LVMH’s Anish Melwani on the innovations to pursue and avoid for luxury

As the luxury industry continues to calibrate post-pandemic, it faces a pullback in consumer spending and a newly relevant generation of shoppers. That’s top of mind for LVMH North America chairman and CEO Anish Melwani. “The US is still underpenetrated when it comes to luxury, but we’ve made enormous strides… especially among younger consumers who value quality and want fewer, better things. Our ability to storytell to them in ways they want to be told to is our biggest opportunity. Our biggest challenge is: do we really understand what the answer to that question is?” he explained to me during the Vogue Business Executive Summit. Below, watch the full interview, and find a recap of our conversation. To watch all of the interviews from this year’s Executive Summit, Members can click here. Melwani said that, at a time when brands are increasingly investing in direct-to-consumer sales, multi-brand retail — as long as the experience is “incredible” — is still a valuable channel for customer discovery. Branded websites, meanwhile, have become surprisingly relevant to younger consumers, and offer an opportunity for luxury brands to differentiate from grid-based e-commerce by focusing on brand heritage and craft. “[Younger consumers] are almost discovering websites, and I think it’s, in part, for authenticity,” he said. “If you go to a website, you know you are being marketed to, but there is no algorithm feeding you what you want to see… It’s the official story from the brand.” There’s more opportunity for deeper stories via film and TV, which is why Melwani recently signed on to help lead the group’s 22 Montaigne Entertainment venture, which plans to explore opportunities that take advantage of the intellectual property, archives and locations of LVMH brands in future entertainment projects. The key goal is to better facilitate interactions between luxury and the entertainment industry, whether that means connecting a production team with the relevant brand as it builds out a concept, or identifying historical stories within maisons that have potential for the big screen. Soon after the project was announced in February, it received more than 200 inquiries. When it comes to circular business models, including rental and resale, Melwani’s perspective is mixed: while long-lasting, valuable products can enhance the brand via existing secondhand platforms, he struggles to identify a business model that makes sense for resale within existing brands. “We have to keep creating new things to stay culturally relevant. If we make a big chunk of our business reselling stuff that was culturally relevant in the past, I haven’t squared that with keeping up with modernity,” he said. Melwani’s similarly less enthusiastic about rental, which he views as “fundamentally an off-price platform”. “The goal of luxury is to minimise how much you put through the off-price channel… We don’t overproduce that much, and so we would rather recycle that than sell at a discount. The goal is to be able to sell things at full price… If you have inventory to put through an off-price channel, it’s because something went wrong.” He is energised, however, by digital product passports (DPPs) — especially for authentication and supply chain transparency — and the potential of artificial intelligence to shortcut time-consuming tasks. DPPs still face the challenge of being integrated into brands’ supply chains, and AI still needs appropriate checks and balances in terms of accuracy, he cautioned. LVMH is preparing for the maturation of each of these technologies. “AI is the next wave of tech,” he said. When it comes to new technologies, his philosophy is that “it’s safe to assume they will be bigger, and be a little disappointed, than to underestimate them and be run over by them”. Comments, questions or feedback? Email us at feedback@voguebusiness.com.

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