Is There Room for Another Luxury Group?

LONDON, United Kingdom — For years, three European conglomerates — LVMH, Kering and Richemont — have dominated the luxury market, with many of their brands reporting double-digit growth even as the category as a whole has all-but-flattened. The benefits of the conglomerate model are clear: sourcing synergies help to reduce costs, a diversified portfolio mitigates risk and, in the best-case scenario, healthy competition between brands leads to product innovation.

Others have tried to build groups to one day rival the Big Three. In Italy, there is Renzo Rosso's OTB Group, which owns Diesel, Maison Margiela, Marni and others. In the United States, Coach, Inc. is gathering steam with its acquisition of Stuart Weitzman and a strategy aimed at bringing more likeminded brands into the fold. (Most recently, the company was reportedly in talks to acquire Kate Spade & Co., although the deal has yet to materialise.)

Whether or not any of these entities will transform into serious competitors to Europe’s most powerful luxury conglomerates remains to be seen, but it hasn’t stopped yet another fighter from entering the ring. Reinhard Mieck, the former chief executive of Labelux, and co-founder creative director Melissa Morris are aiming to build a modern-day version of the age-old luxury conglomerate with their two-year-old UK-based venture For the One, a budding group to be made up of newly established, heritage-free labels.

“We've seen this opportunity in the market,” Mieck says. “The industry became too fast; brands and companies are basically forced to constantly bring lots of new products to market, which leaves little time to really consider perfecting the product. This is why we’ve chosen go into timeless luxury goods — and not fashion.”

The duo’s first brand, LONB London, has been in development for two years. LONB’s first physical outpost — a 1960s wood-paneled box inspired by vintage Porsches and watches that reflect the masculine, if not male, feeling of the brand — opened at 59 South Audley Street in early April. The collection, which is sold direct-to-consumer only and will be available online at Lonb.com starting April 24, is made up of travel-inspired leather goods for both men and women.

The idea for LONB could be boiled down to effortless jetsetting. Different pouches and zip-cases snap together or one can be nestled in another, making it easy to compartmentalise items. A slim attaché clutch, for instance, can be used alone or snapped into a tote or carry-on. The materials and colourways — including smokey greys, browns and maroon — are decidedly anti-fashion but feel less cold than that of a traditional luggage maker. For instance, the signature pattern was finely stippled by a Parisian artist, with six thousand dots making up every diamond. (The brand name — which stands for “Love or Nothing Baby” — appears etched into the diamonds at random.)

“The luxury bags that are well-made lack the functional consideration. On the other side, you have bags that are well-considered functionally, like the Tumi and Samsonites, but they lack the soul and craftsmanship,” Mieck explains. “So we are trying to really marry these together.”

While prices reach well over the thousand-pound mark, Mieck and Morris say that they are considerably lower than they would be if there was a wholesale component to the business. “The three values of the group are customer centricity, perfected craftsmanship and signature aesthetic,” Morris adds. “In LONB’s case, it’s a very specific aesthetic, but for the group, as we create different brands, there might be different codes for the brands.”

In some ways, Mieck has been here before. From January 2010 to December 2014, he served as chief executive of Labelux, the short-lived luxury subsidiary of Luxembourg's JAB Holdings, whose portfolio includes Coty (of which it owns a majority stake) as well as several restaurant chains, including Peet's Coffee & Tea and Caribou Coffee as well as Krispy Kreme donuts. At Labelux, Mieck oversaw brands including Jimmy Choo, Bally and Belstaff, as well as Derek Lam, whose namesake founder bought back his label in 2012. In July 2014, JAB announced that it had decided to do away with Labelux and would instead directly manage the brands through the main company, with Mieck exiting as chief executive.

“We had completed the mission,” Mieck says of JAB’s strategy. “We had hired industry veterans for all the large brands to lead them forward, and had established a global business service platform providing resources for IT, finance, logistics across the brands.”

Mieck’s statements echo those of JAB’s. At the time, the company said that directly managing the luxury brands showed its “increasing commitment to luxury goods as a key pillar in the JAB Holdings portfolio.”

But the move also underscored the challenges of ramping up a luxury goods group. Over the past 30 years, LVMH has assembled more than 70 brands across six different categories. Kering, which entered the luxury goods sector in the late 1990s with an investment in the Gucci Group — of which it had acquired 99.4 percent by 2004 — owns a diverse range of brands, from menswear stalwart Brioni to current growth engines Yves Saint Laurent and Gucci. Richemont, which operates apparel companies including Chloé and Alaïa, has long dominated the hard luxury space with its ownership of Cartier, Van Cleef & Arpels and Piaget.

Together, these three companies generated 2016 revenues of €61 billion (about $65 billion at current exchange) or about 25 percent of the total global market for personal luxury goods. However, it took decades to grow brands like Louis Vuitton and Gucci into the powerhouses they are today.

But Mieck and Morris — who most recently oversaw the women’s team at Belstaff while her partner was leading Labelux — believe that their competitive advantage is a blank slate.

“I think it’s important at the start of a new brand to make sure that it has a very clear, very focused vision, with not too many people trying to impact this vision,” Mieck says, who is currently self-funding the venture. “Looking forward, if we’re seeing that we want to fuel the growth by entering new markets, for instance, we will look for capital.”

But less capital typically equals slower growth. There is also the added challenge of basing the company in post-Brexit London, where the duo recently relocated from Berlin. A March 2017 report released by the British parliament stated that trade-reliant industries like fashion could face "serious" harm if the UK fails to reach a comprehensive trade agreement with the European Union, where many luxury goods and materials are manufactured and sourced. The UK will also need to establish new trade agreements with other countries outside of the EU. On the other hand, some British-based luxury goods brands, such as Burberry, are currently benefiting from the weak pound.

For Mieck and Morris, the UK was the only choice. “I signed the 10-year lease for the store one day after the Brexit vote,” Mieck says. “London is a city where our customer comes through all the time. It’s a stop off for the global traveller. We believe it’s the right place.”

As for all the other challenges that come with establishing a luxury goods group that could rival the stalwarts? Mieck and Morris plan to push ahead by thinking about luxury differently. For instance, they’re more interested in hotels and experiences than fashion when thinking about what sort of brand they might build next. “It’s very difficult to create the perfect product in a competitive market,” Mieck says. “We decided to do it because we just felt we have a clear inspiration.”

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