Scramble For Rihanna, A Luxury Magnate?

Luxury fashion retailing continues to change, and LVMH, the world's largest luxury group, is also looking for new breakthroughs.

According to a number of sources quoted by the women's wear daily, LVMH is secretly negotiating with the social media queen and American hip hop singer Rihanna Rihanna to set up a brand new luxury brand in her name, which will be released later this year. The product will cover many categories including garments, leather goods and accessories.

According to the source, LVMH started its preparations in Paris 6 months ago, and is responsible for Sidney Toledano, chairman and chief executive officer of LVMH fashion group. From the two most important brand teams of LouisVuitton and Celine, it has deployed manpower to communicate with Rihanna.

Sidney Toledano has been the chief executive of Dior fashion, and has won the recognition of LVMH chairman and CEO BernardArnault with the successful Lady Dior handbag. Under his leadership, Dior performance has maintained steady growth.

From then on, we can see that LVMH attaches great importance to the luxury brand name of Rihanna. If the news is true, it will be the second luxury brand launched by LVMH since its establishment in 1987, and it is the first luxury brand launched by the actress in collaboration with the female star in LVMH.

Up to now, LVMH has refused to respond to the news, and Rihanna has not responded to media interviews.

It is noteworthy that this is the third important strategic move LVMH has launched over the past month or so.

Following the $3 billion 200 million acquisition of high-end hotel operator Belmond in December last year, LVMH announced this week that it would acquire a minority stake in New York designer brand GabrielaHearst.

After the deal is concluded, Gabriela Hearst will be the first designer brand acquired by LVMH after shutting down Edun last year.

But unlike buying a brand, LVMH now has to rebuild a luxury brand, which is not easy in the current changing market environment.

Some analysts believe that the reason why BernardArnault dare to make this bold decision at this time node is not only to see the high degree of concern and commercial value of Rihanna.

A senior executive revealed that despite the hip-hop singer's status, any fashion collaboration with Rihanna can break the record of performance, which is inseparable from Rihanna's huge social media influence.

At present, she has more than 67 million fans on a Instagram social platform, and is not inferior to any luxury brand.

Rihanna is also fully aware of its strong influence, and constantly cooperating with fashion brands to realize its own traffic flow, and has achieved great success.

In 2012, Forbes magazine named Rihanna one of the most influential celebrities in the world. In the same year, she was also named "the 100 most influential people in the world" by the times.

In 2014, Rihanna was awarded the "fashion idol Lifetime Achievement Award" by CFDA, the American Fashion Designers Association.

In May 2015, Rihanna set up its own fashion company, Roraj Trade LLC., and registered the $CHOOL Kills trademark in New York, the category of "leather goods" and "clothing".

Rihanna's creative director, Ciarra Pardo, emphasized in her legal document that Rihanna is trying to prove that she is a serious fashion designer.

Rihanna and LVMH started from Dior. At that time, she was Dior's first African American spokesperson, not only in fashion show, but also in collaboration with Dior to launch sunglasses.

In 2017, LVMH's beauty incubator KENDO invested more than $10 million to launch FentyBeauty by Rihanna with Rihanna.

According to the research of Slice Intelligence, the average annual consumption of consumers in Fenty Beauty is US $471, which has surpassed the popular online beauty brand of KimKardashian, such as cosmetics brand KKW and so on.

Although LVMH will not disclose the specific data of its beauty products separately, it has mentioned in its annual report last year that FentyBeauty's performance is one of the main driving forces to boost its perfume and cosmetics department sales by 14%.

At the beginning of last year, Rihanna launched its first underwear brand "Savage xFenty" with the help of fashion group TechStyle. Its products cover T-shirt bra, corset, accessories and so on, priced between 14.5 and 99 dollars.

It is reported that Savage &Fenty offers $50 a year's paid member selection, and members of the consumer can enjoy early benefits of new products, exclusive limited products, free distribution and refund.

However, Rihanna's first official position in the fashion industry comes from the sports brand Puma.

In December 2014, Puma appointed her the creative director of Fenty byPuma.

Although the contract period is only 3 years, the industry has been shocked by the profit growth created by Rihanna for Puma.

With the promotion of Fenty byPuma series, the popularity of Puma brand, which has been quiet for 5 years, has rebounded continuously. Its performance has also started to grow. In 2016, it gained new breakthroughs. Its net profit increased by 68% to 62 million 400 thousand euros, and sales increased 7% to 3 billion 627 million euros. Rihanna was regarded as the greatest hero, and once defeated Yeezy designer KanyeWest became the most concerned designer in New York fashion week.

In addition, the Fenty by Puma series Creeper shoes also beat Kanye West's Yeezy Boost750 launched in Adidas, sold on the shelves for only three hours, and was rated the "shoes of the year" by the industry.

What it means is that Puma was part of Gucci's parent company Kai Yun group. It was not until the beginning of last year that it resumed its independent operation. Rihanna also cancelled its agreement with Kai Yun group in 2017.

Therefore, the industry has speculated that LVMH's choice of Rihanna as the founder of the new luxury brand may have other intentions.

Since last year, the war between LVMH and Kai Yun group has been escalating, and the fuse is the most vigorous Gucci.

First, Fran ois-Henri Pinault, CEO of Kai Yun group, put it to "eliminate" Louis Vuitton, and Gucci CEO MarcoBizzarri also said that it would achieve the goal of $10 billion annual sales of Gucci as soon as possible.

In June last year, Gucci suddenly announced its show in Paris, which was held on the same day with LVMH's Dior, which directly fired the war into LVMH's base area.

From the performance level, Gucci successfully broke the spell of "fire but three years". Sales rose 35.1% to 2 billion 100 million euros in the third quarter of September 30th last year. On the basis of last year's high base, it has recorded an increase of 35% over the seventh quarter.

In the first 9 months, Gucci sales surged 40.8% to 5 billion 948 million euros, a record high.

Thanks to this, sales of Kai Yun group rose 31.5% to 9 billion 526 million euros.

In contrast, LVMH's revenue grew 10% to 11 billion 380 million euros in the third quarter of last year, and its core fashion leather sector revenue, including Louis Vuitton, increased by 14% to 4 billion 458 million euros. It has recorded double-digit growth for 8 consecutive quarters.

Some analysts predict that if LVMH can not effectively block the pace of Gucci, according to the current Gucci quarter average growth rate of 20% over the LVMH fashion leather sector, the number of luxury brands will occupy Gucci in five years.

What makes LVMH more vigilant is that apart from Gucci, the group also supports the two quasi Gucci of SaintLaurent and Balenciaga, and has appointed Daniel, the 33 year old creative director who has worked in Celine for the group's other core brand BottegaVeneta, which aims to make the second tier brand contribute more sales to the group while avoiding the risk of Gucci's disgrace.

BernardArnault naturally will not let the open cloud group wanton provocation. He once told the foreign media that the competitors such as Kai Yun group were imitating in the past ten years and thought they would not succeed.

After making up their minds to defeat the cloud group's spirit, LVMH's action has also become very decisive and rapid. It has carried out a creative director's shuffling with great efforts. The controversial Street trend opinion leader and Off-White founder VirgilAbloh have attracted the attention of the designer, and she has pferred the designer Jones Kim, who is good at giving the brand new vitality to Dior men's clothing, and has given full support to the innovative initiatives of Celine's new creative director HediSlimane.

In this regard, the industry regards the positive defense of LouisVuitton and Dior as LVMH's "A plan", and Celine is the group's "B plan". If the cooperation between LVMH and Rihanna started according to the source of information, it started six months ago, which means that this action will not be excluded as another secret weapon for BernardArnault to deal with Gucci.

His intention is very obvious, that is, using the most current and commercial value stars to create a luxury brand that brings fresh feelings to young people.

But we need to be vigilant that stars create luxury fashion brands and have higher risks while having a certain fan base.

VictoriaBeckham, a member of the US spice girls group with 24 million fans in Instagram, is a typical example.

Victoria Beckham founded the brand of the same name in 2008, which is very similar to Celine in the Phoebe Philo era. In November last year, it obtained the investment of private equity fund NEO3000 million to expand its digital business and retail business, and NEO boss Ralph Toledano became the chairman of the brand.

But according to publicly available data, Victoria Beckham's losses in recent three years have been increasing. VictoriaBeckham, which has two design teams and 100 employees in London, is under tremendous pressure.

Although its sales surged 17% to 42 million 500 thousand pounds in 2017, the loss was recorded at 10 million 200 thousand pounds, or nearly 90 million yuan, much higher than the 4 million 600 thousand pound loss in 2015 and the 8 million 400 thousand pound loss in 2016.

The reason for sustained losses is that the brand represents a continuous investment in brand infrastructure and staff costs, as well as an increase in expansion costs in Asia and the United States.

According to analysts, VictoriaBeckham is currently valued at about 100 million pounds.

Earlier, it was reported that LVMH's L Catterton was interested in acquiring VictoriaBeckham shares, but the negotiations ended in failure.

In addition, LVMH is also at risk for the high-end positioning of Rihanna's personal brand, especially when investors predict that global luxury consumption will slow down. Consumers may not be willing to take the cost of buying LouisVuitton handbags to pay for Rihanna.

DianaEspino, vice president of KENDO global marketing and brand development, who has worked with Rihanna for many years, believes that although Rihanna still ranks first in the attention of celebrities in social media, how to display the authenticity of a fashion icon and entertainment star is the key to the continuity of its business value in the era of social media pparency.

Yesterday morning, LVMH suddenly issued a statement that Bernard Arnault's only daughter, DelphineArnault, had joined the board of directors of the group. She was 43 years old, the youngest member of the board of directors, and the first generation of Arnault family members who joined the LVMH board.

BernardArnault stressed in a statement that Delphine Arnault's accession to the board of directors will help the group to better promote younger development.

There is no doubt that the battle between the luxury giants continues. The competition for luxury goods in the future is no longer a single brand competition, but a dispute over the matrix.

People in the industry pointed out that nowadays consumers should not read the editorial reviews or magazines published by editors. They are concerned about what shoes Rihanna wears on Instagram.

For luxury brands, social media is changing the choices of consumers.