EVP Product & Communications, Tiffany & Co.
SnapSave io FT Business of Luxury Summit Day 1 Alexandre Arnault & Jo Ellison 720p
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 (36 segments)
I
Interviewer0:13
I'm actually going to stay on the stage now because I'm going to introduce our next guest, Alexandre Arnault. He's just in the front here, so if you give him a round of applause... up to the stage. I feel a bit like a headmistress who's just invited a sort of student into the principal's office. 25 years old, are you fixed up? I think so. Yes, yeah, you're good. 25 years old, you just turned 26? Oh, just, okay fine, make a note. Chief executive of Rimowa when you were 24, at a 120-year-old house. How was the first day in the office for you? How did it go down?
A
Alexandre Arnault0:58
It was quite interesting because the company had been run for 118 years by the same family, so they see this 24-year-old arriving, telling them, 'Hey, now we're your new owner and I'm your new CEO.' It's a bit frightening, but things went quite well. I think a lot of reassuring was needed in the beginning, and then when all that was done, we could start working day two.
I
Interviewer1:23
LVMH bought the company for $640 million, a controlling stake in 2016. But it was very much as a result of your pushing everyone to pay attention to it and to take it seriously as an acquisition. What was it especially that you took to your father and said, 'This is a brand you really need to care about, this is what we need to do'?
A
Alexandre Arnault1:49
I'd been using the suitcases for maybe 10 years before that, and they were really great quality products and had a lot of great things about them. He would always see them and tell me, 'Why are you wearing this? Why aren't you carrying Vuitton or other brands of the group?' I was off-brand. But the good thing about them was that they were really the best suitcases out there. When it comes to the group, we really recognize quality before anything. The quality of the products was amazing, the brand had unbelievable heritage and also unbelievable potential.
I
Interviewer2:24
What was the potential that you saw in the brand early on? What was it that excited you about it?
A
Alexandre Arnault2:28
A few things. Number one, the travel market as a whole is growing extremely fast. For example, in France, there were 80 million tourists last year, and in the next five years, there's going to be 100 million—a 25% increase. Look at China, look at the US. Travel is just becoming much more accessible. Also, it's an unbelievable functional product, and the brand is very functional, which is key for us when analyzing specific sectors. It was the only pure player in suitcases and luggage that was attractive enough for us to make an acquisition.
I
Interviewer3:09
You use the word functional, but we're at a business of luxury summit. I don't think functionality and luxury are necessarily things we would have put together. I know you're not a huge fan of the word luxury, so put it in some context for me. Where do you think the new luxury is going, or what word we should be using instead?
A
Alexandre Arnault3:32
I don't really like the word luxury for a few reasons. Number one, I think price is too linked to it, and I don't think price has anything to do with our products. If you look at a €30 bottle of Moët champagne, it's a luxury product. If you look at a €15 Dior lipstick, it's aspirational, desirable, great quality—it's luxury, but it's not expensive. That's why we prefer to use 'high quality.' Functionality doesn't really make sense yet because all the functional brands have the right pocket at the right place on the bag, but the products themselves are not desirable. If you look at luxury brands or high-quality brands, the bags are sometimes not practical—the handles hurt, they're heavy, they don't look pretty. I'm talking about handbags here. There's nothing in between yet. Look at an iPhone: is it a luxury product? It probably is, but it's the ultimate functional product. People buy it because it's functional.
I
Interviewer4:56
To what extent do you think you've brought in a new attitude as a young man, bearing in mind what you see around you and the habits and consumer desires of your peer group? Luxury groups are run by people a great deal older than you, and they probably have a different attitude to what people want. Do you feel like you're pushing an agenda, speaking for the Millennials?
A
Alexandre Arnault5:22
In no way do I want to revolutionize a luxury business. I'm a bit younger, but I've been working in luxury for 26 years already, if I may say so—don't want to upset too many people here. I've been raised in this world. But I think there is definitely a new kind of voice to have and a new way to address customers. I was hearing the person before me talking about one channel or Millennials or influencers—all things that didn't exist five or ten years ago. These are new means of communication that we need to adapt to. However, we still need to remain true to our roots. When you look at brands like ours, most of them are 100 years plus old. We need to live by our heritage, understand our codes, and reinterpret them, but stay true to ourselves.
I
Interviewer6:17
I think it's quite interesting thinking about someone like Dior with these incredibly powerful creative leaders at the helm. But with Rimowa, people don't—even if they knew it was made in Germany, most probably assumed it was a Japanese company, or they had a very loose relationship with it and don't identify with any creative leadership. Do you think that's actually an advantage for a brand like yours? You can just get on with it.
A
Alexandre Arnault6:50
Of course it's an advantage. To have this line of permanent products—another brand in our group, Loro Piana, also has no designer or star face at the helm, and I think it's a great success for that reason. However, I still think that looking at our products and suitcases, we can really excite them, make them interesting and cooler by bringing design elements, collaborating with designers and artists on specific projects. But for now, it is a big advantage to have this core line of products that have been selling for the past 90 years. Then you can do all the collaborative creative things almost as a nice sideline. Our products are like a canvas—the geometry is perfect, the grooves are very identifiable. When you do something with Supreme, like we just did, the suitcase looks like a Supreme suitcase, but it's also a Rimowa because the shape and grooves are so identifiable.
I
Interviewer8:02
You've done three collaborations so far? Two main ones have been released. The idea of collaboration has become a mainstay of the industry, every brand working with somebody. For Supreme, it was a phenomenal success—sold out in 38 seconds globally. Absolutely terrifying results in terms of speed and appetite for an expensive bag with a bit of red. But it's a bit more complicated than that. What makes the right combination? How do you choose the brand?
A
Alexandre Arnault8:55
Supreme itself is an interesting story because they reached out to us five or six years ago already, before we even bought the company, and the company was not ready to do something like that. So it was reactivating a conversation with the founder after everything they had done with Vuitton. When we look at collaborations, we really try not to do too many—overkilling it—and always try to be on brand. There's no real recipe; it's not about high or low or street. We have a lot of inbound and some outbound, and whenever chemistry happens, we try to make things happen.
I
Interviewer9:36
Were you talking to me earlier about the guys in the factory in Germany being a little reluctant to embrace the Supreme collaboration?
A
Alexandre Arnault9:44
For sure. I came to them and said it's a bit more than just red on a suitcase. We have 202 spare parts from 202 different suppliers, so we need the exact same red from all of them at the same time to make the suitcase. It sounds easy, but it's really not. It took eight months to do all the testing and color matching. When we told the people in the factory what they had to do, they were not super excited because they didn't know much about Supreme—it's not a big German brand. It was really difficult to make, but once we released it, we saw the long lines in front of stores, the numbers sold out in seconds, and the resale market demand.
I
Interviewer10:29
Fascinating. The Rimowa was $1,400 and resold at $35,000 within 24 hours. How does that resale market add value to what you're doing? Do you embrace it?
A
Alexandre Arnault10:59
Embracing it is one thing. We can't do anything against it. We had people camping in front of our stores for four days, sleeping on the streets. But I think it increases the desirability of the product because it's limited, very difficult to get, and if you want to buy it on the resale market, it's very expensive. It also allowed us to become the most expensive suitcase in the world, which was pretty cool—always nice to hit some goals.
I
Interviewer11:40
Was that the objective going in?
A
Alexandre Arnault11:41
It was not, but if you look at other luxury brands selling suitcases at $3,500–$4,000, that's not uncommon. Now we sold suitcases at that price with real customers buying and wearing them.
I
Interviewer12:00
My question now is to talk about looking forward. I've bought my suitcase, I'm the most fashionable person in town. Where do I go next with Rimowa? How do you keep me coming back, especially with an amazing service that fixes the suitcase for the rest of time?
A
Alexandre Arnault12:25
Our service is pretty good. We have 95 service centers around the world that fix your suitcase in less than 24 hours. But maybe your family grows and you need more suitcases, and you trust Rimowa so you'll buy some more. Maybe you'll have different ways to travel. Most importantly, you might desire some of the products we make more than the one you have. Why do you buy the latest iPhone when your phone still works perfectly well? Because you desire the new one. I'm not saying we'll make products as desirable as the iPhone, but that level of desirability can create repurchase. For us, product expansion is key.
I
Interviewer13:16
You talked before about lifestyle brand. Other brands in the LVMH portfolio diversified from Vuitton into perfume, jewelry, ready-to-wear, shoes. Do you see Rimowa moving toward that kind of lifestyle brand?
A
Alexandre Arnault13:41
Lifestyle is a word I don't really like either because it applies to everything. For us, we want to stay true to our roots in travel. We will develop new products linked to travel, with this functional luxury idea where we want to be desirable but also functional. Our suitcase today is the utmost functionality. We can also think about services and experiences—Rimowa clubs or lounges in airports or cities. How many times have you traveled for the day and wanted to store your suitcase somewhere, or find a place to sit, take calls, drink coffee that's not a Starbucks? Rimowa could give you access to that. It's about high-quality experiences like skipping the line at airports, not necessarily physical goods.
I
Interviewer14:50
It's not the typical line of hard luxury we've been talking about. It's more ephemeral, isn't it?
A
Alexandre Arnault15:04
No, not at all. Experiences are at the center of everything we do. When we buy hard products, we buy them to wear them somewhere we'll remember. I don't view it as ephemeral. We will not only focus on hard luxury because we want to be a modern brand, staying close to tradition but also to modernity.
I
Interviewer15:35
The bag itself is this aluminum alloy based on an airplane model, with an iconic appearance. You just told me you're going to try all sorts of different fabrications, move out of aluminum into soft cases?
A
Alexandre Arnault15:56
We're not moving out of aluminum. We'll stay with what we do—aluminum and polycarbonate. Yes, we want to add a third, fourth, or fifth pillar. We have many engineers working on new technologies and types of products. There are alloys to make lighter, more resistant suitcases. We also could use different materials like leather, which the group gives us an advantage on.
I
Interviewer16:37
You have incredible rolling technology at Rimowa. To what extent is information shared within the group? LVMH can use that technology for their luggage?
A
Alexandre Arnault17:06
We structured the group so all brands are very independent to foster creativity. The moment you add too many synergies, you kill creativity. However, if a brand comes to ask about the best wheel technology, we have an answer. We held the patent for that wheel for the past 30 years. Vuitton used it for their Horizon suitcase, and we agreed to that. But the day I want to go into leather, I'll make a few phone calls to get the right suppliers. It's not about going and picking all the different things you want. It would be fake—if everybody starts doing the same thing, we lose brand identity. That was one of the biggest scares when we purchased the company. On the first day, I asked the factory people the most controversial questions. One was, 'Are we going to shut down Rimowa and become the supplier of suitcases for Dior, Fendi, etc.?' Absolutely not. We keep brands, nurture them, make them grow on their own.
I
Interviewer18:47
You're a man working in a family business, and you went into a company that was a family business. How do you negotiate that?
A
Alexandre Arnault19:03
The biggest advantage is the long-term vision. When your family-owned, you're able to make bold decisions that impact the short term but are right for the long term. You can make strong investments. Before we purchased the company, the family had over-invested in the factory in machinery and tools. Any brand owned by private equity or publicly listed wouldn't have been able to do that because profits would have been problematic. But now we get all the benefits from that investment—the most powerful industrial tool of any luggage company. It's the same for our other brands: when we open a flagship store in Seoul for Dior, we get the most expensive location, the best architect, and build an incredible building. It might not make sense day one, but on the long term, it does.
I
Interviewer20:22
We're nearly out of time. You've done Fendi, Supreme, Off-White—who's next?
A
Alexandre Arnault20:31
I can't say. But Off-White is not out yet—it's coming out in July. I haven't said that. I love travel, Hamnet, and maybe we could talk about that. We don't look at brands to partner with a specific customer segment. I don't believe stamping Millennials on products is a long-term strategy. We look for brands willing to do something new and disruptive with us.
I
Interviewer21:22
We have 20 seconds left. Thank you very much.
A
Alexandre Arnault21:26
Thank you so much. It was great.