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A swift management overhaul, ‘shock and awe’ marketing and new products have contributed to strong momentum since the group acquired the jeweller in January, writes Luca Solca.

LVMH’s Tiffany reboot is working, delivering what the group called a “remarkable performance” in its third quarter results.

The revamp certainly hit the ground running. Following its acquisition of the American jeweller in January 2021, LVMH lost no time in appointing a heavyweight management team, speed being a vital ingredient in successful M&A and brand turnarounds.

Chairman Michael Burke, one of Bernard Arnault’s most trusted lieutenants, is surely applying lessons learned at Louis Vuitton to sell ‘exclusive’ products by the millions of units. CEO Anthony Ledru brings almost 15 years of experience working not only for Vuitton, but for some of the top fine jewellery companies in the world: Cartier, Harry Winston and Tiffany itself. Meanwhile, Alexandre Arnault, EVP of product and communication, is largely onboard to bring millennials to the brand through blockbuster collaborations and a new brand identity, much as he did at Rimowa. In March, Tiffany & Co also announced a new creative director: Ruba Abu-Nimah, a jewellery outsider and a wild card worthy of a “big bang” revival.

‘Shock and awe’ marketing

Since then installing its new team, Tiffany has deployed an effective “shock & awe” communication strategy, dusting off the company’s brand image. It started in July 2021 with a provocative guerilla-style campaign. The slogan — “Not your mother’s Tiffany” — appeared on posters plastered around New York and Los Angeles featuring denim-clad models wearing the brand’s edgiest pieces, a clear rupture with Tiffany’s past and a nod to the zeitgeist. Social media response was divided: some saw it as a “dis” to loyal customers, but it certainly succeeded in grabbing attention.

Tiffany has also begun to emphasise its high-end products, in sharp contrast to some of its past communications, bolstering perception that the jeweller is a legitimate luxury brand. The brand “broke the internet” with its August 2021 ‘’About Love’' campaign, its most visible piece of marketing since the reboot, featuring Beyoncé and Jay-Z, a rarely-seen Basquiat painting from 1982 whose dominant colour closely resembles Tiffany’s signature blue and the 128.54-carat Tiffany Diamond, one of the largest yellow diamonds ever discovered. (The Tiffany Diamond, which has only been worn by five women — among them Audrey Hepburn and Lady Gaga — will also appear on the big screen in February 2022, worn by Gal Gadot in Death on the Nile)

To further highlight the stone, Tiffany has turned its April Fool’s joke (a yellow rebranding of the iconic Tiffany blue) into the theme of a new pop-up concept: currently on Rodeo Drive, but soon to travel the world, the store features the Tiffany Diamond itself, along with yellow furniture, yellow bags and a Yellow Diamond Café serving yellow-hued turmeric lattes and honeycomb ice cream.

LVMH has also pushed Tiffany online with new vigor. The new campaigns have been heavily promoted on social media, with Tiffany seeing an 8 percent increase in Instagram uploads in Q3 versus Q2 2021, more than double hard luxury peers.

While Tiffany is currently gaining followers at a slower rate than Bulgari, Van Cleef & Arpels and Cartier, the brand is among the top jewellery brands on Instagram (12.6 million followers) and new campaigns and ambassadors should boost these metrics.

Indeed, new brand ambassadors are at the core of Tiffany’s rebranding. In the age of influencers, the use of actors, musicians and athletes seems an old-fashioned marketing strategy. However, Tiffany & Co. has chosen well, drafting in the likes of British tennis star Emma Raducanu, alongside Jay-Z and Beyoncé. In terms of marketing ROI, ambassadors are as important as all the other media channels taken together, generating on average almost half of total media impact for luxury brands.

Luxury houses have, over time, used association with the arts as a way to upgrade their brand positions and enrich their brand equity. Tiffany debuted a collaboration with popular artist Daniel Arsham on September 6, 2021, to recontextualise its iconic blue box and launch its Tiffany Knot collection. The resulting Bronze Eroded Tiffany Blue Box — building on Arsham’s signature “Future Relics” series — updates Tiffany’s packaging for the 21st century and is available for purchase in limited edition.

New products

Tiffany needed to fill the $2,000 to $10,000 price range with more design jewellery and the September launch of its Knot collection did just that. While it only features 23 products at the moment, the core of the collection is priced in the $2,000-to-$10,000 sweet spot. Adding more design jewellery is bound to increase both space productivity and operating margin. In fact, our analysis suggests that gross margin can be significantly higher for design jewellery (where the cost of precious metals is marked up about 10x) than with stone jewellery, Tiffany’s original focus.

Tiffany is also benefiting from market tailwinds. Jewellery is the fastest growing segment in personal luxury goods, expanding by 10% CAGR in the 5 years leading up to the pandemic. What’s more, fine jewellery has been one of the most resilient categories during the Covid-19 crisis because hard luxury is seen as both an investment and a collectible item by consumers. The smaller price premiums on watches and jewellery also mean the category benefits more from spending repatriation to China compared to other categories. And, in the short term, pent-up demand for weddings and other events will provide a further boost for jewellery sales.

There remains much for LVMH to do. But the group seems to have taken a page from Kering’s playbook (as well as its own) in implementing a “big bang” revival at Tiffany. It’s a recipe based on mixing creativity (the ability to come up with strong new creative ideas that resonate with the zeitgeist but link to the brand DNA), commercial acumen (the ability to articulate these ideas into a commercially smart collection and pricing architecture) and entrepreneurial courage (the ability to go “full in” with all the company functions and resource to support the new creative and commercial ideas.

Creative technologist Ommy Akhe, founder and CEO of Wanna Sergey Arkhangelskiy, and Auroboros co-founders Alissa Aulbekova and Paula Sello discuss how our physical realities will be augmented and overlaid by digital experiences and services.

---> Podcast : https://apple.co/3BCGwbr

The metaverse — a term originally coined by the author Neal Stephenson in his sci-fi novel ‘Snow Crash’ — is now widely used to describe how our physical realities will be augmented and overlaid by ambient and accessible digital experiences and services.

Luxury’s entrance into the metaverse was expedited by many brands’ leverage of new technologies to speak to consumers when lockdowns removed physical interactions in bricks-and-mortar stores and in-person events. But the impact of virtual and augmented reality on consumer behaviour preceded 2020: Forbes reported in 2019 that 40 percent of consumers were willing to spend more on a product they can experience through augmented reality technology first.

From stores that guide you from the street to luxury items designed exclusively for the smart glasses that every major tech platform is working on, the future of luxury is already here — it’s just not yet evenly distributed.

To discover what impact the metaverse will have on the future of the luxury goods industry, BoF spoke with four global experts to share their insights with host Robin Mellery-Pratt.

Expert Commentators:

Ommy Akhe is one of the breakout stars of this first generation of AR. The creative technologist specialises in augmented reality, making experiential software and AR prototypes through tools such as Facebook’s Spark AR software.. Previously working as an ethical hacker in information security, the London-based developer has now created dozens of filters for platforms such as Instagram Stories and Facebook.

“In the digital space, there’s obviously a high profit margin because digital products are infinitely scalable. You write one programme or you have one object, and obviously this can be duplicated, whether it be a million times or one time.”

Sergey Arkhangelskiy is the founder and CEO of Wanna AR solutions, having previously worked as a lead engineer in Google’s search ranking team. Wanna has collaborated with the likes of Gucci, providing the technology behind their virtual try-ons and the creation of the brand’s first virtual sneakers.

“Digital fashion is for younger people, for Gen-Z, for millennials, for the people who are mobile, native or digital age [...] These people are critically important for those brands — this is the new generation of consumers, they’re becoming the purchasing power.”

Alissa Aulbekova and Paula Sello are co-founders and creative directors behind Auroboros, the first digital collection shown in London Fashion Week’s DiscoveryLAB. Auroboros is also part of the Sarabande Foundation. Aulbekovas previously worked at Dazed magazine as a fashion stylist, while Sello held previous roles as an archive assistant at Chanel and at Vogue as a fashion stylist.

“Since coming from this gaming generation, we’re really understood drop culture and how these games are becoming so hyperreal. It’s more a gamified experience [...] it’s all blurring lines between digital fashion and what you wear on your social media.”

H&M and Kering are among the fashion players that have recently launched pilot programmes to trace their supply chains using blockchain technology.

Fashion has been eyeing blockchain to trace its notoriously opaque supply chain for years. The technology has yet to be widely adopted, in part because it isn’t easy to implement. It requires information and participation from all the suppliers along the chain, from cut-and-sew factories to fabric weavers, yarn spinners, ginning mills, and even farmers.

Lately, though, disruptions from the pandemic to geopolitical events have made visibility all the way down the supply chain a top priority for brands and retailers, adding to pressure they already faced from consumers and watchdogs to be more transparent. It’s helped drive momentum around blockchain projects. In recent months, groups such as the UK Fashion & Textile Association (UKFT) and companies such as H&M have launched new pilot programmes to track their supply chains with blockchain.

“To be totally frank, it was the dual onslaughts of Brexit and Covid, and the impact that had on supply chains,” said Adam Mansell, chief executive of UKFT, which announced a tracing pilot with IBM and others including Next and H&M’s COS brand in August.

Government regulations are contributing too. This year, the US banned imports of products made with cotton from China’s Xinjiang region, where researchers and authorities say Uighurs and other Muslim groups have been pressed into forced labour. (China denies the claims.) Germany adopted a law scheduled to take effect in 2023 mandating large companies perform due diligence to ensure their supply chains comply with social and environmental standards.

These sorts of developments have drawn “attention at the very highest level around, ‘How do I manage the risk in my supply chain?’ — the material risk — and that immediately brings you into the traceability topic,” said Amit Gautam, founder and CEO of TextileGenesis, a blockchain-based tracing platform for fashion.

The company is H&M’s partner for its new tracing efforts, and has teamed on separate pilots with the US Cotton Trust Protocol, a cotton sustainability group that counts Gap and Levi’s as members, and with Kering and Bestseller on a viscose tracing project.

For brands and retailers feeling pressure to be more transparent about where they get their goods, the appeal of blockchain is clear: In theory, it provides a verified record of a garment’s history at each step of its production, something companies haven’t historically had much visibility into, and because of its decentralised architecture, that record would be tamper-proof.

But blockchain isn’t a silver-bullet solution. Companies still face the challenge of making sure the data they’re getting from suppliers is accurate.

“The issue is still that first part: How do you get the information and verify the information that’s coming into that blockchain system?” said Nate Herman, senior vice president of policy at the American Apparel & Footwear Association. “In the last two years there’s been a dramatic increase in efforts to do that.”

Pressure To Know the Chain

UKFT’s traceability project is funded by a research grant from the UK government. Other partners include Future Fashion Factory, which supports innovation in the UK garment sector, and Tech Data, a technology firm.

“There is definitely an economic driver to this,” Mansell said.

After Brexit, sourcing from Europe immediately became more challenging, and then the pandemic threw global supply chains into disarray. Companies realised they needed a much sharper understanding of where their materials came from.

The aim of IBM’s and other blockchain projects is to capture information around each step as it happens, as opposed to fashion’s historical method of tracing, which has been to start with a finished item and try to follow it backward. But “fibre-forward” tracking is tricky. Companies often only have contact with the factories that sew their garments and maybe fabric suppliers.

Keric Morris, who heads up standards for IBM’s strategy business and is involved in the UKFT project, said they’re collecting data from invoices created at each step of the chain and other information, stretching back to the farm level. They can’t always identify the specific farm the cotton in a product originated from, since batches of cotton are often mixed together when they’re processed, but they can identify the area or even group of farms it came from.

To start, the pilot is focusing solely on cotton products, which entails onboarding suppliers in countries including Bangladesh, India, Turkey, and Portugal.

“What makes it slightly different from other projects is that we are very much trying to build it so that the platform is available for everyone,” Mansell said.

The scope of TextileGenesis’s work is narrower. It focuses specifically on tracing what Gautam calls sustainable, differentiated materials, such as organic cotton as opposed to commodity cotton, or recycled polyester versus virgin polyester. It does it using a digital token it calls a Fibercoin.

“It’s a digitisation of the physical volume, so if 100 kilograms of Tencel are shipped to a spinner, then the spinner’s account on our system receives 100 kilograms of inventory,” Gautam said. “When that fibre is converted into yarn, yarn to fabric, fabric to garment, we transfer those tokens along the chain at article level.”

H&M has “several scaled pilots” set to launch with the company throughout the year. An H&M spokesperson said in an email its partnership with TextileGenesis enabled it to improve its supply chain’s traceability and transparency.

Cost-Benefit Analysis

One challenge for companies is ensuring the information logged on the blockchain is accurate. Many are having to use other tools, such as forensic verifications that test genetic or chemical markers in material fibres, to confirm suppliers are entering data truthfully.

Another is cost. There’s a reason TextileGenesis focuses on fibres such as organic cotton.

“Commodity material has very little value, and very little value from a traceability perspective,” Gautam said. “There’s always a certain amount of effort, investment required to deliver traceability, and if it’s commodity product, how do you capture that value across the supply chain?”

Commodity material describes the vast majority of fabric used to make clothing, and its supply chain tends to be more fragmented, making it more difficult to trace. Some of the costs involved would likely have to be passed onto shoppers.

“The first and foremost resistance I see is from the consumer,” said Tarun Kumar Agrawal, a production logistics researcher at KTH Royal Institute of Technology in Sweden who has studied blockchain’s use to trace the apparel supply chain. “Are consumers really interested in paying a premium if they get to know about all the history of the product? There is a major segment of consumers who still believe in price over sustainability.”

He predicted many big brands will adopt blockchain, but how it develops further could depend on what return they see on their spending. Brands could release tracked-and-traced product lines, much like the “sustainable” collections that exist.

Gautam forecast an even greater split. In his view, the top 100 or so fashion brands will trace most of their products in the coming years. “The rest of the apparel retail market, which is a lot of domestic retailers, let’s say in parts of Asia or parts even of Europe, which is lower value retail, would continue to be generic, would continue to be commodity product, and largely not traceable,” he said.