch and jewellery brands and has made in-roads into the luxury eyewear market. Unlike Richemont and LVMH, the Kering group has purposefully kept their portfolio small and relatively niche, operating in closely related industries.
As a business model, conglomeration is much more complex than a corporation as it involves operating in various industry sectors which often need different strategies and specialised knowledge. However, the business model provides greater financial protection for subsidiary companies. The more financially successful companies within a conglomerate can be used to bolster the smaller ones.
For designers, launching a fashion house with a conglomerate can be incredibly beneficial. A brand can receive significant financial investment from the conglomerate which can help them build and sustain their brand. Moreover, they can take advantage of the wealth of business knowledge from group leaders.
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Words by Martha Ngatchu