While the overall French economy has been battling what seems like a never-ending crisis, its luxury industry has been thriving, posting consistent double digit sales growth and some of the top French luxury companies almost doubling their turnover from 2008 to 2012 (Hermes, Chanel and Kering Group). Luxury has been among the very few economic sectors in France which has been creating jobs and investing in formation of luxury professionals. According to several estimates, French luxury brands top 59 billion euros in turnover, with 80% exported worldwide.
The combined turnover of independent luxury powerhouses Hermes and Chanel surpasses that of Kering Group, the luxury pole of which includes 13 brands (Gucci, Bottega Veneta, Boucheron etc). Thanks to their strategic outsourcing of their leatherwear, mostly to Italy, some of France leading luxury brands excel in profitability: Louis Vuitton (41,6%), Cartier (32,1%) or Chanel (30%).
The top two French luxury groups, LVMH (also the world’s largest) and Kering have been making strategic investments in the past two years, in key areas of growth such as menswear – LVMH opting to transform one of its brands, shoemaker Berluti, into a full range menswear and accessories brand by building an entire organic infrastructure which includes dedicated production facilities in Italy ; while Kering opted for acquiring Brioni, one of Italy’s iconic menswear brands.
Both LVMH and Kering have been making investments in both emerging market such as China and mature markets, Italy’s being the number one target. Top recent acquisitions include two major Italian powerhouse luxury brands – Loro Piana acquired by LVMH and jeweller Pomellato acquired by Kering. By encompassing diverse sectors, from fashion and accessories to jewellery and watches, luxury groups can leverage on many levels their competitive advantages. French luxury dominates several key sectors, globally, such as: fashion, fragrances, jewellery and accessories – watches being dominated by Swiss giants Swatch Group and Richemont Group.
Many global luxury sectors are led by French companies, from manufacturing, product development and selective retail, one such example being fragrances:
L’Oreal owns luxury beauty brands such as Lacome and Kiehl’s but also licenses the beauty and fragrances products of major luxury fashion brands: Giorgio Armani, Yves Saint Laurent, Ralph Lauren etc.
Firmenich is the world leader in manufacturing of fragrances and flavours
Chanel‘s No.5 is the world’s best selling perfume according to many studies
Sephora is among the best controlled and wide-spread fragrances and beauty products retailer
However, at the heart of France’s success of its luxury industry, lies its unique capacity to nurture talent and creativity. Despite the apparent dominance of the larger corporations, new luxury brands are born across all luxury sectors, each with a unique competitive edge and innovative business model.
Successful young French luxury brands set up in the past two decades:
Hospitality: Charm & More Hotels (incl. the latest luxury Hotel de Nell, Paris)
Accessories: Vignes (leather accessories and handbags from the finest exotic leathers)
Concept stores: L’Eclaireur
Tech: Focal (hi-fi sound)
Jewellery: Akillis (known as the ‘rebellious’ jewellery makers)
E-commerce: Vente-privee (flash sales of luxury fashion and accessories brands)
Gourmet foods: Pierre Hermé (macaron specialist)
Fashion: Isabel Marant
Swimwear: Pain de Sucre
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