Alexandre Arnault, LVMH’s Digital Scion

LONDON, United Kingdom — It would be easy to dismiss Alexandre Arnault as just another rich kid. Like his father Bernard Arnault — the wealthiest man in France and mastermind behind the $130 billion LVMH empire — Alexandre is more than six feet tall, reed-thin and often dressed in an impeccable navy blue Dior suit and Berluti shoes.

He is unfailingly polite, with a warm, laid-back disposition, and seems to have inherited the curiosity, drive and ambition that have made his father a living luxury industry legend and one of the world’s most respected businessmen. But until recently, Alexandre has mostly kept a low profile.

The world first got its first real glimpse of Alexandre Arnault in January when he accompanied his father on a highly publicised visit to Trump Tower to meet then president-elect Donald Trump to discuss LVMH’s plans for the critical US market, including the possibility of opening a new factory Stateside.

Many in the luxury industry seemed to sit up and take notice: it was not his older half-siblings Delphine, 42, and Antoine, 40, who joined their father on this important mission. It was Alexandre. Then, later that month, at the age of 24, he was named co-chief executive of Rimowa after LVMH acquired an 80 percent stake of the German luggage business, known for its premium, ribbed aluminium rolling suitcases, for €640 million (about $716 million).

This was not just a nepotistic appointment. The Rimowa deal was actually Alexandre’s idea. “I spent two years courting the former owner and spending a lot of time with him, showing him what we did, kind of seducing him,” the young Arnault says in American-inflected English when we meet over lunch at London’s Bulgari Hotel, also part of the LVMH empire.

The $18.5 billion global luggage market is in the midst of rapid consolidation. Samsonite, which had a 17.3 percent market share in 2015, according to Euromonitor, acquired rival Tumi last March for $1.8 billion. With the Rimowa acquisition, LVMH firmly positioned itself as the number two player in the space, building on its long-standing position in luxury luggage through its high-end Louis Vuitton business with a presence in the fast-growing premium luggage sector.

“The travel market is growing at an incredible pace, I think 12 to 15 percent a year. The [Rimowa] brand has been untouched in the past 20 to 30 years. Four wheels from two wheels, improvements here and there, but it was never taken to the next level,” explains Alexandre.

But just who is this young man, thrust into the industry spotlight? And what does the future hold for him at LVMH?

"I've always enjoyed learning. I studied physics, maths and chemistry when I graduated high school in the famous prépas in France — classe préparatoire — prépas is the code name," he says of his time at Lycée Louis le Grand, a prestigious secondary school located in the fifth arrondissement of Paris. "You're mixed up with kids your own age who come from around France. It's free, so anybody can go. It's based on merit, so there's no privileges for anyone. There were kids like me and also very modest people coming from the suburbs of South East of France who were all on the same level. We were all passionate about excelling at something and learning, learning, learning."

Alexandre Arnault with his father Bernard Arnault | Source: Getty

After prépas, he enrolled to study computer science at Télécom ParisTech, one of France's grandes écoles. But Alexandre was already eager to immerse himself in the family business. "I asked if I could regroup [my classes] on one day to allow me to work in the next four. For those three years between 2013 and 2016, [I spent] one day a week at school and the rest of the time working [in the group] on technology and investments for [private holding company] Groupe Arnault and following my dad around on trips to get more acquainted with the business abroad. It was fascinating."

It was after gaining this first-hand insight into the inner workings of the LVMH empire that he pitched the Rimowa deal to his father as a good fit for the group's portfolio of more than 70 maisons, including Louis Vuitton and Dior. "Once we had the opportunity to acquire it, I had this baby that I had polished and I wanted to see what was inside."

Rimowa was founded in Cologne in 1898 by Paul Morszeck who focused on the kind of classic steamer trunks that competed with the likes of Louis Vuitton and Goyard. But it was Morszeck’s son, Richard Morszeck Warenzeichen, who started manufacturing the company’s distinctive aluminium suitcases. RI-MO-WA is even derived from his name. At the time of the LVMH acquisition, the company was turning over around €400 million (about $471 million) and had become one of the largest premium luggage brands in the world.

Now, as co-CEO, Alexandre’s strategy is to go after the travel sector, writ large. “The middle class in China is growing like crazy, so people are starting to travel. It’s also very linked to Millennials. Everybody says ‘oh yeah, Millennials don’t want to buy products anymore, they want to live and experience and so on,’” he continues. “Yes, that’s true, I see it in myself. I don’t own a car. I don’t own these things because I prefer spending money on experiences as well. Yet, for experiences, you need a suitcase because you need to travel, right?”

“Social media is also a big factor in this. Back [in the old days], you would have a Vuitton logo somewhere and it was kind of a status symbol of ‘Hey, I made it. I could afford it.’ Now, for the same amount of money, people prefer to post a picture of themselves swimming with dolphins in Bali,” he quips.

Alexandre can certainly talk the talk, and he seems to have developed a very good strategic understanding of the business opportunity for Rimowa, but is the 25-year-old really ready to be a CEO?

“I still have to prove myself,” he says. “My father is the same with [all of] his five children and he’s very insistent on meritocracy. You only get things if you deserve them. Being at LVMH with my surname gets me a lot of advantages: access to people, access to technology and knowledge which someone my age without my last name wouldn’t have. I get to spend a lot of time with my father but also with CEOs and very senior people. But it’s also more challenging because I’m obviously more under the spotlight than anyone else. But pressure has never been an issue for me, so I think I live with that pretty well.”

“I talked with my dad a lot, and I asked him, ‘Please, trust me with some operational responsibilities. I’d rather take something small but be in charge than work in a big company and be responsible for a smaller perimeter,’” he explains. “I think that was already on his mind and he lived with the idea. When the opportunity to acquire Rimowa came, obviously the group would have to put in a manager for the brand and I told my father that I’d be super interested in doing that. Yes, it’s in Germany, it’s in Cologne. Yes, I’ll move away from Paris, but operationally it’s such a unique challenge.”

Alexandre is reluctant to lay out his plans for Rimowa in detail, but he does say this. “I’m a big admirer of Airbnb. We as a family invested in the business when I was working in tech. What they have built with experiences is [based on] one simple remark: people book Airbnb but they only spend 20 percent of their vacation in the Airbnb. So they said, we want to own the entire experience, because we don’t want to sell people a place to live, we want to make them better travellers and make them happier travellers. So they launched Airbnb Experiences. It’s kind of the same with us: you sell a suitcase. I travelled this morning so I woke up, I left, I took the train and went to my hotel and now my suitcase is gone, it’s going to wait till Sunday till I leave. So I think, to really have a Rimowa customer, we have to also find other things to offer him.”

In preaching a business opportunity more in tune with Silicon Valley than a traditional French luxury conglomerate, Alexandre seems to be carving out his own identity, separate from that of Delphine and Antoine, who are also actively engaged in the family business and have become powerhouses and would-be successors in their own right. Antoine, chief executive of Berluti and chairman of the Italian cashmere company Loro Piana, came up through the ranks at Louis Vuitton, where he worked closely with Pietro Beccari, now CEO of Fendi, building a reputation as an executive with a flair for marketing and communications. His elder sister Delphine was schooled in all things Dior under the tutelage of chief executive Sidney Toledano and is now executive vice president of Louis Vuitton and the force behind the LVMH Prize for Young Fashion Designers, as part of her mission to build relationships with the next generation of fashion talent.

I still have to prove myself. My father is the same with [all of] his five children and he's very insistent on meritocracy.

So what will become Alexandre's raison d'être in the group? "I'm still building my own identity," he says. "I see myself as a builder, as someone who likes to build things. But right now, the path I want to carve for myself is having this company Rimowa and making it as successful as I can, building something powerful, meaningful, relevant with it. Then we'll see where my help is needed in the group. I'm at the service of this group. I'm both a shareholder and a manager, so wherever my help is needed I'd be happy to give it. If you look at my older siblings and I have two younger brothers as well, the way they've built their careers, it's all about: where can I be useful? How can I help? This is what I want to do."

Even now, his service to the group is not limited to Rimowa. As the youngest Arnault in the business, and one with a personal interest in technology, Alexandre has already taken on the mantle of digital guru, acting as an advocate for modernising the group’s digital culture, building connections with the technology industry and attracting the kind of talent — developers, engineers, product managers — that can help to reshape a company that some consider a technology laggard that has failed to innovate as quickly as competitors.

"I'm a geek at heart. I studied computer science at school," Arnault says of his years at Télécom ParisTech. "Very early on, I started doing investments in tech companies for Groupe Arnault. I would go to the US and my dad would say 'I'm sick of seeing those Snapchats and Ubers and we're not investing in them. Go meet those guys!' So, I would go to San Francisco every month and a half and meet a lot of people, build a network, and I would come back every time and go, 'Wow! It's amazing to see what these people think of us.' They see us as like hommes de Cro-Magnon, as you would say in France."

In doing so, he also managed to become the de-facto advisor to his father on all things digital. "Little by little I would talk to my father and he would say: 'You're right, but people don't want to buy bags online, they want to go to our stores.' My father has always been a fan of technology, so getting him exposed to the new digital platforms, getting him an Instagram account, a Snapchat account wasn't very difficult. Seeing around him how many people were using these platforms and how our clients were increasing their usage of all these apps, he decided: 'We definitely need to build stronger digital capabilities in the group quickly. For that, we need a leader, someone at the group level who will have the legitimacy to speak to all the heads of our maisons, to sit with Michael Burke, Sidney Toledano and challenge them so that they would say: okay I know about my bags, but this guy knows about the internet and I respect him. His next question was: 'Do you know someone?'"

That someone turned out to be Ian Rogers, LVMH's chief digital officer who joined the group in 2015 from Apple's music division. "I remember the first time I saw him, I Skyped with him. He was in LA or San Francisco and after 30 minutes I knew this guy understood all of our challenges, he understood the path to take to cure each of them one-by-one, and he had amazing ideas to innovate as well."

“Then, I met him in New York for a drink. It was supposed to be a 20-minute drink but lasted two hours. Luckily for us, he agreed to move to Paris to work for us. The [terror] attacks happened two or three weeks after he arrived so it was a rude shock for him, but so far he’s been awesome. He’s changed our culture in many ways, changed the way people see digital; he’s put digital on stage as one of our core focuses at VivaTech,” says Alexandre, referring to LVMH’s new annual technology conference.

Rimowa's "Défense d'afficher” collection by M/M available at Colette | Source: Courtesy

One project which became a major focus for Rogers was also near and dear to Arnault’s heart and became their first real collaboration: LVMH’s long-awaited return to multi-brand e-commerce with a site named 24 Sèvres after Paris department store Le Bon Marché’s street address and customer loyalty programme. LVMH may be playing catch up to market leaders like Yoox Net-a-Porter and platform player Farfetch, but Alexandre says the group is thinking ahead — and planning to leverage one of its biggest assets – its retail network. “It’s omnichannel at Le Bon Marché, obviously. But now the vision is way beyond that: to go through stores worldwide. Nothing can really stop us from going there because we own the stores. The brands are also developing omnichannel technologies on their side because they want to have these technologies, and so we just have to plug it in.”

The vision may be big, but Arnault says his father asked him to think about it like any other start-up. “He said, ‘Don’t go to Vuitton and take a bit of their office. Find a guy who is going to be founder and CEO, who is going to build it as a real independent start-up outside of Paris.’ So I went to investigate and I found Eric [Goguey] pretty quickly. He was head of Europe for Sephora.com for seven years. We started to do the business plan and we realised it was going to cost some money and so my father told us, on top of that, ‘make sure you don’t spend a lot of money.’ He gave us an allocated envelope which was very small compared to what we’ve done [before]. And we stuck to it.”

The sense of caution may have stemmed from the group’s failed attempt to enter the multi-brand e-commerce space with e-Luxury, a San Francisco-based multi-brand site owned and operated by the group until 2009, when it was shut down. There was also the spectacular bust of Boo.com, another e-commerce player in which Bernard Arnault was a significant investor. Boo.com burned through $185 million in 18 months in 2000, around the same time as the launches of Net-a-Porter and Yoox, which went on to become big success stories and ultimately merged to become a single company turning over more than $2 billion. But despite the failures of the past, LVMH is trying its hand at multi-brand e-commerce again.

“We wanted to keep it scrappy, iterate, do some A/B testing, be agile. Don’t do like we would have done before,” says Alexandre. “It’s basically a start-up: scrappy, in the 15th arrondissement, IKEA desks, no phones on the tables, everybody coding, free food downstairs, all that type of stuff. It’s funny, today to recruit and retain talent you need all these things. You’re not competing against Procter & Gamble or L’Oréal anymore, you’re competing against Google, Facebook, or even younger start-ups.”

“It’s been a great journey, seeing it start from one employee, Eric and me doing business plans, to another employee coming, to the first discussions with Michael Burke and Sidney Toledano, saying ‘Hey, we have to think about selling our products in multi-brand environments.’ Ultimately, we were on time, on budget, and now it’s just the growth phase that’s starting. It’s a fascinating moment because we’re also able to do something which a lot of people in the market don’t have, which is to build it fresh. Some competitors are 100 times bigger than us, but they’ve built on existing platforms and sometimes it feels a bit clunky.”

His connection to the tech sector has also shaped Arnault’s views on attracting and retaining top talent across the group. “At Rimowa, we’re also trying to build a young culture in the way we make decisions, in the way we motivate people and the way we interact with managers. It’s much more than an HR play, but we’re trying to build something unique which you wouldn’t see in other LVMH brands,” he says. “Fast decisions, for example. Incentives which are different to a regular salary that you might expect, more of a start-up feeling. A stronger company culture based on values. I’m taking inspiration from start-ups and all my start-up friends. I’m not inventing anything new here.”

“Part of why those companies have been successful with Millennials is because they have had these elements of Millennial culture in them, some of them were founded by Millennials. But even those that weren’t founded by Millennials — like BlaBlaCar in Paris — if you go to their office it screams culture. It screams the culture founded by Frédéric [Mazzella]. I think he’s 40 or 45 or something. But we’re going to try to do the same because it’s amazing to have a sentiment of really belonging to a company, belonging to a brand, and also to share that with a customer, ultimately. It’s an ongoing process, of course, but we’re working on that. Hopefully it works and hopefully we get to teach things to the group,” he reflects.

In the role of catalyst, it’s natural that Alexandre has also gleaned important lessons from working alongside his father. “When you’re in this family you kind of develop a passion [for luxury] on its own. Growing up, seeing my father build the empire, and seeing everything happen helps build [an under- standing about] quality and fashion and everything.”

Right now, the path I want to carve for myself is having this company Rimowa and making it as successful as I can.

He continues, “one thing he refers to a lot is the mix of the right and left brain. In order to succeed in this business you need to have not necessarily a creative brain, but at least an understanding of creativity; a respect and love for creativity, which he has obviously. He’s a pianist, he loves art, he loves fashion. He’s also super rational. He has this mix of these two brains... He [has created] something quite unique in the world and he manages to stay humble and very down to earth, very open- minded, very open-hearted as well, listening to people.”

So, what’s Alexandre’s vision for the multi-billion dollar luxury group whose future he is now helping to shape? “That’s the $130 billion dollar question! Building on our brands for the long-term is something that I see us continuing to do for the next hundred years. We have these assets which are unbelievable, which are cherished, and which we have to continue nurturing,” he says.

But with Millennials shifting their spending to experiences and the rise of new “sharing economy” consumption models pioneered by the likes of Uber and Airbnb, Alexandre also knows that simply cherishing the group’s brands will not be enough. What’s more, as Chinese consumers continue to drive not only the vast majority of luxury industry growth, but increasingly shape trends and tastes, LVMH must come to grips with the fact that its brands are largely rooted in a Europe and must adapt as cultural and economic influence swings eastwards to Asia.

How will LVMH cope?

“We must also not get disrupted, being completely aware that disruption exists in many different aspects — design, product, communication, distribution — and keeping an eye on the most meaningful changes to embrace them sooner rather than later. We need to stay at the forefront of innovation in all aspects to keep our leadership [position]. That’s how we want the group to evolve, I think. To be as it is today, but always more innovative.”

Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholders’ documentation guaranteeing BoF’s complete editorial independence. Between 2007 and 2012, Imran Amed was an advisor to LVMH.

This article appears in BoF's latest special print edition: “Generation Next”. The issue is available for purchase at shop.businessoffashion.com and at select retailers around the world.

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