The Power of The Few
This is Part 1 of a series of pieces about the largest fashion conglomerates in the world viewed from a behavior and tech lens.
LVMH has continued to show unstoppable growth over the last ten years. It's truly remarkable that LVMH has outperformed the S&P 500 in cumulative returns.
*Excludes dividends
Why is this? What power does the fashion industry hold over us? What drives our intense emotions towards it—whether we crave, love, need, or even hate it?
Image by: Johanne 8
I woke up a bit too early for my taste on a Wednesday morning. Taking off my sleeping mask, I squinted through one eye, and, yep, it was only 6:18 a.m.
I lazily scrolled through my phone and soon realized, to my delight, that it was shaping up to be an amazing day. Sunlight sneaked through the blinds, filling me with a burst of excitement as I scrambled to get ready.
As I glanced out the window, I noticed a pair of beautiful dark pink cherry blossom trees across the street in full bloom. It was like nature was celebrating—winter is officially out, and spring is in!
Refreshed after my shower, I dove into my closet, ready to tackle the outfit of the day challenge.
As I flicked through the garments, my fingers brushed against the cherished Valentino dress my mom had passed down to me. It's truly a gem.
Choosing my outfit is like my morning coffee—essential and delightful. It's a daily moment where I tap into my creative spirit.
Each outfit is a playful exploration of emotions, designed to reflect the woman I aspire to be that day. Indeed, there are so many shades of me to express.
It's a thrilling process, transforming ordinary moments into a moment of self-expression and artistry. Fashion as a creative outlet allows me to transform emotions into something tangible, helping me connect with others and bringing a deep sense of fulfillment.
I love mixing and matching outfits that showcase the stunning craftsmanship of pieces from phenomenal artists worldwide with cherished heirlooms from my beloved family members. It's a playful dance of flair and personal history!
But today, something felt off. The usual thrill of fabric and color just wasn’t sparking.
I find myself in deep thought. Going in infinite loops.
My curiosity was partly fueled by a conversation with my husband about fashion, business models, and the remarkable success stories that come with them.
He knows I love fashion, business models, and, oh man, a great financial success story!
Last night, we discussed LVMH, the titan of luxury goods whose stock has had an amazing 10-year run, outperforming the SP500 handsomely over that time period.
As a result, Bernard Arnault, the mastermind behind LVMH, is now the richest man on earth.
Not Elon, who is trying to go to Mars, or the tech godfathers Jeff Bezos, Bill Gates, or Mark Zuckerberg, not even my favorite, the investment hero - Warren Buffet.
Bernard Arnault - the master of luxury - is number #1!
How did this happen?
Images belong to those with copyrights
Thinking about the big leagues of fashion, I wanted to dive deeper into the business models and success stories behind their fashion empires.
Remember that scene in "The Devil Wears Prada"?
Link to the clip
The one where Andy Sachs (Anne Hathaway) laughs off those two belts that look the same but aren’t? I had to watch it again. I found it on YouTube, fittingly under "Stuff," and—no surprise—it’s had nearly 10 million views.
At first glance, the iconic scene depicts Andy receiving a scathing lesson from Miranda Priestly (Meryl Streep) on the relevance of the fashion world. With surgical precision, Miranda traces the journey of Andy’s cerulean sweater from elite runway shows to the clearance racks where she found it.
Andy mistakenly believes she's immune to fashion's reach, oblivious to the fact that her 'random' attire is anything but.
Upon deeper examination of Meryl Streep's masterful performance in "The Devil Wears Prada," it unveils an undeniable truth—the immense power wielded by the global fashion industry coterie.
The underlying message?
The fashion industry, dismissed as frivolous by so many, wields surprising power.
Fashion is ruled by 'the power of the few. ' A select few multinational conglomerates and media giants dictate prevailing aesthetics and cultural norms.
Few individuals or communities remain unaffected by this "power of the few" to mold societal beauty standards on a massive scale.
Bernard Arnault's LVMH empire exemplifies this phenomenon par excellence. Having a competitive edge as formidable as any tech titan or political leader.
With his arsenal of top-tier brands, Arnault not only shapes global fashion desires but manifests sartorial dreams into reality for millions - I highly recommend listening to Acquired Podcast).
I've always found how fashion polarizes people into two distinct camps fascinating.
On the one hand, some perceive it as a superficial and frivolous pursuit, dismissing it as mere vanity, a way to signal social status, or just plain dumb.
Conversely, many individuals embrace fashion as a powerful medium for self-expression and artistry, viewing it as an extension of their rich personalities.
In reality, fashion is a multifaceted phenomenon that encompasses both perspectives.
Scratching beyond the surface, today's fashion is a canvas for creative expression, allowing individuals to showcase their unique personalities and artistic sensibilities through their sartorial choices. Social media, #TikTok, has become vital.
Fashion is a complex interplay of societal norms, personal preferences, and cultural influences, defying simplistic categorizations.
At their core, the garments we adorn communicate our identities, values, and emotional states to the world. What may be perceived as superficial posturing could be the overt expression of fundamental human impulses—belonging, individuality, creativity, and projecting idealized self-images.
Perhaps the discomfort with fashion stems from an aversion to face-to-face confronting these primal facets of human nature.
The industry bears our innate vanities, aspirations, creativity, and insecurities.
By commodifying and celebrating these "shades of humanity," fashion holds a mirror to the viewer, compelling them to confront the very emotions and desires they may suppress within themselves.
Polarization, although directed towards the industry, stems from one's willingness to embrace or reject the complex tapestry of motivations underpinning personal expression.
However, in my musings, my biggest obsession has always been with a third group of individuals—businessmen and entrepreneurs worldwide.
These visionaries see the colossal opportunity in the fashion industry, which McKinsey estimated to be worth a whopping $1.7 trillion in 2023.
While designers, models, and influencers bask in the glitz and glamour, these low-key business minds quietly drive this juggernaut industry forward from behind the scenes.
As I dig deeper into the industry, I can’t help but keep going back to the following questions:
Who truly owns our closet?
Why are we unaware of “the power of the few” as consumers?
What makes a fashion company successful and profitable?
What role does technology play, and how are these companies fortifying their moats through heavy investment in technology, either directly or indirectly?
What new opportunities does social media create for brands that are brilliant storytellers and authentic and provide spaces for connecting with like-minded individuals?
Here's some mind-blowing food for thought: LVMH boasts an impressive portfolio of 75 brands, underscoring its luxury empire's sheer scale and diversity.
But let me tell you a secret: this is just part of Bernard Arnault's portfolio, which we will continue to dig into in future articles.
Why?
The fashion industry is intricate and wide-ranging, touching numerous sectors such as logistics, supply chains, retail, marketing, technology, sustainability, finance, media, and even education.
So, it's no surprise that LVMH has started to invest actively in AI. In fact, Microsoft, Apple, and Nvidia are not the only companies making significant strides in this area. Just last week, FancyTech, a startup that uses AI to generate high-quality video scripts and 3D models from creative briefs, won the 2024 LVMH Innovation Award Grand Prize at Viva Technology.
As we peel back the layers of the fashion industry, from its vibrant runway shows to the strategic boardroom decisions, it's clear that fashion isn't just about what we wear. It's about culture, identity, and, most importantly, influence.
Your wardrobe is more than just fabric and thread—it's a narrative you control. So, I challenge you to look beyond the labels and the latest trends. Consider the impact of your fashion choices on your style, the industry, and the world. Dive into the stories behind your favorite brands and understand what hangs on the rack.
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This post would not have been possible without some incredible people pushing me to be better. Thank you: DaraSongye, Jessica Fan,
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