High Fashion/Big Business

by by Belle Cushing

illustration by by Emily Martin

Kate Moss drags on a cigarette in bondage boots and hot pants. Naomi Campbell struts out of a gilded elevator in a bellhop’s hat and leather sweater set. Marc Jacobs’s fetishistic fall collection for Louis Vuitton asks why shouldn’t you have everything you desire—that is, if you have the money to spend. The show was a preview of the excessive future of luxury conglomerate LVMH Moët Hennessy Louis Vuitton. Bernard Arnault, chairman and founder of LVMH, sees nothing stopping him from getting what he wants as the company extends its influence over the fashion, retail, and contemporary art industries with no end to his fantasy in sight.
Italian jeweler Bulgari is the most recent gem to join the long line of luxury brands under LVMH. Arnault reigns over an empire that includes within its multibillion dollar ranks the likes of Louis Vuitton, Möet & Chandon Champagne, Givenchy, and Donna Karan, along with majority shares in Dior and other companies. On March 7, LVMH bought the family stake in Bulgari for €4.3 billion (about $6 billion) and outlined a plan for the eventual takeover of the entire company in one of the most expensive deals in fashion history. The deal was met with favorably by the Bulgari family: former CEO Trapani didn’t seem at all displeased about trading shares of his company to become the second largest shareholder in LVMH, in addition to receiving command over the jewelry and watch division. Sales have dropped at Bulgari in the past three years, though the company has still managed to eek out a profit margin of 3.3 percent. While Bulgari clearly benefited from the deal, and the French holding company established itself as a leader in jewelry and watch production, LVMH had its sights mostly set on street cred. According to Shawn Kravetz, president of Boston-based investment fund Esplanade Capital, “These companies don’t have to make acquisitions but...the large conglomerates want these assets like a consumer covets a new handbag — the arms race continues.” LVMH is competing in this stockpiling of names against another luxury mogul: French company PPR, where François Pinault reigns over brands such as Gucci and Yves Saint-Laurent. The fashion industry, it turns out, though it flaunts individualism and artistic innovation, is as subject to corporate conglomeration as any business.
Not one to be satisfied by a mere doubling of financial presence in the watch and jewelry market from his deal with Bulgari, Arnault has hinted at the prospect of a similar transaction with Burberry, and is now making moves on Hermès.

Big Bad Wolf
Unlike the convivial dinner date that resulted in the Bulgari deal, Arnault went about procuring Hermès in an underhanded fashion: after gradually buying up public shares of the leather retailer, LVMH now owns more than 20 percent of the company. While Trapani and Arnault were talking figures at a restaurant in Milan, Pierre Alexis Dumas, creative director of Hermès, was giving a talk at Brown University. The ’91 Brown alum and great-great grandchild of the founder of Hermès had no qualms about publicly denouncing the deal, claiming that “something is threatened” by LVMH’s encroachment on their company, and insisting that they would do whatever possible to keep the fashion mogul out. To Dumas, Arnault is the “bad wolf in the family garden.” In the case of Hermès, LVMH’s fantasy has crossed unwanted boundaries.

Despite Hermès’s unwillingness, LVMH does not plan to sell its shares. The company maintains that while it is not seeking a place on the board of directors, it does want to form purposefully ambiguous “constructive relations with the family.”

Changing the Parisian landscape
The fashion sector is not the only area where LVMH is met with resistance. In Paris, when not dealing with former Dior designer John Galliano’s anti-Semitic bar crawls, Arnault has been facing stalled construction projects.

The flagship store of La Samaritaine, another of LVMH’s holdings, has lain vacant on the banks of the Seine since 2005 when it was closed for safety concerns. A landmark of Art Nouveau and Art Deco architecture from the early 1900s, La Samaritaine is a symbol of the former grandeur of the grand magasin, but LVMH has a €400 million plan to convert the historical building into a complex of condos, offices, shops, and a hotel. Again, LVMH is mixing necessary financial aid for struggling businesses with presumptuous plans for the future: La Samaritaine was rescued from debt by LVMH’s buy-out, but the founding family is nonetheless enraged by the renovation plans. The Cognacq-Jay Foundation, a charitable fund set up by the founding family of the department store and minority shareholder, walked out of talks for renovation, and expressed its disgust in a statement: “This resignation reflects our deep and fundamental disagreement with the majority shareholder [LVMH] … on the future of Samaritaine. We are letting the majority shareholder take sole responsibility for its decisions, which have in any case always been made despite our opposition.”

In 2009, LVMH launched plans for a contemporary art museum in the Bois de Boulogne, a large park on the western edge of the city. The Fondation LVMH de l’Art Contemporain would feature Arnault’s personal permanent collection, as well as temporary exhibitions. While planning for the destruction of one artistic landmark in the form of La Samaritaine, Arnault promotes the creation of another. Construction had already started on the museum, a cloudlike structure designed by Franck Gehry, architect of the Guggenheim Bilboa, but progress was brought to a halt in January. The administrative tribunal of Paris, a part of the national judiciary system, pulled the center’s building permit, citing that the proposed structure encroached on a park for children next to the building site. An appeal was filed by the City of Paris, spearheaded by Deputy Mayor in charge of culture, Christophe Girard, who, coincidentally, is also director of Marketing Strategy for the fashion sector of LVMH.

France is divided city vs. state on this issue, which has been taken personally by city officials and residents alike. The City had stated that the area next to the park “has neither the status nor the function of a public space.” Both sides, in typical French fashion, are concerned with the aesthetic effects: proponents of the project cite that the building will elevate Paris’ status as an engaged actor on the global stage of contemporary art and architecture, while others are holding on to the prospect of an uninterrupted Monet landscape during their walk in the woods.

Arts (/self-) Promotion
The debate calls up a similar controversy from 2001, when François Pinault proposed the construction of a contemporary art collection of his own on an abandoned island about three miles down the Seine from the Eiffel Tower. After a series of similar administrative snags, Pinault was forced to bring his multi-million dollar collection to Venice, where he was welcomed in his establishment of Palazzo Grassi in 2005, and in 2009, the Punta della Dogana, two contemporary art galleries to house his extensive collection.
Not to be outdone, Arnault is attempting to succeed where Pinault failed ten years ago. The city of Paris decided against the opportunity for a significant contemporary art center once, though its refusal brought Pinault eventual success: The Fondation Pinault has become a major tourist destination in Venice, attracting around 375,000 visitors a year. In centers established by corporate moguls, however, promotion for the arts is overshadowed by the wealthy backer’s unabashed self-promotion. Rather than a space for progress in art, such galleries become cultural artifacts in themselves, a testament to the fiscal side of the art world. As collecting businesses is more often paired with collecting art, in an industry already dominated by millionaires and auction houses, the political economy of an art gallery is rarely as simple as the display of art for art’s sake.

La Samaritaine houses only squatters, the Fondation LVMH lies silent, and the fourth richest man in the world shows no signs of slowing in his global takeover.

Still, for all the drama these deals create within the realm of luxury corporations, the casual follower of fashion week is left to wonder if companies changing hands actually changes anything. Hermès is a family business that seeks to remain true to a tradition of high quality production. At the same time, it remains a company with an operating income of upwards of €600 million. If Hermès became a part of a multibillion-euro conglomerate, as opposed to a multimillion-euro independent house, it would still produce expensive scarves and leather goods. The question is one of nostalgia for family-owned businesses in the face of the ubiquitous corporation. It is easier to believe in the existence of art in the frivolous fashion market when it is centered in historical houses of fashion as opposed to a conglomerate not unlike PepsiCo. In the world of high-end transactions, whether Hermès or Buglari is owned by LVMH, PPR, or stands alone probably will not have a great effect on the everyday. However, when such conglomerates extend their influence beyond the insular luxury sphere we must question if such intervention is progress, or self-glorification. The extension of luxury beyond department stores and into parks and museums is perhaps no different from sponsors’ advertising at a stadium or a benefactor’s name on a building, and it is undeniable that artists benefit from wealthy sponsorship. But when new art is presented under a corporate name, the focus is transferred from the art to the power of the Louis Vuitton name. Changes brought upon La Samaritaine, a city landmark and residence for artist squatters, and Bois du Boulogne, a family oriented park, will affect Parisians far more than would changes in handbag manufacturing. As luxury business continues to assert itself into the public sphere, the average consumer is no longer an onlooker or occasional splurger, but a direct recipient of wealthy whims.

BELLE CUSHING B’13 is not to be outdone.