In 2022, LVMH, the world’s largest luxury goods group, acquired the American high-end jewelry brand Tiffany&Co., becoming a key milestone in betting on hard luxury. LVMH Chairman Bernard Arnault’s four younger sons all entered the hard luxury business, Fr é d é ric Arnault entered the high-end watch brand Taghauer, Alexandre Arnault assisted in managing Tiffany, and Jean Arnault was in charge of LV watches.
At the same time, in the emerging incremental market of China, with the improvement of consumer spending power and the rapid growth of luxury goods awareness, this group of consumers are gradually exploring the world of hard luxury from soft luxury. Coincidentally with the arrival of the COVID-19 pandemic in 2020, the global economy has entered a weak cycle. In a volatile situation, high-end jewelry watches are favored by many investors due to their precious materials and high value craftsmanship, which have the function of preserving value and avoiding risks.
This has brought about the hard luxury market, especially the three-year golden period for Cartier’s parent company, Swiss Richemont Group.
However, after LVMH fully penetrated the middle class consumers, this luxury goods giant specializing in fashion and leather goods also began to turn its attention to hard luxury and consider bringing the operational ideas that have been successfully verified in the soft luxury market to the hard luxury market.
Secondly, hard luxury brands enhance the pricing power of luxury goods giants through lower substitutability, exclusive patented processes, and other aspects, in order to consolidate their market position. Although LVMH has expanded its scale to become the world’s largest luxury goods giant, it still lacks a competitive advantage from high-end positioning in the competition with single brand groups Herm è s and Chanel at the top of the pyramid through core brands LV and Dior. There is an urgent need for hard luxury brands with higher average unit prices and top product unit prices to sit down.
