(Bloomberg Opinion) -- Bernard Arnault has finally taken control of Tiffany & Co.
With the acquisition being LVMH Moet Hennessy Louis Vuitton SE’s biggest deal to date, and an expensive trophy asset despite the last-minute price cut, there’s little wonder that the company’s chief executive officer is sending experienced staffers from his flagship brand Louis Vuitton to oversee it.
More interesting is the appointment of his 28-year-old son Alexandre to a senior role at Tiffany. It is the latest example of how Arnault, the 71-year-old LVMH founder and France’s richest man, is situating his children into the world’s biggest luxury group, readying them for eventual succession.
It’s a smart move, and one that is playing out across the industry, as scions from family-controlled houses like Prada SpA and cashmere-maker Brunello Cucinelli SpA are elevated to top roles. Younger, digitally focused consumers will drive high-end sales over the next decade. Who better to understand them than the next generation of luxury dynasties? They’re bling kids themselves.
Alexandre Arnault will become executive vice president of product and communications at Tiffany. He was previously CEO of Rimowa, the luggage company that LVMH acquired in 2016, which had been growing until travel seized up with the pandemic. His digital and fashion credentials include spearheading Rimowa’s successful collaborations with streetwear houses Supreme and Virgil Abloh’s Off-White.
Such experience will be crucial at Tiffany. Creating a buzz about the storied brand will be imperative for appealing to millennial and Gen Z consumers, particularly in Asia. These customers also care deeply about brand values, so differentiating Tiffany on sustainability will be important too.
But the younger Arnault will also be tasked with elevating Tiffany’s luxury status. Consequently, he’ll be flanked by two top Louis Vuitton managers: rising star Anthony Ledru, who will become Tiffany’s chief executive, and Michael Burke, one of Bernard Arnault’s most trusted lieutenants, who will become its chairman.
Pairing his children with experienced executives is a pattern that Arnault has used before. For the past seven years, his daughter Delphine Arnault, who is in charge of all Louis Vuitton’s product-related activities, has worked alongside Burke, who is CEO of Louis Vuitton.
Meanwhile, in watches, his son Frederic Arnault was recently appointed as CEO of Tag Heuer. He’d worked alongside Swiss watch industry veteran Jean-Claude Biver earlier in his career, overseeing Tag Heuer’s smartwatches.
It’s a similar story outside of LVMH.
At rival Kering SA, founder Francois Pinault already handed over the reins to his son Francois-Henri, who has been chairman and CEO since 2005. One of the key tenets of Pinault junior, now 58, has been sustainability, which Kering says it has put at the heart of its strategy.
At Prada SpA, Lorenzo Bertelli, the 32-year-old son of Miuccia Prada and co-chief executive officer Patrizio Bertelli, leads marketing and communications as well as the group’s corporate social responsibility function. As a former racing driver with little business experience, his appointment two years ago raised eyebrows. But he has done well so far by pushing e-commerce and a sustainability agenda. Digital investment and a focus on environment-friendly fabrics (his first major initiative was unveiling nylon products made out of recycled ocean plastic, fishing nets and textile industry waste) have likely benefited Prada’s turnaround efforts.
For both Prada and LVMH, a changing of the guard still looks a ways off. If family succession is the outcome — and whoever gets the job must be well qualified — Bertelli looks the frontrunner at Prada, while the field is wide open at LVMH. Alongside Delphine, Alexandre and Frederic, their brother Antoine Arnault is also involved in the business, with roles including responsibility for LVMH’s communications and environmental strategy. The youngest son Jean is finishing his studies.
When the time comes, Bernard Arnault could hand everything over to one of his children, or he could split his responsibilities between them, with some siblings leading the most important divisions. The latter path would help prevent a family feud, while putting Europe’s second most valuable company in a stronger position to anticipate emerging trends.
How Tiffany’s future shapes up will help determine not only whether Arnault was right to press ahead with the deal, but which of these succession scenarios eventually prevails.