EVP Product & Communications, Tiffany & Co.
Alexandre Arnault & Antoine Flamarion: Tiffany & Co., The Relaunch of an Icon - TLF 2023
Alexandre Arnault, Executive Vice President of Product and Communications @TiffanyandCo in conversation with Antoine Flamarion, Co-founder @tikehaucapital7956.
About Alexandre Arnault
Alexandre Arnault, Executive Vice President of Product and Communications at Tiffany & Co., has discussed the company's repositioning since its acquisition by LVMH in 2021. He described the pre-acquisition culture as "lost in translation," stating that the company operated like a mid-market American firm where employees "go home at 5:00 pm" and "nobody questions anything." Arnault said that after the acquisition, employees who preferred that environment left on their own, allowing the company to introduce "entrepreneurship and speed of decision making." He noted that the renovation of the flagship New York store, which was restarted from scratch under architect Peter Marino, took three years and cost "multiple hundreds of millions of dollars," but that the store is "exceeding projections week after week." Arnault has also spoken about marketing strategy and collaborations. He said that the "Not Your Mother's Tiffany" campaign was "controversial" but had a "great impact on sales," with silver business growing the fastest in five years during its month. Regarding collaborations, he stated that the company does not partner with brands to target specific demographics, calling it "completely stupid" to target Millennials because "you feel when it's fake." He said the company looks for partners "willing to do something new and disruptive" and cited the Supreme collaboration as an example of a partnership based on shared interests in streetwear and skateboarding rather than demographic targeting. Arnault also said Tiffany does not sell lab-grown diamonds, stating the company "believe[s] strongly in natural diamonds" and citing social and economic consequences in Africa if the natural diamond industry were displaced.
Transcript (21 segments)
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Interviewer0:11
French founder this event and thank you Alex to be with us today. Maybe I start with a few words on your career. So Alex started in the US in New York initially with McKinsey and KKR. I'm mentioning that because now it's a lot about Tiffany and the brand, but you know he's still involved in finance and he was ringing the bell of the BSTOCK IPO a few weeks ago, so happy to mention that here. Then he moved to LVMH and Finag in charge of innovation, then he brings some entrepreneurship in the group with the idea and the execution of the purchase of Tiffany.
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Alexandre Arnault1:11
If you want, if that suits you, sure. We had a plan, but because it's 2 PM after lunch, we changed the Q&A and all that, so it's a little bit different than what we anticipated.
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Interviewer1:21
So tell us Alex about your first day at Tiffany.
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Alexandre Arnault1:24
Sure. So first, thanks to everyone for being here. My first day was January 6, 2021, so that day has different meaning for different people, but it was in front of the TV most of the day to understand what was happening in the country, which is a little crazy. But that being said, we were acquiring a company that was publicly traded in the US, not controlled, with a very quarterly mindset, and bringing it into the LVMH ecosystem could make them think about projects over the long term versus every month or every three months. It was a big challenge. It was COVID, nobody was in the office, so acquiring the largest acquisition and acquiring such a company without being able to see the teams or anything for several months was pretty hard. Assessing everyone, understanding who was doing what, the product, the marketing, the stores, the supply chain, everything over Zoom was a big challenge. But we managed to do it, and now it's been three years and it's been pretty good. We've had fun.
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Interviewer2:48
Thanks. And you mentioned it has been the largest acquisition. Tiffany is a global brand, but what about expansion and innovation?
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Alexandre Arnault3:11
Sure. So the company was 60% US-based, now it's 40% roughly in terms of sales. The rest is Europe, Middle East, Asia with an even distribution. The expansion for us is more about the rest of the world than the US because we have a dominant market share in the US and that should stay for a while. We have over 120 stores in the country alone. The fact that all competitors are European-based, namely the Richemont brands or some other brands from LVMH, makes our position there as kind of up-and-comers. So we're really focusing a lot in Europe, same for Asia. The store network was the way we found it. We bought the company with about 320 stores, which we still have today, and we don't plan on changing that too much. But investing into your store network is super expensive and takes multiple years. So we really started an expansion plan and a renovation plan when we arrived, with the quality you know from the other stores of our brands, which is taking some time. I think we're going to talk about the New York store a little later. That's kind of the first real milestone that we experienced, and that will develop itself across the network around the world. And then innovation: the company is 185 years old, and it's about how we can continue delivering the same promise and the same quality, attention to detail and craft in all our products, whether it's with new materials or new metal ways or diamonds or things like that which we're very passionate about, and trying to stay focused on our innovation.
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Interviewer5:31
Thank you. Maybe a little bit on entrepreneurship. LVMH is a global group, very big. You mentioned Tiffany was the largest acquisition. Your experience at Rimowa was a lot about innovating, bringing entrepreneurship, drive, energy. How easy is it to bring energy in a large organization?
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Alexandre Arnault6:11
Because we have 76 brands by now, and every single brand is considered as its own family company. So when we hire a CEO or manager somewhere, we tell them it's your company, behave like it's your own money, and they do. So they feel like they're at home, they have shares most of the time, and they're their own entrepreneurs. So quite frankly, it's fairly easy to bring an entrepreneurial spirit within the group. Within an organization like Tiffany, it's a little different because it's very large, 15,000 people. It came fairly quickly, but it takes a bit of education and time and understanding that not everything is granted, everybody's accountable for everything. We know what it takes, and I think it's very critical in large organizations to keep bringing that. And I think you've been very good at helping Tiffany in that way.
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Interviewer7:19
We mentioned the landmark store. Will you tell us about the initiative, the story, what it takes, the challenges?
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Alexandre Arnault7:30
So the store is, I'm sure you've all seen it at some point in your lives, on the corner of 57th and Fifth Avenue. It's probably the most iconic luxury store in the world. Tiffany has been owning it since 1939. It's been in various movies across time. When we bought the company, it was under renovation. So we arrived that day, a little spooky, and we interviewed the designers that had been chosen to renovate it. Their brief was make sure we can reopen as fast as possible, which in our view is not the right brief to give architects for building a new store for the next 50 to 100 years. So we came in, there was a year of construction already done, there was a whole project. We decided to tear it down and make our own project. So we hired one of the architects we work with since many years, Peter Marino, New York-based, and we started from scratch. That was very challenging. We reopened after two and a half years. It was the largest project the group had ever made, both in terms of scale, 10,000 square meters on 10 floors, and budget, multiple hundreds of millions of dollars just for one store. And it's paying off. It reopened late April, and we're very happy with what we're seeing. We're exceeding week after week all the provisions we had. Our first holiday season is coming next month, which we're super excited about. So far it's been an amazing journey. When we built this store, we thought okay, we want to build it now and I don't want to be renovating this store ever again, so hopefully many, many years.
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Interviewer10:11
All these codes that are dissected around the world, we're really focusing on bringing the best of what that store has to other stores. Obviously not every store is 10 floors and 10,000 square meters, but little things you'll see here and there. We're opening a store in Vegas next week, for example, so a lot of designs from there. Miami beginning of January, Shanghai beginning of February. All these will start to look very similar and coherent together.
Maybe one last question on the challenges when it comes to innovation, because now brands are more and more global. Where do you see the biggest challenges?
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Alexandre Arnault11:11
I think visibility is a big challenge. You can't hide anymore. Everything you do is immediately public, seen, commented, criticized, or applauded immediately, which makes it tough. I think the scale also makes it difficult. When you want to innovate at the scale we have, over $6 billion in sales, or even at the LVMH level, it's difficult because you can't just do it at a small company level. And then I think competition also makes it very exciting but tougher and tougher, because it becomes harder. Talent, technologies, patents, and everything become more difficult to protect with a few competitors running around. So these are the main challenges.
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Interviewer12:10
Which intuitively appears versatile. So we see that the group has ventured again in hospitality projects with Cheval Blanc or Louis Vuitton. Is there room for a Tiffany hotel at some point?
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Alexandre Arnault12:22
Maybe one day, but it's not a priority so far. The industry is great, but we have so many things to do that it's far for us right now. We do have a restaurant though in our store, and I encourage all of you to go.
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Audience Member12:42
Hi, your Arnaud Roth, photographer. Nice to see you. When recently, last couple of days, somebody said that Louis Vuitton is no longer a luxury brand, it's a culture brand. Can you talk about that?
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Alexandre Arnault13:10
Culture, at least for Vuitton, which I think Tiffany could also be defined by, means that it touches so many different points than just products sold to someone. Hospitality, like was just mentioned, restaurants, experiences, things that go beyond just a general relationship between a brand and a customer. I believe personally that culture plays a huge role in the growth of these brands, because that's how you can stay connected and continue connecting younger consumer bases for much longer. I'll give you an example for Tiffany. Every single person I've interviewed for a job, whatever position, I always asked them, do you have a story with Tiffany? And they tell me yes, whether it's from their grandmother, their mother, their first love, their wedding. So it's a brand that has been present across generations, across different touch points, which makes it much stickier and much better for our brands to also be able to expand and grow sustainably.
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Audience Member14:25
One last question. Thank you Alexander for being here. It was really interesting to hear you talk about the entrepreneurial mindset and the talent management strategy that is really embedded in the LVMH culture. What was the biggest challenge taking over Tiffany to bring that into my own mindset and to bring this LVMH culture to this very old-fashioned organization?
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Alexandre Arnault14:52
I think Corporate America was kind of the biggest challenge. The reason why I think we were able to purchase it for a price that now seems fairly cheap, though it was commented the opposite when we bought the company, was because it was lost in translation. It was really on the same level as all these mid-market American companies that kind of float on the horizon and don't really have an objective. People go to work, they're happy with what they do, they go home at 5 PM, they get their stock options at the end of the year, everybody's happy, nobody questions anything. I'm being a little critical on purpose also to prove a point. But I think this was the largest issue, and this is why the best people left themselves. They said okay, we want something else, and they went to work at other large American corporations and were very happy. But I think once we were able to kind of break this apart, that's where we could bring entrepreneurship and speed of decision making within the company.
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Interviewer16:31
Thank you Alex for sharing all these thoughts with us and bringing something special about entrepreneurship, drive, energy. So thanks a lot.
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Alexandre Arnault16:43
Thank you very much.