Quick take: LVMH’s acquiring problem

Fendi, Bulgari, and, most recently, Tiffany & Co. What do these brands have in common? They were all purchased by LVMH in the last twenty years. In fact, majority of LVMH’s top performing brands were acquired by the company years ago.

In a rare move in May 2019, LVMH launched a new brand: Fenty with Rihanna as the founder. There were initially two lines, Fenty and Fenty Beauty. The Fenty line was comprised of clothing, while Fenty Beauty focused on makeup and, later, skincare. Fenty Beauty products are only available through Sephora, also owned by LVMH.

Fenty Beauty did exceptionally well at launch and continues to do so. This can be attributed to the brand’s focus on providing inclusive shades, along with Rihanna’s popularity with the demographic who shops at Sephora. A factor which can’t be ignored though is pricing. Much of Rihanna’s fans belong to the middle-class. They can afford a price range of $13.50 - $109. Spending this much on makeup has become the norm.

Fenty fashion house did not fare as well. The line launched in New York in May 2019 and launched online a week later. Less than a year after launch, in 2020, LVMH announced the fashion line would be suspended for the near future. They claimed the COVID-19 pandemic had caused demand to plummet.

Why was Fenty not received with the same excitement as Fenty Beauty? With lockdowns worldwide, consumers shifted from shopping for makeup to skincare. This trend must have meant lower demand for Fenty Beauty as well. But this wasn’t the case. Shifting consumer trends due to COVID weren’t the real problem here.

The problem was pricing and a disconnect with Rihanna’s fan base, the audience Fenty tried to target. Fenty and Fenty Beauty were catered to the same target market: consumers who admired Rihanna’s music and style. The problem was most of this market fell under the middle-class, and LVMH ignored this when pricing clothing created for the Fenty label.

Fenty clothing ranged from shirts starting at $180 to denim jackets for $940. This pricing strategy was similar to true designer labels, but the corresponding beauty line did not match. Either both brands should have been priced to target higher-income individuals, or both should have been priced for middle-class consumers.

For Rihanna’s fans, spending $36 on a foundation is not a big deal. Spending $280 on a pair of pants is.

LVMH missed the mark when pricing Fenty clothing. Changing consumer preferences due to COVID had nothing to do with it. This is proven further when you look at the success of Savage x Fenty, Rihanna’s moderately priced lingerie line.

It’s clear LVMH does not have the vision or understanding of markets to develop brands from scratch. They rely on others to do this work, and then swoop in with millions, sometimes billions, of dollars to buy your successful brand from you.

What they are good at, though, is providing these brands with the right resources to expand further. I’m excited to see if Fenty ever makes a comeback and what LVMH does for Tiffany & Co. in the next few years.