INSIDE LVMH Certificate - Appunti, Appunti di Costume E Moda

Scarica INSIDE LVMH Certificate - Appunti e più Appunti in PDF di Costume E Moda solo su Docsity! INSIDE LVMH Certificate Course 1 – LVMH & The Luxury Industry Welcome to the INSIDE LVMH Certificate Dear learner, At LVMH, we are committed to transmit our passion, knowledge and savoir-faire to the next generations of talents. This learning program is designed to deep dive into the uniqueness of the Luxury Industry and cultivate the essential knowledge and skills that will help you navigate the next step of your career. Through these 4 courses, you will gain valuable insights into the trends and key challenges shaping the Luxury industry today and tomorrow. Furthermore, you will have the privilege to uncover the behind-the-scenes of our teams all around the world who are building the future of our Maisons. You will access exclusive content curated by Luxury experts, including LVMH and our Maisons teams, as well as renowned professors from around the world. But before you deep dive… Let’s go through some key information to ensure a smooth learning journey: o Release of Course 1: May 21 o Release of Course 2, for learners who already completed Course 1: May 28 o Release of Course 3, for learners who already completed Course 2: June 4 o Release of Course 4, the last course, for learners who already completed Course 3: June 11 o Release of final assessment for learners who completed all four courses: June 18 o Deadline to complete the final assessment: July 18 (6 PM Paris Time) In every course, you will find two quizzes: one midway through and one at the end. To successfully pass each quiz, you must achieve a minimum score of 70%. You can retake these quizzes as many times as necessary. Upon completing all four courses, you will gain access to the final assessment. To obtain the Certificate, you must score at least 70%. Please note that you can attempt the final assessment only once. 2 Another very recent update to Moët Hennessy's world leading portfolio is the addition of Joseph Phelps Vineyards in July 2022. This acquisition follows Moët Hennessy’s development strategy, which aims to satisfy its consumers and distribution partners’ aspirations with an increasingly diversified and comprehensive portfolio, adding Houses with strong values of excellence, craftsmanship and heritage. For the following months to come, the Wines & Spirits division has major strategic priorities:  Pursue value-enhancing strategy  Expand production capacities to ensure sustainable growth  Develop direct sales to end-customers  Further improve efficiency of distribution in key markets  Accelerate efforts to protect the environment, in particular in supply chains and packaging Focus on Veuve Clicquot: The ride from grape to glass Founded in 1772 in Reims (France), for the past 250 years, Veuve Clicquot has been pushing the boundaries of champagne inspired by Madame Clicquot’s audacity, inventive spirit and societal commitment. In 1805, Madame Clicquot unexpectedly became a young widow. At just 27 years old, with skill and grace, she took the reins of the champagne House, which she led driven by her vision, taste for excellence and inventive spirit. Making Veuve Clicquot champagne has always been a creative act, requiring unique expertise grounded in a love for Pinot Noir and the art of aging. From harvest to shipment, Veuve Clicquot is inspired by the Maison’s longstanding motto, “only one quality, the finest.” Focus on Fashion & Leather Goods Preserving an identity and roots, whilst at the same time constantly reinventing themselves in order to appeal to their contemporaries, has always been the “raison d’être” of the Maisons in LVMH’s Fashion & Leather Goods sector. Over the years, this division has been enriched with younger Maisons that also allow creative talents to express themselves. Working with the best 5 designers, while respecting the spirit of each brand, is one of our strategic priorities. Our creative directors promote the Maisons’ identities, and are the artisans of their creative excellence and their ability to reinvent themselves. In order to guarantee a fitting environment for their exceptional products, Maisons in the Fashion & Leather Goods sector strive to master their distribution: in this way, they offer their clientele unique customer experiences. Focus on Fendi: How the Maison is perpetuating its success through craftsmanship Founded by Adele and Edoardo Fendi in Rome in 1925, over the years Fendi has emerged as a Maison renowned for its craftsmanship and innovation deeply linked to its Roman roots. Today, more than 90 years later, Fendi is synonymous with tradition, experimentation and daring creativity. In this article, the Maison’s CEO and Chairman Serge Brunschwig explains some aspects of the company’s savoir-faire and his vision for its future. What’s the key to good craftsmanship? It’s know-how, it’s having great designers and artistic directors, and it’s storytelling. What makes good storytelling? Authenticity. People want real stories – beautiful stories that show that something is real and not invented. The customer puts value on understanding these stories and their relative products. How do you keep clients interested in your products? Product innovation. We have people in our teams who are always looking for new ideas. They are artists and craftsmen, and they are our two famous artistic directors - Kim Jones and Silvia Fendi - who are focused on what’s next and how they’re going to surprise again.  Are Millennials & Gen Zers important to the brand? 6 Yes. Luxury exists today because it is relevant, so the challenge is staying relevant – and “millennials and Gen Zs” are important to this. But we will soon need to find another term to speak to the next generation - to let them know that the craftsmanship that exists today is anchored in history, but can still be modern.   What does modern craftsmanship involve? Talking to a new generation of people and inventing a new generation of products to go with it. Incorporating new savoir-faire… We always base ourselves on the same, authentic craftsmanship, but the question is adapting it so that it interests the customer.   How important is education to Fendi’s future? It’s immensely important. Our craftsmanship is something that could have disappeared, but fortunately the jobs are still here in Italy. But it is a very fragile industry. It is our responsibility to ensure that these jobs still exist in twenty years.    How can you do this? We invest. For instance, we recently opened a new, amazing factory with state-of-the-art equipment and internalized craftsmanship. It offers openings for a new generation of people. It has been a very important step for us.   How would you describe your role? I’m here to make sure that talented and passionate people can express their art, and invent and design beautiful objects that people around the world will be interested in.   If you could summarize Fendi’s craftsmanship in one sentence, what would it be? Opening the next chapter.    What things do all of Fendi’s creations have in common? Quality and creativity. Focus on Perfumes & Cosmetics The LVMH Maisons that are part of the Perfumes & Cosmetics sector benefit from exceptional dynamism that relies on both the longevity and development of key lines, and on the boldness of new creations. These brands cultivate what makes them unique and this guarantees they stand out to their devotees in a highly competitive global market. The success of the Perfumes & Cosmetics division depends on finding the right balance between major historic Maisons such as Parfums Christian Dior, Parfums Givenchy and Guerlain, and younger brands with strong potential like Benefit Cosmetics, Fresh, Make Up For Ever… Yet, these brands are driven by the same values: a quest for excellence, creativity, innovation and perfect mastery of their image. All brands are accelerating the implementation of their online sales platforms and stepping up their digital content initiatives. Excellence in retailing is key, requiring expertise and attentiveness 7 - and selective retailing concepts represented by Sephora, the most innovative name in the world of beauty, and Le Bon Marché Rive Gauche, the department store with a unique atmosphere located in Paris. Focus on Le Bon Marché: The world’s first department store What a story! In 19th-century France, the advent of innovative technology and new ways of thinking revolutionized every part of life, from architecture and medicine, to dining and retail. Founded in Paris in 1852, Le Bon Marché was at the heart of this transformation, progressing – under the masterful reins of owners Aristide and Marguerite Boucicaut – from a simple novelty shop on Rue du Bac into the world’s first Grand magasin (department store) – “a new kind of store to thrill all the senses”. Along the way, not only would it generate commercial models copied the world over, but also supply chain and sales norms still relevant in today’s hyper-digitalized society. Did you know Le Bon Marché was the first French retailer to offer fixed prices?  Until Le Bon Marché, the norm was to haggle. When Boucicaut came up with a fixed-price model, word spread that the sellers at Le Bon Marché could be trusted. In addition, entry into the store was free, with no obligation to try, and you could touch the products. A revolution!   Did you know Aristide Boucicaut was the first French entrepreneur to constantly diversify the offer? In 1882, the store had 35 departments; by 1887 it had 74. Merchandise came from all over France: silk from Lyon, lace from Calais, wool from Roubaix, and drapes from Sedan - cities whose emblems are still visible on the building’s façade today.   Did you know Le Bon Marché was the first to champion low profit margins?  Boucicaut convinced his partners to lower prices, preferring to sell more of an item for less and regularly renew stock than sell goods at high prices for a lower turnover. It was daring for the era, but it worked. And it broke the established model of sales.   Did you know Le Bon Marché was the first to introduce mail order? 10 In 1867, the Boucicauts invented the catalogue, allowing the company to penetrate people’s homes and increase sales. The catalogue was such a hit that it influenced fashion all over France and abroad, thrusting the image of the elegant Parisian into the public psyche. Did you know Le Bon Marché was a forerunner of home delivery? In the 19th century, culture slowly changed, and women were increasingly allowed to shop unaccompanied. Through his home delivery service, Boucicaut further emancipated his female clients by enabling them to move around without their bags, and thus their male, bag- carrying chaperones.   Did you know Le Bon Marché initiated the self-service stand?  With its multiple floors and endless departments, the Bon Marché became a place to see and be seen, with people often spending the entire day in the store. Boucicaut wanted their time there to be as agreeable as possible, and so set up the self-service stand, where clients could succumb to temptation at their own rhythm.   Did you know Le Bon Marché contributed to the modern changing room? Until Le Bon Marché arrived, clothing was the affair of tailors who would make made-to-measure clothes in people’s homes. Boucicaut realized that tailoring could be done under their roof, providing changing rooms for women and waiting areas in which to entertain their husbands.   Did you know Boucicaut was a pioneer in understanding the importance of retail architecture and design? He knew that to entice clients, his ‘cathedral of modern shopping’ needed to be immediately identifiable. In 1869 he ordered architect Alexandre Laplanche to create a monumental entrance and rotundas topped by domes that could be seen from afar. In 1872, he asked Louis-Charles Boileau and Gustave Eiffel to give the building the aesthetics you see today, notably the vast glass roof, which allowed natural light to pour into the shop. Did you know Le Bon Marché developed both the in-store event and the seasonal sale?  To keep their clientele interested, ‘surprise’ was the name of the game. And in 1880, to keep them surprised, Marguerite created a calendar of events, listing the opening of the season’s collections, perfume sales, promotions, art shows and even concerts.   Did you know Le Bon Marché created France’s first animated Christmas window? Most shops do it now, but in 1909, when the store created a mechanized display (dedicated to Robert Peary, the first person to reach the North Pole on April 6th 1909), they were well and truly ahead of their time.  Focus on Other Activities In this business group, LVMH brings together people who share a passion for lifestyle, culture and the arts. 11 Being ambassadors for culture and a certain “art de vivre” is the raison d’être for the Maisons in this area of our business. They all benefit from a vertical integration system, in order to offer high quality products and services to their customers. This approach is part of the quest for excellence pursued by each of these Maisons: from the Les Echos group, which includes key titles from the economic and cultural press to Royal Van Lent, which markets custom-designed yachts under the name of Feadship; and Cheval Blanc which is developing a collection of exceptional hotels. Focus on Cheval Blanc Celebrating a delicate alchemy between tradition and innovation, local architecture and timeless elegance, the 5 Cheval Blanc hotels celebrate bold design and contemporary inspirations with local roots and craftsmanship. Since the opening of its first Maison in 2006, Cheval Blanc has developed unique properties with an unparalleled sense of detail. In a warm, caring atmosphere, every Maison takes the utmost care in creating fulfilling and memorable moments for guests and their families. A new vision of Luxury hospitality Cheval Blanc redefines prestigious French hospitality with a collection of one-of-a-kind Maisons in exclusive destinations, uncompromising in privacy and experience. Cheval Blanc creates a new residential experience in the world's most exclusive destinations through the construction of new properties or redevelopment of iconic sites. The Maison shares a powerful entrepreneurial spirit, an acute sense of detail and dedication to an haute-couture approach to hospitality. Here are 3 key highlights to understand the uniqueness of Cheval Blanc in the world of hospitality: The Art de Recevoir, a Cheval Blanc signature 12 81 countries and more than 6,000 stores. Revenue of 86.2 billion euros in 2023 (+9% compared to 2022), distributed across geographies: Asia (excl. Japan) 31%, Japan 7%, United States 25%, Europe (excl. France) 17%, France 8% and Other Markets 12%. How to define Luxury? By Anne Michaut, Associate Dean for Education Track and Pedagogy and the Director of the LVMH Academic Chair at HEC Paris Luxury has 7 essential characteristics (characteristics to measure the luxuriousness of an offer): 1) Quality: referring to the long-lasting characteristic of luxury goods and to their design and aesthetic appeal, but also to the craftsmanship. 2) Scarcity: at times products may not be scarce per se, and increasingly, luxury brands go beyond mere rarity of ingredients and craft. It has been adding qualitative rarity, with limited editions and collections. 3) Delivering experiential rewards: luxury needs to be loaded with positive emotions and powerful brand associations to ignite an emotional connection. At times, even their packaging can evoke emotions (e.g., with colors) 4) Signed by brands: beyond product artistry, the brand signature, symbol of distinction and status, also is an essential element of luxury. Beyond the brand logo, all iconic elements participate to the symbolic dimensions of luxury (pattern, color, design, raw material, etc.). 5) Controlled channels: beside lowering the risks of counterfeiting and gray markets, controlled channels certainly help brands express their universe online and offline. They also enable creating and managing a direct link with the customers. 6) Personalized services: controlled channels enable brands to develop rich experience delivery and to “explain” the products to their consumers. 7) Price: the price is not correlated with the sole functional performance of the offering. For mature brands more specifically, because the “dream” created immensely contributes to the overall value delivered to customers. For developing brands, however, since the brand power and status isn’t yet built in the imaginary of the customers, it remains reasonable to consider a degree of correlation between the mere functional performance and the price, before a strong status is developed over time. Key figures and trends of the Luxury Industry By Joelle de Montgolfier, Executive Vice-President for Bain & Company’s Global Consumer Products, Retail and Luxury practice In Bain & Company’s annual study, the overall luxury market comprises 9 categories:  Cars;  Personal luxury goods;  Hospitality;  Fine wines and spirits;  Gourmet food;  Furniture; 15  Art;  Private jets;  Cruises. The luxury market reached 1.4 trillion euros in retail sales in 2022, an increase of 20% from 2021. Whitin this overall market, Personal Luxury Goods are the “core of the core”. It’s the main segment: it includes fashion, accessories, beauty and fragrances, jewelry and watches. This segment had been consistently growing at 6% per annum for 20 years up until 2019, when the pandemic induced a severe contraction of the market. However, 2021 saw an impressive V-shaped rebound, with the market growing back beyond 2019 levels; and in 2022, the market continued to see meaningful growth! Ultimately, the market saw 27% annual growth between 2020 and 2022. Forecast for 2030: we expect the market to reach 560€ billion by then, an annual growth rate of 6% from 2023. Over the next decade, we will see younger generations (Generation Z and also Generation Alpha) make up an increasing portion of the luxury market. This expected growth is partially driven by the fact that Gen Z tends to start buying goods at age 15, about 3 to 5 years earlier than millennials did. We also expect to see some changings regarding where the consumers are from. Currently, the US represents the largest market for personal luxury goods, followed by Europe and China. But, as we can see in the chart below, we expect China to grow substantially by 2030: 16 We’re also seeing changes in what luxury customers buy, moving beyond physical luxury goods to the full spectrum of luxury spend. Luxury experiences and experience-based goods were hit hardest by the pandemic, but are returning to pre-COVID levels. For this reason, luxury brands are making inroads – both by entering the hospitality and fine dining markets and by delivering experiences. For example, we can see luxury brands opening restaurants, collaborating with hotels, organizing experiential events, etc. We’re also witnessing a transformation in where customers buy luxury goods. Luxury spending has continued its migration to online, a channel that skyrocketed in 2020 and has continued to grow since, increasing by 20% from 2021 to 2022. Apart from online channels, monobrand stores are also shining. By 2030, online will become the largest channel in luxury, reaching one third of the market: In conclusion, while the luxury market is still recovering from COVID, it looks very different than before. The customer base is expanding and extending its spend beyond physical goods to the full spectrum of luxury. Brands are assuming more and more control of distribution, and are offering value to consumers beyond physical products. 17 happens at the expenses of self-perceived dishonesty: in other words, consumers self- attribute equal status when renting, but they’re somehow aware that they’re “cheating”. This kind of deception feeling is significantly attenuated when consumers already own some similarly positioned items. …and tackle the challenge of personalization By Emanuela Prandelli, Associate Professor for the Department of Management and Technology at Milan’s Bocconi University Luxury brands have started to offer consumers the opportunity to customize their exclusive products by making certain aesthetic decisions (such as the color, fabric or cut of the product). Consumers place a greater value on customized products, because these unique products better fit and communicate their tastes, preferences and identity. In the luxury segment the need for uniqueness and customization is getting stronger and stronger; however, also brand identity need to be preserved. In the luxury market, the consumers’ desire for self-expression could erode the product’s signaling value. The more attributes can be personalized, the higher the risk to negatively impact product recognizability and, hence, its signaling potential. Thereof, this inherent tension highlights the need to find the proper balance point between self-customization and luxury product’s recognizability. Through a series of experiments, we demonstrate that brand managers should allow consumers to make fewer design decisions for luxury versus mainstream brands, in order to preserve the signal value created by the designer. In fact, when luxury brands offer low and moderate levels of customization, consumers respond in the same way as they do when mainstream brands offer similar level of customization: they perceive greater value in the customized product relative to its off-the-shelf counterparts. However, at high levels of customization, the designer’s judgement can be displaced by that of the consumer. By taking the customization process too far, luxury brands are in danger of eroding much of the designer equity they’ve created. There are a few strategies that luxury brands can put in place to attenuate potentially backfiring effects emerging from customization. They can protect their ability to convey status by making the brand more prominent through overt means, for instance, through the explicit display of brand logos. When the brand signature, rather than the brand logo, is what creates the signal, less design freedom is desired. Last but not least, customization can be seen as a strategy to fight against counterfeiting. Another key stake: Innovation (the case of Louis Vuitton) By Agnès Vissoud, Digital Innovation Director at Louis Vuitton Agnès Vissoud founded the Louis Vuitton Digital Innovation Department in 2017. Its mission is to make Louis Vuitton Future Fit, by merging physical and digital worlds. 20 She also founded Aura Blockchain Consortium, the world’s largest Luxury consortium, Asnières Immersive, the first client Virtual Reality experience, and, finally, Louis Vuitton VIA, LV’s first Digital Collectibles program. 1. Innovation & Transmission of savoir-faire Asnières Immersive is basically a product of innovation: it is the first Louis Vuitton’s first virtual reality experience. The goal was to share with the clients the historical LV’s savoir- faire and over 170 years of history through a unique experience, transporting them into the heart of the Maison. “We believe that Virtual Reality technology is mature enough, with the right quality, to invite our clients into those universes”, says Vissoud. Innovation – through mixed reality technology – can undoubtedly help to transmit the savoir-faire of the Maison. 2. The Innovative spirit “Louis Vuitton is always looking for the next horizon and frontier, it’s part of our DNA as a Maison”, says Vissoud. 3. Innovation & Excellence Louis Vuitton VIA it’s a unique program accessible to 200 clients to explore new horizons, unveil exclusive products and offer unique experiences to the customers through a passport between digital and physical worlds. VIA leverages all five key levers of client loyalty: - Reward; - Ownership; - Recognition; - Empowerment; - Connection. 4. Sources of inspiration Louis Vuitton is especially inspired by the DNA of the Maison and its history of creativity. LV is also inspired by the world around us, and by what’s happening in the world (such as societal changes, digital innovation and the ever-evolving intersection between luxury and fashion). For this reason, in LV they analyze trends in market and economy. The also look at AI and, of course, at culture. To conclude, there are few points to keep in mind to foster innovation in a Maison like LV: #1 Anchor innovation In the DNA of the Maison; #2 Adopt the pioneering spirit of Louis Vuitton: be an intrapreneur! #3 Share your knowledge and vision with the people that can help you put them into action. #4 Dream, and take a bold, daring approach! 21 …but also through their digital transformation. By Prune Pillois, Group Omnichannel Director Digital transformation and e-commerce are becoming increasingly important for Luxury brands, bringing forward the focus on an omnichannel customer journey. Digitalization of the Luxury industry is nothing new for LVMH. But since the pandemic, the LVMH Group and its iconic Maisons have taken digitalization to the next level by reinventing experiences for all clients and taking up new commitments in providing the best possible service. Prune Pillois, Group Omnichannel Director, shares her insights into the Group’s commitments in providing the best possible service by bringing forward the omnichannel mindset and integrating it into the Group’s and the Maisons’ strategy. The Group’s commitment to the customer The customer has always stood on the center stage of the Luxury Industry, reflecting its very essence and its raison d’etre. Today, Luxury brands are focusing particularly on building long-term connections with their clients, fostering beautiful relationships that are based on trust and loyalty. In our new world, the customer places higher expectations on service and experience. They want to choose where, when and how they discover the world of our different Maisons, try the rich variety of products, and also enjoy the ambiance and the experience. We have to ensure that all touchpoints of the customer journey are unforgettable, special and unique, but also excellent, smooth and natural. Omnichannel is the new reality for business The digital age has completely changed our rooted perception of the “true” Luxury experience by broadening and enriching its meaning. The digital allows us to dematerialize and remove any existing physical constraints while facilitating and amplifying the notion of service that lies at the core of the Luxury business. The beauty of digitalization is that it’s a never-ending process of incorporating newer, faster, richer features. Among the many trends informing our brands’ strategies in recent years is the increasingly omnichannel behaviors of our clients. We now have to “show up”, be where our clients expect us to be, and sometimes go where Luxury brands had never gone before. In truth, breaking new frontiers, exploring new horizons, and reinventing oneself is also part of the very essence of Luxury. Then, how does LVMH define the omnichannel? “Omnichannel is a client-centric approach aimed at providing a consistent, qualitative, and seamless customer experience across all channels and geographies. The key to obtaining this synchronicity is cross-functional collaboration and full integration of each Maison’s assets (including inventory, capabilities, tools & systems, data, processes, etc.)”. 22 By Andrew Wu, Group President of LVMH China The 1990s put China on the agenda of Western companies, as the country stopped issuing foreign exchange certificates and allowed the purchase of imported products with the Yuan. This is when many Western Luxury brands opened their first Chinese stores. Thirty years later, China is today a key market for Luxury brands, and the prestigious reputation of Luxury brands stimulates a strong demand in Chinese consumers. Andrew Wu, Group President of LVMH China, looks back over the last 30 years of LVMH’s presence in the region and reveals the ongoing importance of high-end retail as a crucial pillar to succeed in the market and gain consumers’ loyalty. Dior was the first to enter Chinese department stores. Spotlight on Chinese consumers By Rane Xue, Senior Vice President Global Chinese consumers at Moet Hennessy Diageo China, and Xiaolei Gu, Innovation Director Asia at Fabernovel Chinese consumers will shape the future of Luxury. When we are talking about Global Chinese Consumers, who are we talking about? The “Global Chinese Consumers” is a specific group of consumers who tend to have this international exposure and international experience. There are four typologies that we can look into in the way we look at the Chinese consumer. Starting from the left, we have the majority of the Chinese consumers living in China domestically, and they travel domestically. But at the same time, we know there are probably about 10% of frequent outbound travelers. Then we have this new concept of the nomadic Chinese: this is the group of Chinese consumers more and more happening within the young generation. They choose to live in different parts of the world for a couple of years here and there, for different purposes. Last but not least is the overseas Chinese: these are the people who have decided to migrate beyond China (especially those who left after 2000). 25 The people in the two middle categories are not only Chinese by heart, but they are international by footprint and by their mindset. This is quite important for Luxury brands to take note of, and they should focus especially on them! Also, we need to underline the fact that we’re seeing a strong dynamism between these different categories; they’re not still and fixed in time! Why developing the mindset of Global Chinese consumer is critical for our industry? Speaking of why this group of consumers – global Chinese consumers – are super important to our luxury industry, I’d like to start with the most obvious reason: they have purchase power. They are the ones who are more affluent than their peers, who are residing just in China or mostly overseas, because being able to frequently travel is a luxury itself. In China, there’s only 9% of the population who has the passport that allows them to travel overseas! Secondly, they’re important because they have developed a global mindset, or they are in the process of developing a global mindset. Travel can very profoundly change or impact our personal as well as professional development while challenging us to see the world in a different lens. The third reason is that they are more mature, they have a higher maturity in their luxury perception. Last but not least, they are trendsetters and change agents. What is the state of mind of Global Chinese Consumers and what changes are they driving? Individuality Luxury is a lot about individualism and personal taste, personal pleasure. However, when it comes to Chinese consumers, we still categorize them in a more collectivist culture versus that of the Western world. What I want to highlight here, from a global Chinese consumer perspective versus more like a generational or cultural, regional perspective, is that global Chinese consumers see more fluidity on the concept of individualism; fluidity meaning that understanding and perception isn’t fixed but rather fluid in reaction to different cultural contexts and where they are. They know how to appreciate individualism in a Western context and in the meantime, they can also understand why it is super important to have conformity in a Chinese context. 26 Diversity/Inclusion The topic of diversity and inclusion is becoming the core of our brand purpose for many of the brands, especially in the luxury sector. In our point of view, the true diversity and inclusion is also about embracing multiple perspectives, embracing different ideas and possibilities, because we believe this is how the collective intelligence will work together. It would be fair enough to say that only people who have traveled and seen enough and interacted with different cultures and mindsets, they’ll be able to develop such diversity or such inclusion attitudes and mindset. Sustainability Sustainability is such an important evolving trend, even in China, where the Chinese consumers are really catching up and becoming more aware. Course 2 – Luxury & Society The Luxury Industry and Society over time Dear learner, We hope that you enjoyed the first course of the INSIDE LVMH Certificate path, immersing yourself in the Luxury sector & LVMH. You saw several key stakes, from new customer expectations, to digitalization & innovation and a focus on China. It is now time to deep dive into a crucial topic as Luxury and Society have been inextricably linked over the time. As a leader in the Luxury Industry, LVMH has a duty to be a role model and show the right behaviors to follow. Every action taken by the Group and its employees reflects our commitment to ethics, corporate social responsibility and respect for the environment. They drive our Maisons’ performance and ensure their longevity. Firmly convinced that truly desirable products can only come from sustainable businesses, we are committed to ensuring that our products and the way they are made have a positive impact on our entire ecosystem and the places we operate, and that our Group is actively working to build a better future for our planet. Past, Present and Future: The Luxury Formula By Serge Carreira, Lecturer in the Program of the Master “New Luxury and Art de Vivre” at Sciences Po Paris What makes a Luxury brand relevant over time? 27 In a society where there has been a slight but visible shift from the consumerism orientation towards a more conscious spending attitude – where consumers indicate a preference for brands that express strong values and statements – this is likely to ignite a virtual cycle. In conclusion: #1 Consumers have a range of consumption motivations #2 Consumers express their own values through their brand selection #3 Brands have the power to foster desirable values in society Sustainability By Anne Michaut, Associate Dean for Education Track and Pedagogy and the Director of the LVMH Academic Chair at HEC Paris In proper definitions, sustainability and sustainable development were seen as “the ability to meet the needs of the present without compromising the ability of future generations to meet their own needs”. This definition, focusing on the notion of persistence over generations, is the most frequently cited definition of the concept to date. Another commonly used definition is based on the so-called three pillars of sustainability: “maximizing simultaneously biological system goals, economic system goals and social system goals”. For a long time, much of sustainability has been about limiting damage, but today that has changed. Businesses not only chase their negative impact, but also seek to enhance a positive one. First, it is about seeking for Upside Benefits: the “gold” that smart companies mine from being sustainable includes higher revenues, lower operational costs and reduced risks. Secondly, Managing the Downside with efforts to cut waste and reduce resources used, can save money that drops to the bottom line. Third, in a Value-Based Concern, doing the right things attract the best people, enhances brand value and builds trust with customers and other stakeholders. Commitment to improving society as a whole through actions may be disconnected from the core business, but meaningful in the bigger picture. In this vision, companies engage in actions, not only to coherent with their business, but also related to it. To take an example of this, a company producing honey-based products could act in favor of the protection of the bees, including nature protection and education of citizens. Companies should manage not only their consumers’ expectations, but also society’s expectations, in order to be accepted beyond their customers by non-customers as well. What about sustainability communication? One essential issue with sustainability communication is to carefully consider the potential differences between consumers’ expressed requirements and their implicit expectations regarding sustainability. In other words, what consumers voice (expressed requirements) does not fully encompass all of their implicit expectations. First, implicit expectations about the role of brands can be broader than the value delivered to their customers and encompasses a value delivered to society as a whole. Second, their implicit expectations might at times exceed the 30 actual brand performance on sustainability. Communication should therefore carefully consider consumers’ unvoiced expectations with respect to sustainability performance and compare them with the reality of their performance. Any gap is likely to create irritation and frustration from a consumer and society perspective. In conclusion: #1 The responsibility of companies towards sustainability may be envisioned with a broader scope #2 Brands should enforce a more holistic vision of sustainability initiatives #3 Brands should consider customers’ implicit expectations when communicating Equity, Diversity and Inclusion By Felicia Henderson, Lecturer at Sciences Po Paris Let’s define the concepts “equity”, “diversity” and “inclusion” (EDI or DEI). Diversity refers to demographic difference or the ways that people differ from each other. Race, ethnicity and gender are common in discussions of diversity, but they’re only a few of the characteristics that distinguish one person or group from another. Other dimensions of diversity include religion, sexual orientation, age, national origin, physical ability, socioeconomic status, and many others as shown here: In an inclusive workplace, all individuals feel welcomed, respected and valued. No employee’s identity characteristics create an advantage or disadvantage to that person’s feeling safe to be who they are and enjoying a sense of belonging, support and empowerment. Finally, equity is about fairness based on an individuals’ varying life experiences. It is not “equality” if we limit equality to mean identical treatment. Instead, equity means creating fair access, opportunity and advancement for all, which requires identifying and removing barriers that exist for some demographic groups and reforming policies, processes and procedures that perpetuate unequal outcomes. Why do EDI matter in business? 31 Promoting greater EDI is simply the right thing to do. The emotional and psychological benefits convince many organizations to promote inclusive workplaces, representative leadership, and equitable processes as a moral imperative. Additionally, research increasingly demonstrates that prioritizing EDI is a business imperative. Tangible benefits include attracting and retaining talent, boosting creativity and innovation, making better decisions and improving financial performance. In one study, companies with diverse leadership were more likely to achieve above-average profitability, 25% more likely for the most gender-diverse executive teams, and 36% more for the most ethnically and culturally diverse executive teams. In another study, where employees believe the organization is committed to diversity and feel included, reported performance improvements included a 31% increase in responsiveness to evolving customer needs, a 42% increase in collaboration, and an 83% increase in ability to innovate. Despite proven benefits, equity, diversity and inclusion remain underdeveloped in business. In addition to systemic challenges, a major individual-level obstacle are biases and stereotypes. What explains these biases and stereotypes? It is well-established in social psychology that we prefer people who are similar to us, a phenomenon known as in-group bias. Conversely, we tend to view dissimilar people unfavorably, known as out-group bias. Another consequence of this categorization is out-group homogeneity. Rather than evaluating out- group members as individuals, we harbor stereotypes that assign the same negative qualities to all people who share an identity characteristic, like gender (“all women…”) or ethnicity (“all black people…”) or physical appearance (“all overweight people…”). Out-group bias and stereotypes often operate at the unconscious level, but have profound impacts on the way we evaluate and interact with other people. A Harvard Business Review article reminds us that: “Increasing diversity doesn’t, by itself, increase effectiveness; what matters is how an organization harnesses diversity”. How can you help your organization to harness EDI? Being aware that out-group biases exist is an important step. The more aware we are, the better we are able to recognize and challenge our own assumptions. Being open to differences and learning helps counteract exclusion. Finally, when you observe inequity and/or exclusion, you can act as an ally. Allyship refers to behaviors ranging from interacting more intentionally with underrepresented individuals to consciously supporting such employees by amplifying their voices, highlighting their contributions, and recommending them for visible opportunities. LVMH: 30 years of sustainable commitments LVMH takes action. Every action taken by the Group and its employees reflects our commitment to ethics, corporate social responsibility and respect for the environment. Our commitments drive our Maisons’ performance and ensure their longevity. 32 What is LIFE 360? LIFE 360 is composed of four concrete action plans on circular economy, biodiversity, traceability and transparency, climate, with objectives to be reached in 2023, 2026 and 2030. Creative Circularity Our first action plan is about circular economy. Our objective is to reduce the environmental footprint of our products, with:  Eco design products;  New innovative raw materials;  Recycled fibers;  Products with a second life;  Repair services;  New services. Biodiversity The second action plan is about biodiversity. Our objective is to limit our impact on biodiversity. We exclude, for example, products that come from regions at high risk of deforestation or water stress. We also have the objective to have a positive impact, giving back to nature what we borrow from it. We have an ambitious objective: rehabilitating 5 million hectares in fauna and flora habitat by 2030. To do that, we’re focusing on regenerative agriculture, new agricultural practices having the potential to reverse biodiversity loss. Traceability and Transparency The third action plan is about traceability and transparency. Our objective is to guarantee a perfect traceability from the field to the stores. We need to know countries from which our raw materials are sourced, and we need to ensure that ethical, environmental and social principles have been respected throughout supply chains. In LIFE 360 we have this target of 100% of our strategic supply chains being certified by 2030. Climate The last action plan is about climate. Our objective is to limit our carbon footprint with lighter packaging, more renewable energy, more road and sea transport. We are committed to reduce CO2 emissions from energy consumption at our sites and stores by 50% by 2026. We are also committed to reduce CO2 emissions from Scope 3, that is from transport and raw materials by 55% by 2030. Pillar 1: Creative Circularity At Ruinart, sustainable development is a source of creative inspiration 35 Since its foundation in 1729, Ruinart has been a symbol of French art de vivre. The Maison has crafted its exceptional wines by nurturing the roots of the terroir and ancestral savoir-faire. In the vineyards located in the Montagne de Reims, the cellar masters have witnessed the impact of climate change. In 1961, the first day of harvest was October 6. In 2020, the first day of harvest was August 17. Global warming is a reality and it is changing the way Ruinart chooses its grapes and creates its champagne. One of the major challenges in the coming decades will be to mitigate and adapt to climate change. In order to harvest perfect grapes, Ruinart has been deepening its commitment to preserving the soils that are a source of life. Because the preservation of biodiversity is a top priority, Ruinart has announced that the Maison is dedicating the entire 40 hectares of the historic Taissy vineyard to a biodiversity pilot project carried out with Reforest’Action. It attests to the drive to develop this approach in the years to come and to share it more widely on the scale of the Champagne region. Faithful to its pioneering spirit, Ruinart also promotes sustainable energy, like choosing LED lighting in its cellars. And in terms of commercial transport, 85% of deliveries are made by sea and 15% by road – not by plane. With the launch of its Second Skin packaging, Ruinart reinforces its commitment to promoting sustainable innovation. One of the first reasons to buy champagne is to give it as a gift, therefore packaging is truly important. Since 2015, gift boxes have been eco-conceived, but Ruinart has pushed its limits by challenging its design and development teams to create the second skin case. Two years of research and development were needed to create this sustainable packaging in every aspect, from bottle shape to wine protection. This 100% recyclable paper case reduces the bottle’s packaging carbon footprint by 60%. Its white color and texture are inspired by the Maison’s historical Crayères, the chalk quarries that store Ruinart Curvées in optimal conditions. The partnership between Christian Dior and Parley for the Oceans Nature has always held a special place in the hearts of Christian Dior and his successors, who have in turn celebrated the beauty of gardens and flowers in their collections. Perpetuating this deep admiration, the House of Dior today works as a creative laboratory in motion to integrate Sustainable Development into all the Maison’s professional sectors and areas of expertise, organized around three pillars:  The protection of natural resources;  The contribution to the climate effort;  The daily commitment on the part of all the House’s collaborators. The encounter between Dior and Parley for the Oceans is a continuation of these virtuous actions, placed under the signs of sharing, transmission and determination to build a better future. For the second year in a row, Kim Jones, artistic Director of Dior’s men’s lines, has teamed up with this environmental organization that takes action against major ocean threats – with the Parley AIR (Avoid, Intercept, Redesign) strategy. Together, they’ve conceived a Beach Capsule made of 96% recycled fabrics, reflecting the Maison’s objective to move towards a more sustainable fashion, thanks to the concept of circularity. Driven by eco-innovation, in 2019 the two partners initiated joint research work, which gave life to novel materials made from Parley Ocean Plastic – created with marine plastic debris and fishing 36 nets recovered from the coastlines of several countries and islands around the world, then reworked in Dior’s Ateliers. A challenge for the artisans who, using this recycled fiber as an alternative to virgin polyester, created high quality fabrics, such as seersucker, silky knit and a technical fabric punctuated with the Dior Oblique motif. Fusing durability and desirability, the wardrobe designed for this unique capsule is the fruit of a new alliance, inviting us to rethink the fashion of tomorrow by transforming the creative process. Nona Source, a veritable innovation in sourcing Created by three experts from the LVMH Group – Marie Falguera, Romain Brabo, and Anne Prieur du Perray, Nona Source is a startup incubated by our DARE intrapreneurial program (Disrupt, Act, Risk to be an entrepreneur) to accelerate innovative solutions. With their expertise in material sourcing and digital transformation, they designed a game- changing platform to re-use deadstocks, the “sleeping beauties” stored in the warehouses of exclusive LVMH Fashion & Leather Goods Houses. Pillar 2: Biodiversity Fundamental importance of preserving the ecosystem By Alexandre Capelli, Innovation & Biodiversity Director at LVMH LVMH has been committed to making the protection of biodiversity an absolute priority. The protection of nature’s ecosystems has always been of utmost importance to LVMH, whose activity is significantly reliant on natural raw materials (flowers, grapes, cotton, leather, stones, etc.). therefore, LVMH is taking action and making the protection and regeneration of biodiversity a key pillar of its LIFE 360 environmental strategy. The LVMH environmental LIFE 360 strategy is based upon 4 main pillars: 1) Creative circularity; 2) Traceability and transparency; 3) Climate; 4) Biodiversity. Our commitments to biodiversity What does it mean biodiversity to LVMH? It means both dependencies and impacts. Firstly dependencies: LVMH had an intimate relationship with the richness and beauty of life, which gave the products of our Maisons their exceptional character. All our Maisons rely on biodiversity. Secondly impacts: our activities are generating some impacts on nature as wastewater, deforestation or other use of natural resources. The aim is to reduce this impact. The LVMH Group has structured its biodiversity strategy around 3 main objectives: 1. Establish a clear and precise measurement of biodiversity impact; 37 About the second goal, in July 2021 we’ve been validated by the Science Based Targets initiatives to be part of the Pass 1.5 program to decrease our carbon emission. So, we’ve got the ambition to limit the global warming to 1.5 degrees and to do that, we’ve got to reduce our carbon footprint by 55%. At the end of 2022 we already reached -25% in this decrease. Two other important objectives: equip all our stores with energy efficient lighting systems (LED) and run all our workshops & logistics sites on renewable energy. In 2022 we reached 60% of the first objective and 71% of the second one. About the third and last goal, we’re going to measure the environmental impact of all our products by 2025. At the end of 2022 we already reached 60% of products to be committed to this eco-design process. People for Wildlife Partnership 40 At the beginning of 2023, we signed a 5-year global conservation agreement with a NGO, People for Wildlife, to work together on protecting and regenerating biodiversity in a 1M acres area in Queensland, in North of Australia, with its local community. Created in 2020, this NGO is led by Dr. Daniel Natusch, a world-renowned conservationist expert, member of IUCN, who has been living and working there during his PhD. This project contributes to the LVMH target of restoring 5 million hectares of flora and fauna habitats by 2030 and to the rest objectives of the COP15 dedicated to biodiversity to protect 30% of the emerged areas in the world. Concretely, we will:  Support scientific research;  Monitor wildlife species;  Contribute to carbon sequestration;  Work with local community. A year after joining the People for Wildlife conservation charity in a five-year partnership to restore and preserve biodiversity in a vast Australian natural reserve, Louis Vuitton has shared the first results of initiatives for a 400,000-hectare area on the Cape York Peninsula in Queensland, Australia. In order to assess the state of biodiversity in the area prior to project launch, the first year of the People for Wildlife collaboration established baseline metrics, set up robust monitoring systems and deployed operational scientific measurement equipment. This facilitates access to remote and challenging terrain. Effective monitoring has led to the discovery of two new species in the Apudthama reserve, a unique mushroom species likely endemic to the area, as well as a new snake species. The grey and brown python is currently being studied by the scientific community. What’s more, over half a million camera trap images have been collected, documenting the presence of numerous species and attesting to the health of the ecosystem and the diverse wildlife population in the reserve. Pillar 3: Climate Fight Climate change with Sephora By Katarzyna Wizniewska, Corporate Social Responsibility Director at Sephora Key Sustainability Challenges at Sephora When you think Sephora, obviously you think about beauty products as well. The impact related to product ingredients, manufacturing and packaging is the most important part of our environmental footprint. Additionally, to sell those products we need stores, beauty advisers, e- commerce activities, deliveries, marketing and promotions… all these activities could be qualified as retail operations, and this is another significant source of our environmental impact. Sephora sustainability strategy is the response to current environmental challenges. We are committed to: 41 o Reduce carbon emissions; o Reduce waste on packaging and plastic; o Offer more and more sustainable products and services. Our initiatives are aligned with LVMH ambitions framed by LIFE 360 program. What type of initiatives we put in place? Our Climate Pillar As we have an important number of stores, it is key to act in energy consumption. We can do it via more efficient LED lighting systems, via more sober use of air conditioning and heating, and minimum use of energy beyond opening hours. To reduce CO2 impact, we made the choice of using renewable energy contracts. Last winter, within couple of months, Sephora reduced its energy consumption by nearly 20%. This performance has been awarded by LVMH as the best energy saving plan within the group. Simultaneously, it has been chosen as the best 2022 green project by Sephora employees. The same approach can be applied to store deliveries. In France, 1/3 of stores are delivered by electric tracks and another half by natural gas-powered vehicles. We have also decided to manufacture our major retail elements like shopping bags, uniforms & gift boxes in Europe to limit transportation impacts. Beyond handling our own direct initiatives, the superpower of Sephora as a retailer is to influence brands and consumers. We can promote less overpacks or more sustainable solutions like refills. Via our Good For sustainable product selection, we are guiding our consumers to take more responsible choices. Key takeaways Working on sustainability requires strategy, commitments and concrete action plans. But this is also about people’s passion and individual contributions that the results are brought to life. My biggest personal satisfaction is that today at Sephora we have an active community of employees that feel engaged, that take actions and progressively change our company’s culture. Bvlgari’s commitment to protect our planet By Agnese Maria Mazzi, Engineering & Sustainability Associate Manager at Bvlgari All LVMH Maisons contribute to making improvements regarding climate and biodiversity changes through their specific action plans for the years to come. But what to expect from a Maison like Bvlgari? What are its strategy and main pillars to fight for our planet? At Bvlgari, creativity also means thinking for the community We are a team of architects, engineers, visual, event, creative people with a strong commitment to achieving high sustainability standards through creativity, innovation, and research. We had great teachers in the past, such as Bruno Munari (Italian artist 1907-1988) or Gio Ponti (Italian artist 1891-1979), who taught us that a designer doesn’t work just for himself, to follow his own idea, a special shape or only the functionality of the object. A designer works for the 42 Approximately 80% of the world’s colored-gemstones come from small scale, artisanal mines spanning more than 40 countries. The industry is also highly complex, making it difficult to trace the gems’ origins. Tiffany & Co. uses strict protocols for sourcing the approximately 60 varieties of gems used in its jewelry. Industry collaboration Tiffany & Co. collaborates to create standards and share best practices to promote responsible gemstone supply chains. In 2015, Tiffany joined others in the luxury jewelry industry and colored gemstone mining sector to form the Colored Gemstone Working Group (CGWG), which has developed:  Due-diligence tools;  Training materials;  Other resources for the colored gemstone sector. Focus on Fendi By Sèverine Pinault, Supply Chain, Sustainability & Logistics Director at Fendi As you already know, LVMH LIFE 360 program is based on 4 pillars: Creative circularity, Biodiversity, Climate, Transparency. Focus on Transparency Fendi is best in class among LVMH fashion brands. Why? As we are working every day to build a more responsible supply chain, we think we can be confident to be transparent and for example to disclose the full list of our suppliers. What is a Responsible Supply Chain for Fendi? As a Roman luxury Maison, as a Maison representing the “made in Italy” worldwide, the preservation of the Italian craftmanship and responsible supply chain is at the heart of Fendi commitments. At Fendi, 98% of our products are made in Italy. We’re proud to have built a supply chain almost entirely located in Italy based on collaborations with hundreds of highly skilled artisans. Another testimony of Fendi strong commitment to support the made in Italy is our investment on the Italian territory. 2022 was a special year for Fendi, with the opening of 2 new “state of the art” factories: o A leather goods factory; o A shoes factory. These factories are key assets for Fendi, but even more important are the artisans. One key mission of Fendi is to recruit, to train and to develop the next generation of highly skilled artisans. We’re proud of our internal Fendi Leather School to train our new joiners. We have our internal factory, but we also have our external suppliers, and we want to ensure the same level of environmental and social standard. To support this commitment, we have built an extensive monitoring program to support not only our first-tier suppliers, but also our second-tier 45 suppliers (the suppliers of our suppliers). In 2022, 83% of our production is coming from audited suppliers. How do we bring more Transparency at Fendi? Let me first explain what is Fashion Transparency Index. Fashion Revolution is a movement created in 2013 further to the Rana Plaza disaster in Bangladesh pushing Fashion/Luxury brands to be transparent on their social & environmental practices all along their supply chain. They have created the Fashion Transparency Index to promote transparency and accountability in our Supply Chain. Why at Fendi are we committed to be best in class in the Fashion Transparency Index? First, we see it as an opportunity to question ourselves on our practices and the practices of our suppliers. Second, it is becoming a must have, a strong expectation from all our stakeholders. Our clients do not only want to know where it is manufactured but how it is manufactured, what are the raw material we use, where is it stitched. How does the Fashion Transparency Index work concretely? It covers 250 indicators on 5 pillars: for example, we need to answer to: what are the policies and commitments for our employees or for our suppliers’ employees? How is organized the governance of people in charge of social and environmental performance? Do we communicate the list of our suppliers? How do we monitor our suppliers? What do we do with our unsold products? Where are we today at Fendi? In 2020, we were at the same level as the other LVMH Fashion Maisons, mainly relying on LVMH communications and reaching a score at 20-25%. End of 2020, we did a big step ahead with the creation of our sustainability website & the publication of the list of all our suppliers allowing us to reach 43% in 2021. In 2022, we continued to enrich our website and we reached 53% being second luxury brand. In 2023, we hope to reach an even higher level! Guerlain’s Bee Respect Platform By Cécile Lochard, Chief Sustainability Officer at Guerlain Does being in charge of sustainable development issues give more meaning to your role as a manager? I must admit that I have a job that fascinates me. I am extremely fortunate to have a team that shares my passion. We also measure this luck by the number of job applications we receive. Despite everything, we are always up for a challenge with sometimes difficult targets. We can also deal with anxiety-provoking subjects. This ambition requires collective efforts on a daily basis. Our responsibility of impact and our business objective are to market and offer creations that are both the most natural and the lightest in terms of carbon emissions and footprint in the broad sense, in complete transparency. How was the Bee Respect platform launched in 2019 born? 46 Bee Respect is a very “tech” project. It’s a digital revolution applied to a dual connected requirement of transparency and traceability. We are fortunate with Guerlain to be seen as a house linked to nature. It's even in the DNA of the brand with the bee signature. Our Group has been very committed since 1992, and Bee Respect marks an important step in opening up transparency on our supply chain and whole life cycles of our products. For over 4 years, Guerlain has been committed to a long and rigorous process of mapping the life cycle of its products. In 2019, we launched "Bee Respect", our transparency and traceability platform designed in partnership with Product DNA (architects of traceability). Accessible to all via our website guerlain.com, it is also a valuable tool for internal teams, a valuable tool for continuous improvement (particularly in terms of environmental impact), from the flower field to our customers. Does Bee Respect demonstrate an evolution of the customer relationship and experience? We started working on this platform in 2015. This platform Bee Respect, intuitively, is a new relationship with the consumer. It’s a revolution in itself. This requirement of transparency, asked us to go up the value chain and recreate the link with the customer. In a way, this is a way of breaking away a little from the adage that Luxury does not reveal its secrets, its backstage. We felt this need for communication very early on. Regarding the products, we went to look for labels such as third-party certifiers as well as the programs of retailers like Sephora. Everyone was put on the same level in terms of “Clean beauty” or Naturalness. How does this tool guarantee this transparency? We have a very strong ambition to be exemplary. Engaging in this process of mapping products was very long and required a lot of rigors to meet this expectation and this requirement of details on the information of all the products and all the creations. We mobilized 250 employees, partners and suppliers. Today we are focusing on internationalization: we have recently launched the site for the United States and planned to put online new countries in Asia. It is a rather complex process, each country has its own regulations. It has long been believed that sustainability is not always marketing's best friend. The Bee Respect experience proves the contrary and responds to this need for concrete and precise information to the deep questions on environmental footprint and climate change. How does the naturalness strategy fit into the LVMH Group’s zero carbon objective for 2028? We are fortunate to have this powerful backbone of the unique connection to nature, this history linked to biodiversity and natural ingredients. We must not forget that Guerlain is also the inventor of synthesis in perfumery. The product must also respond to an essential alliance between its functionality and sensoriality. The equation must be subtle and respond to an ecosystem. This alliance will never be one hundred percent natural. Sustainable innovation is like a healthy mind in a healthy body. At Guerlain, the spirit is the formula and the healthy body is the packaging. Here too, we are completely transparent. Ahead of each new product development, our Marketing, Development and Sustainable Development teams work together to set ambitious yet realistic goals according to the 3 following indicators: 47 #4 Transition to a regenerative culture where design can actively reverse socio-ecological damage LVMH and its impact on society LVMH & Social Responsibility At LVMH, we are driven by a strong sense of responsibility towards society. As a leading group, at LVMH we have the responsibility to stay in touch with the world around us because we are driven by the belief that people – whether those employed by the Group or those with whom it works – make the difference. Our social responsibility is rooted in the fundamental principle of respect for people and their individuality. We believe our heritage, as well as the success of our Maisons, is anchored in our respect for society and communities. Our long-term commitments yield tangible benefits for society. LVMH views social responsibility as not simply an obligation, but an imperative and a source of competitiveness. Together, we are committed to making excellence a lever for social and professional inclusion in solidarity with our host regions and communities as we strive to cascade the positive social impact of our activities. The four pillars of social responsibility are as follows: 1. Respecting the uniqueness of our employees: we endeavor to build an inclusive organization that celebrates what makes each employee and each candidate special. 2. Passing on and developing savoir-faire: the preservation of artisan crafts and design is a fundamental concern, as it guarantees excellence for our Maisons and safeguards our reputation throughout the world. 3. Supporting our employees by improving their safety and well-being: employee well-being requires action in all areas directly and indirectly related to health and safety. 4. Empowering local communities: As a leading company in the global economy, at LVMH we feel a strong sense of responsibility towards the regions in which we operate. Diversity & Inclusion Focus now on Diversity and Inclusion at LVMH By Vanessa Moungar, Diversity and Inclusion Director for LVMH Could you explain your role at LVMH? Your key responsibilities? My role is to lead the implementation of our global roadmap, to coordinate our actions towards our common goals, and to create synergies amongst our Maisons to share best practices. We are committed to fostering an inclusive culture in which all stakeholders feel welcome, respected and represented. Animated by this vision, we have set clear and measurable global objectives, starting with our talents: to achieve parity, 50% of women in key positions and salary equity by 2025; to employ 2% of people living with disability by 2025 and 5% as a long-term goal; and to ensure the 50 representation of people of color, with a 30% goal of Black, Indigenous and People of Color in leadership positions in the United States by 2026. Through the EllesVMH program, we aim to accelerate the professional development of women across the Group. In 15 years, the percentage of women in key positions rose from 23 to 45% in 2022. Each year, we recognize the best initiatives implemented by Maisons through the Inclusion Index, which is our tool to capture our impact and measure the change we operate through all our actions. What is your vision of diversity and inclusion? Diversity & Inclusion are interconnected. They need to work together to be real change makers. Diversity is a fact; it refers to the variety of unique individuals that make a team diverse. Differences between individuals can be visible (such as gender or skin color), but also invisible (such as our personal backgrounds, countries you have lived in, life experiences). It’s that diversity that makes our business more creative, more innovative and stronger every day. Our pillars of action We have three main pillars of action: 1) PEOPLE, which is about ensuring inclusive practices into the entire employee journey; that spans from recruitment processes free of any forms of discriminations to equitable career development opportunities for all. We develop specific training programs for recruiters and for all our talents, such as the unconscious bias e-learning, that is available to all our talents across the group. 2) PARTNERS. We have to be sure that the partners we work with are aligned with our values and principles for impact through a wider ecosystem. We also encourage our Maisons to proactively diversify their supply chains to ensure that underrepresented groups are part of our journey. 3) IMAGE. We want to make sure everyone feels represented and respected from our marketing campaigns to our store experience. Focus on LVMH commitments in North America By Corey Smith, Vice President of Diversity, Equity & Inclusion at LVMH North America Homogenous thinking drives sameness, not innovation. It is the diversity of thoughts that allows innovation, creativity, and excellence to thrive. Diversity of thoughts is born out of physical diversity. At LVMH, we are diverse by nature, inclusive by choice. Above all, we want to reflect the world that we live in, the customers that we serve, and the employees that work for us. - Guidelines around gender identity within our uniform policies; - Grooming related to hairstyle and hair texture; - Grooming aesthetics based on skin tone. 51 Have all elevated the work experience of our retail talent to allow them to be more authentic at work and therefore feel more comfortable. It increases their productivity, sense of belonging and dedication to their Maison. #1 Inclusivity is not a luxury, it’s a choice #2 An inclusive organization is not only beneficial to talents and in talent recruitment, but it also drives client engagement and experience #3 Inclusive environment drives productivity internally through the creativity that diversity of thought triggers #4 External storytelling helps brand image and bolsters client loyalty #5 Diversity is not enough to create an inclusive corporate culture; inclusivity is made of conscious daily actions of individuals Our motto: “We are diverse by essence inclusive by choice and it’s everyone’s business”. Supporting employment of people with disabilities By Jean-Rémy Touze, Head of the Group’s Disability Inclusion Office Steadfast in the commitment to integrating people with disabilities into the workplace, LVMH has launched an inclusive program to enhance accessibility, recruit people with disabilities and provide them with the support that enables them to perform their best at work. The Group values the unique contributions of people with disabilities to the legacy of excellence championed by its Maisons. In 2021, LVMH signed the International Labour Organization (ILO) Global Business & Disability Network Charter and fixed a target of increasing the percentage of people with disabilities in its global workforce to 2% by 2025. We were at 1% in 2020. The target is to double the number of employees with disability globally by 2025. What are the key roles of Disability Inclusion? Jean-Rémy: Some of the key roles of Disability Inclusion at LVMH are  Ensuring that disability issues are addressed by teams at all levels and in all countries  Improving understanding of the situation in each geography  Identifying local challenges for people with disabilities and facilitate communication among our HR teams worldwide  Helping the Maisons implement global disability policies while also supporting them in the development of local programs What are the effective actions? Jean-Rémy: Some great programs have been introduced in several countries on an local basis. The aim now is to expand the scope, so we’re trying to provide the Maisons with a methodology for replicating these initiatives elsewhere and widespread the implementation of these programs. 52 The Métiers d’Excellence Institute offers unique Master Classes to their students (discovery, métier, cross-disciplinary, culture) to discover the Maisons and exchange views with experts in the field. In this podcast, Frederic Bodenes, Artistic and Image Director at Le Bon Marché, and Emilie Labarussias, newly promoted Première Main Qualifiée at Atelier Christian Dior Haute Couture Flou, share their experience holding a Masterclass and taking part in the Métiers d’Excellence Institute program, respectively. 4. The Métiers d’Excellence Academy is the LVMH Group’s career-long learning organization through in-house academies and schools at our Maisons which pass on and develop employee skills in Métiers d’Excellence. 5. The virtuosos, a community of people whose exceptional savoir-faire are practiced at LVMH Maisons around the world. They endorse this status as a recognition of their expertise and emblematic career path within the Group. This recognition enables them to take part in Métiers d’Excellence multidisciplinary trainings and activities but also to pass and promote their profession, transmit their savoir-faire, develop themselves, and gain visibility by becoming an ambassador of their profession and Maison. Deep dive into a sustainable and social Maison strategy (Focus on Tiffany & Co.) By Mary Bellai, Chief Human Resources Officer at Tiffany & Co. As with LVMH, at Tiffany we are passionately committed to the idea that our people make the difference. As a company whose DNA is entwined with the notion of love, we feel a special responsibility to care for our environment and make a difference in the communities where we live and work. Two examples of our social commitments are:  The Tiffany & Co. Foundation;  Tiffany Atrium. The Tiffany & Co. Foundation The Tiffany & Co. Foundation, which recently celebrated its 25th anniversary, has a mission to preserve the world’s most treasured seascapes and landscapes. Since the year 2000, the Foundation has awarded over $100 million grants to nonprofit organizations working around the world in this capacity. The Foundation supports organizations dedicated to the stewardship of natural resources in the areas of responsible mining through mediation and land preservation; as well as coral and marine conservation, through support for marine protected areas, and raising awareness about the importance of coral reefs. As examples of its work in responsible mining, the Foundation has supported the cleanup of abandoned mines across the American West, and has protected 10 million acres of ecologically rich and culturally significant lands. The Foundation has also been instrumental in the reclamation of abandoned diamond mines in Sierra Leone by supporting RESOLVE, an organization that works with local communities to restore these lands for viable agriculture use through the Peace Diamonds Restoration Initiative. 55 In coral and marine conservation, the Foundation has supported the protection and promotion of coral reefs in over 30 countries around the world, with locations spanning from Hawaii to the Caribbean, Australian and the Coral Triangle. Additionally, the Foundation has supported the creation and implementation of over 30 marine protected areas, protecting more than 11m sq.km., equivalent to the size of the United States, across the world’s five oceans. Tiffany Atrium Tiffany Atrium is our platform for social impact. Launched in July of 2022, Atrium stems from our deep commitment to diversity, equity, inclusion and belonging. From its inception, Tiffany has had a profound connection to the arts, creativity and innovative design. In fact, the House established a design apprenticeship program in the 19th century to foster and leverage creative talent. In recognition of this legacy and our responsibility to the future, Tiffany is committed to building a more equitable and inclusive jewelry industry. With a focus on people of color, women, and the LGBTQIA+ communities in the fine jewelry and creative fields, Atrium guides Tiffany’s engagement with diverse communities, philanthropic strategies and community partnerships. As one example of our Atrium program in action, we recently launched the “Breakfast at Tiffany’s” program for those starting out in their careers. It’s a behind the scenes tour where early career professionals from underrepresented backgrounds can experience Tiffany & Co.’s world class service and get to know the teams behind the brand. We also engage with our local communities. We have a long-standing relationship with the Lower East Side Girls Club to build a career recruitment pipeline. We work with historically black colleges and universities to provide education and professional opportunities for students in these communities. To date, more than 100 students have received scholarships totaling over $2 million as part of this initiative. In conclusion Tiffany & Co. is: o Committed to being a leader in Sustainable Luxury; o Proud of our achievements to date; o Continue to expand our efforts for our planet and for our communities. LVMH & Art Supporting art and heritage From the beginning of its history, LVMH has demonstrated a unique commitment to philanthropy. The Group and its Maisons support community-oriented initiatives in France and around the world, promoting and maximizing access to art, cultural heritage, fashion and arts education. LVMH is a major supporter of initiatives aimed at preserving France’s historic heritage. Thanks to LVMH’s exclusive support, Boating Party – painted by Gustave Caillebotte between 1877 and 1878 56 – has been added to the Musée d’Orsay’s permanent collection. The painting – a major work of the artist and of the Impressionist movement as a whole – was recognized as a National Treasure by France’s Ministry of Culture in 2020. Its acquisition enriches the Musée d’Orsay’s collection of Impressionist paintings with a masterpiece without equal in France’s public collections. Fondation Louis Vuitton: A haven for art and culture Since it was opened in 2014, the Fondation Louis Vuitton has become one of the world’s leading institutions on the international arts scene. In nine years, it has already welcomed nearly 11 million visitors, reflecting its immense success with French and international museum-goers. The Fondation Louis Vuitton’s core missions are supporting artists and building dialogue between key figures in modern art, leading lights of the international contemporary art scene and a wide audience, especially young people. Two flagship exhibitions were held in 2023: Basquiat x Warhol: Painting Four Hands, from April 5 to August 28, and Mark Rothko, starting October 18. 57 Thomaï Serdari has been studying the Luxury markets since 2008, although her earlier career in design and art was the foundation of her academic work. She maintains that the most successful Luxury companies uphold their advantage in the market because creativity is in the core of their strategic planning. Her academic work stems from the analysis of several of these companies and, based on her research, she designed a framework that organizes our understanding of creativity, which is called ASCEND. Her analysis of both historical and contemporary examples of groundbreaking designs, whether in fashion or any other creative field or Luxury Industry, showed a very interesting process that takes place consciously, but mostly subconsciously, and that allows the designer to overcome the challenge of breaking out of the restrictions that come with the tradition of a particular design field. Thomaï gives a work example of the celebrated historical designer, Charles James (1906- 1978), an Anglo-Saxon who was dedicated to haute couture and craftsmanship and was much praised by the most renowned names of his time, such as Paul Poiret (1879-1944), Elsa Schiaparelli (1890-1973), Coco Chanel (1883-1971) and Christian Dior (1905-1957). "While James had tremendous dexterity with form, he did not simply try to invent new forms for the sake of novelty. He thought deeply about the changing roles of women in society and particularly their new callings and aspirations. James was a great revolutionary; he actually set into motion a framework that accurately defines how the evolution of thought pushes forward the evolution of humanity through the invention of new principles, new technologies, and new designs." The ASCEND Framework This framework is called ASCEND, based on the four distinct fields of which it consists: 1) Arts; 2) Science; 3) Design; 4) Engineering. And the clockwise motion through which ideas become things. Example of a Famous Creative: Louis Vuitton 60 Let me present to you a fundamental concept that clearly illustrates how this framework works before we return to our examination of the field of fashion and product design. Let’s go back to the time of LV. Until his time, people were traveling by horseback carriages. The idea of travel was a familiar concept, but it was also a challenge that had to be mastered. How to travel faster, easier and further? These were some of the questions that occupied the popular imagination as well as the imagination of young Louis. As an idea, travel belonged to the first field of the framework, the Arts, as an abstract question. That is until knowledge advanced and allowed the science of physics to be applied in creating engines that could sustain long periods of motor movement. Science led to better engineering; and with the help of design, new and fast locomotives changed the nature of travel. Louis realized there was an opportunity to design a new type of luggage that made travel even more comfortable and that ensured the transfer of personal goods in a convenient and safe way. And so, the stackable LV trunks were invented. Art and Inspiration today Are the arts still an inspiration to innovative designers today? Absolutely! Can they propel creativity to the next level of novelty that makes luxury brands the trendsetters in their industry? Without a doubt. Reviews of the Spring-Summer 2019 LV collection, designed by the then newly appointed artistic director Virgil Abloh, applauded the designer’s unabated use of color and embraced the vocabulary Abloh created specifically for the runaway show. As Max Grobe of the magazine Highsnobiety reported, “Under ‘R’, the designer defined rainbow as a kaleidoscopic palette evolving from off-white to polychromatic synchronously forming a holograph archway known to represent a dream”. Fascinated by the idea of space travel and discovery, Abloh was hinting at a futuristic space age- inspired contemporary design that he materialized on the catwalk with having asked Playboi Carti, the popular rapper from Atlanta, to close the show in a silvery foiled cape and an iridescent version of Louis Vuitton’s classic Keepall bag. Abloh used his own artistic curiosity about how space exploration was evolving to introject elements of space travel into the design. Immersion into Creation and Design at LVMH From Design to Creation with Bvlgari By Fabrizio Buonamassa, Bvlgari’s Watches Creative Director When we say design, we mean art applied to industry. The designer’s ultimate aim is to improve the quality of life with the products he or she designs. It isn’t a one man show, the team is required to turn the designer’s vision into a real product. The creative process 61 The creative process is the true mystery behind the product, each designer has his own. Personally, what I most do is draw. I started at four or five and I don’t think I’ve ever stopped. I always draw when I’m in a meeting or on the phone, when I’m being interviewed; it’s my way of expressing my creativity. I end up with 200/300 pages notepads full of drawings. It’s amazing how sometimes you start drawing your idea and end up somewhere completely different. I show the drawings once the idea is more solid, that’s when the idea starts developing. Bvlgari, Roman-inspired creativity It is the only jewellery and watchmaker Brand born, raised and living in Rome. So Italian style is as much a source of inspiration as is Roman style. The concept of beauty for Italians is completely different from other nations. Beauty for Italians is absolutely necessary, it’s part of our lives. Being an unordinary Brand, we don’t view the archieve as a place to look for ideas, but as an opportunity to reinvent the Brand. We love reinventing the Brand time and time again. Hublot’s modern reinvention of traditional watchmaking A thrilling name for collectors and watchmaking connoisseurs alike, Hublot wields the art of the unconventional. Founded in 1980, the Maison bridges audacity, tradition and innovation, all in a day’s work. Emmanuel Missillier, Industrialization Manager, and Patrick Cibien, Technical Director of Movements, lift the veil on what it takes to birth desirable yet wearable timepieces that continue to defy convention. A glimpse into a day of a Watchmaker at Hublot Watchmaking enthusiasts will agree that a timepiece contains a universe of miniaturization and precision. Hublot’s “manufacture movement” channels the many know-hows within the Maison. It is entirely designed, produced and assembled in-house and most of the components and cases are produced on-site. Far from the age-old image of the lonely watchmaker tinkering away in his workshop, a regular day at Hublot involves interacting with many different colleagues. Patrick Cibien describes daily interactions this way: “We are in constant interaction with the manufacturing and product departments... Every day is full of exchanges with the whole company. A typical work day does not exist at Hublot.” The design and laboratory units reflect the watchmaking process: from ideation and prototyping to function optimization, product approval and manufacturing. The two teams are responsible for every single Hublot watch that comes to life. “A movement is born from the close collaboration between these two teams, from their permanent dialogue, in the desire to constantly perfect the product.” How to tackle the challenges of modern watchmaking Quality and continuous improvement are at the forefront of Hublot's mission. A large part of fine watchmaking revolves around efficiency and optimization. The laboratory evaluates each design 62 My advice for you is to love your project and believe in it. Don’t do things because you think they’re expected. Leather Goods Creation at Marc Jacobs By Reiko Katakura, Studio Director of Leather Goods at Marc Jacobs I have partnerships with: o Ready-To-Wear (RTW); o Footwear; o Jewelry; o Artwork Department; o Runaway Team; o Merchandising; o Operations; o Press Relations (PR). To collaborate, influence and drive change for the line. Creation to First Prototypes stages For the core line, we receive seasonal concept and direction from the Creative Director and establish what newness to develop for that season. Materials and silhouettes are determined by the Head of Design and the design team to be put into work for first protos. This is where the team gets to be the most creative, looking for inspiration and ideas to experiment with and hash out. Things to keep in mind during this process are that all styles need to be:  Brand Right;  Current;  Wearable;  Appealing. One of the best things working at thus brand is that with Marc Jacobs at the helm, there is endless inspiration to start with. As we work with him directly on Runway bags, we know the intricate thought process that is behind the collections, and we’ll take that as a cue to start the commercial line. Once designs are sent to our overseas factories and while we wait for the prototype to be made, we continue to work on designs. We make sure they’re compatible with Ready-To-Wear, and that we’re using the same language of the season. We obtain information about prints, artwork, material, and embellishment that will best tie back to the concept of the season. We partner with jewelry on hardware and any charms or components they may be designing that we can utilize. Not only do we work on handbags, but also:  Small leather goods (or SLGs);  Wallets;  Webbing straps; 65  Chain straps;  Key charms;  Belts. Once prototypes arrive, we study and correct them to get a better version of themselves. We have meetings with merchandising to see what items work with the line, and what needs to be changed for marketability. We review cost, material and hardware passability with the product development team. Because it is round one of seeing the protos, many elements change as we work through the line. We may try other materials and construction as another round of protos are put into work. Depending on current sales, we may add or drop styles to reflect the current market. We review color and prints again to make sure they are right going forward. Second prototypes stage The second proto stage is the same as the first, but the bags should be in a more finalized version with fewer changings needed to get to market sample stage. After second protos arrive, color cards – which document all the components necessary to assemble the bag – are built. They detail our everything from the materials, lining, stitch colors, edge paint, hardware finish, and interior/exterior label details that tie back to the designer’s tech packages, which include sketches, measurements, and construction details. This information makes it possible for the factories to gather materials efficiently, to pattern the bags correctly and construct them in a timely manner. While these samples are being made for the final market, the stage where buyers come in to see the line, we’re on to the next season, starting this process all over again. We go through the same process for Outlet product, which is a separate team, so we not only have to keep different seasons in mind, but also different teams’ collections, which happens four times a year. Another element of the creative process is that twice a year we also work with Marc Jacobs on Runway bags. Although a much smaller collection, the expectations of developing this product are very high as we use luxury materials, higher quality and generated at a much shorter time frame. We have two months max to work through concept, protos, re-protos and finalizing. Market to In-store stages Back to the main line, once we receive our final protos for market, they’re merchandized in the showroom for internal buyers to look at. We do get feedbacks from them and still may need to update and implement changes for marketability. It is always a dance between design intent and how to commercialize it. The line eventually gets finalized, and things move along to production stage, photography for editorial and e-commerce. About 9 months later, it is ready for clients to buy and enjoy. STAGES TO REMEMBER 1) Creation stage: - Reception of seasonal concept; 66 - Brainstorm of ideas to explore; - Sketches are reviewed and drafted; - Specifications are detailed. 2) First prototype stage: - Bag silhouettes and animations are reviewed; - Alignment of the bags to the rest of the categories is analyzed; - Cost of materials, hardware, and production is scrutinized. 3) Second prototype stage: - More finalized prototypes are reviewed; - Colors and materials are decided for market proto development. 4) Market stage: - Final line is presented to buyers in the showroom for marketability feedback. 5) In-store/E-commerce stage: - 9 months later product is ready for clients to purchase and enjoy. Creation of windows, events and runway shows at Louis Vuitton By Faye McLeod, Visual Image Director, and Ansel Thompson, Art Director of the Visual Image Studio at Louis Vuitton Faye and Ansel, could you please explain your role at the head of LV’s Visual Image Studio? The Visual Image Studio is responsible for all of Louis Vuitton’s store windows worldwide; there are currently 460 Louis Vuitton network windows all over the world and 14 Maisons or flagship stores. The Studio also ideates, creates and produces other three-dimensional projects, including brand elements such as exhibitions, runway shows, temporary spaces, digital projects, and facades. How could you describe your creative process? Our process starts with collaboration and creative freedom: we are really fortunate for not having rules regarding the creative process, so we approach all of our projects in different ways. For example, an idea may originate from something we find in a flea market or bookstore. We travel a lot [when we can], and we work closely with our communications, product, marketing and digital as well as the local store teams along the design process, as this can enable projects to develop in a wider variety of directions. Ultimately, we aim to deliver work that is consistent and extremely sharp in its outcome so that, no matter where a client travels in the world, they have a qualitative and exciting experience with the brand. We work in a variety of ways that stimulate the creative and development process. Whether that is through the use of mood boards, which is a great way to move away from a blank page, through to modelling, illustration and rapid prototyping. Sometimes we will work three-dimensionally and occasionally move straight to a digital means of development, although ultimately, concepts are developed through discussions with our team. Which has been the most memorable of all your schemes for LV? 67 Overall, you need to create an environment, a process, and therefore a culture where people have trust and the resources to ideate, where curiosity in encouraged and people can see the benefits. Of course, there are always happy accidents in innovation, especially if your team is perpetually curious. First, there needs to be an understanding of the goals. You can shatter some boundaries later, but it’s important that this is done with intention and understanding. Second, is an understanding that there is no such thing as a bad idea or failure. Everything is an opportunity for learning. Every single idea is good because even if it just inspires another idea or makes people feel relaxed and comfortable, it works! It helps to have the highest person in the room throw out a fantastical idea, to make people comfortable with the messiness of innovation… that no idea is bad. The farther you get down the process of development, the more you are wasting labor, materials and even emotional investment. In our team, we even measure how often we kill a project and at what point of the project every month. A high percentage of rejected ideas is OK if it happens early. If it was later, why? The third part of accelerating innovation is the environment in which you’re exchanging ideas. Create a space where you can be flexible, and people get out of their comfort zones. Fourth is the way you prototype. What is the minimal amount you can show to quickly determine if an idea works or not? How can you give people the vision of what a product or process will look like? Innovation can also be quite efficient. Everyone likes to take in information differently. Building the right team The single most important tool you have in accelerating innovation, is the people you have in the room, virtual or physical. Everyone has a purpose and a reason for being part of this process. They have an expertise and need to feel valued enough to share it. Ensuring you have a diverse team is critical. When I say diverse, I’m saying it on a few levels. If everyone on the team looks the same and comes from the same background, your product will look the same, your solutions will be the same, and you won’t be able to make the critical change you need. Not only do you need diversity in human makeup, but you also need diversity in skillset, proficiencies, thought, behavior and even personality type. Project teams should be mixed from project to project, testing the balance and allowing new synergies to form. Technology meets craft One of the great sources of pride in the Jewelry Design and Innovation workshop is the work we’ve done on mechanism. Icons like Knot and Lock. With Lock, the challenge was to create a mechanism that functioned similarly to a padlock without obstructing the beautiful, clean and bold lines of the piece. This was not a project that was 100% done in a digital world, this was not a project that was 100% done with only the hands of one jeweler. It was a complete partnership. At Tiffany & Co. and at LVMH: o Creativity is a core value shared by everyone; 70 o We cherish the innovative spirit at every touchpoint; o Multiple levers to accelerate innovation: work environment, culture, diversity of the teams and the advanced technologies at our disposal. About Brand DNA The essence of a Luxury Brand By Sonja Prokopec, Professor of Luxury Brand Management at ESSEC Business School In traditional marketing, brands are defined by their positioning. In other words, how they offer greater value or benefit to targeted customers compared to their competitors. Positioning is usually the cornerstone of Brand Management. Luxury brands, however, play by a different set of marketing rules. Since their focus is the uniqueness of their brand identity, they put themselves in a class of their own, where the concept of competition is irrelevant. Luxury brands more closely resemble artists. Each has a recognizable, unique expression that is judged on its own merits, rather than by comparison. Instead of traditional positioning, luxury branding strategies focus on building a strong individual identity: a brand DNA. Sometimes the elements chosen to represent the brand DNA come from the brand’s heritage. However, this can sometimes be problematic, especially when the creator becomes central to brand identity. A brand DNA must be strong enough to survive even the death of a creator. Christian Dior, for example, founded his eponymous label at 30 Avenue Montaigne, in Paris, on December 16th, 1946. His first legendary collection introduced ‘The New Look’: a calf-length, full skirt, cinched waist and fuller bust. The ‘New Look’ was a rebuttal to postwar fabric restrictions. The average Dior dress at the time used 20 yards of fabric. The collection, therefore, generated some criticism upon its release. Nevertheless, the opulence of his designs delighted women everywhere. This part of the brand history can still be observed today in four key elements of the Dior brand DNA: The ‘New Look’ silhouette, provocation, glamor, and absolute femininity. In other words, even though the man Christian Dior was only at the helm of his label for a few years, the brand codified his influence so that it could survive his death in 1957 and the succession of creative directors that followed. The Hennessy brand DNA, on the other hand, is first and foremost about values. It embodies four key statements: Hennessy dares to look beyond the horizon and set its own course towards an uncompromising future. Its unparalleled expertise in selection, maturation and blending makes the brand a master of potential. Hennessy expertise creates magical experiences to sublime alchemy. And finally, the Hennessy brand has traveled the globe, been embraced in every country and culture, and is therefore at ease in the world. First and foremost, defining a brand DNA means knowing who you are and sticking to it. It’s about distancing your brand from the ordinary, capturing the soul of your brand and expressing its uniqueness. Then, it means weaving that identity through every product experiences. Finally, a well-constructed brand DNA brings your clients into – and allows them to dream about – the universe you’ve created. 71 Brand Codes By Sonja Prokopec, Professor of Luxury Brand Management at ESSEC Business School Brand DNA is expressed through visible, symbolic signals or codes. Throughout much of the 20th century, the strongest luxury brands relied mainly on loud signals or codes: monograms like the Louis Vuitton LV, or logos like Fendi or Christian Dior. More recently, the democratization of luxury brands and the rise of accessible luxury mean that these loud signals are becoming increasingly visible and losing their luxury status . At the same time, luxury consumers are evolving and looking for more discreet ways of expressing themselves. Of course, signals are still important to consumers. After all, luxury brands are often associated with status and exclusivity, and therefore the customers want that purchase to be recognized. The difference today is that luxury consumers are looking to convey this to a smaller, initiated inner circle. Subtlety and discretion are key. Many luxury brands are taking these new types of behaviors into consideration as they look to reduce their use of loud signals and focus on what we call subtle signals or codes. A subtle signal can take many forms. It could be:  A color, loke Dior Gray or Veuve Cliquot Orange;  An emblem, like Bvlgari’s Serpenti snake, or monster eyes in Fendi;  A shape, like the shape of the Hennessy bottle, the shape of the Alma bag of Louis Vuitton, or the shape of the Lady Dior bag;  A print, as seen with Emilio Pucci;  A way of using material, like stitching on the leather, called Cannage, by Dior. These codes can also change over time. A brand might choose to focus on one code more than the others, drop a code that is not relevant anymore or develop a new one. Unlike the brand DNA, which is something that defines the brand and is not changeable, the brand codes are changeable and should be changed over time. Changing the codes refreshes the brand and allows it to be more creative in its expression. Identifying the right codes to develop often involves looking through the archives and choosing a reference that best suits attitudes of contemporary customers. Indeed, the most successful subtle signals have two common characteristics: 1) They are unique (the monster eyes of Fendi are so unique a feature, that many customers can recognize the product without seeing the logo); 2) They reflect the brand heritage (Christian Dior liked the stitching used on the chairs at his very first fashion show in 1947…). Many brands have multiple codes. Christian Dior, for example: he grew up in Granville, Normandy, where the dominant colors were gray and pink. His home there was surrounded by a beautiful garden, was furnished in Napoleon III style furniture and frequently decorated with vases of lilies. There historical references explain why the dominant colors in Dior stores today are gray and pink and feature Napoleon III style furnishings, and why one of the most recognized of Dior’s subtle signals is the lily. 72 Another great example is the collaboration between Dior and Nike. Dior Homme teamed up with Nike to unveil the highly sought-after Air Jordan Dior sneaker, even though they had to postpone their international online draw by a few months due to the coronavirus pandemic. 5,000,000 people registered on the micro site set up for the launch, even though the brand only produced 13,000 pairs of sneakers with 5000 pairs offered to top clients. These sneakers were priced at around $2000 for the low top versions, a much higher price point than the original Air Jordans. What is important to remember is that Luxury brands no longer sell just their brand. In a new era of consumer expectation for shared values, brands are curating platforms to function as tastemakers to extend their own brand halo into the wider cultural world. Consumers are interested in discovering new brands, unique storytelling and in cultivating tastes. So, what you find is that brands are taking a step forward in how they are engaging their customers by offering not just their brand curation but a wider curation that fits within their brand universe. For example, Stella McCartney reopened its London flagship store in April 2021, with a space that they called StellaCommunity friends, with the purpose to host a different local business each week, featuring beauty, art, music, food, live-streamed talks with special guests and skincare treatments from Dr Barbara Sturm and Face Gym, among others. The initiative was the start of a new global rollout, with the goal of turning its stores around the world into a hub for local businesses and consumers. Brands like Gentle Monster recently opened a new flagship store in Seoul, featuring products from other brands alongside its eyewear. This has resulted in their quickly becoming a local influencer hotspot. Extending your brand to include new products only works if there is a synergy and it adds value. Unlike Alibaba or Amazon, which sell everything, a luxury brand will have to be careful about the brands that they bring on. A curated assortment is crucial! Experiences as a key lever to engage customers A key challenge for Luxury Brands By Sonya Prokopec, Professor of Luxury Brand Management at ESSEC Business School Consumers used to let brands do the driving. They would get into the back-seat, and let the brands lead the way. Each brand had a story to tell, and by choosing one over another, consumers were effectively buying into one brand’s narrative and letting it speak on their behalf. A purchase was a form of self-expression. One might say you were what you bought. Today’s consumers, however, want to take the wheel. With a wealth of knowledge at their fingertips and the world at their feet, they are telling brands where they want to go and how they want to get there. Of course, Luxury consumers are still looking for craftsmanship, functionality and design. But, more than ever before, they are also looking for a shared experience with their favorite brands. This shift, as consumers spend less money on tangible things and more on experiences, represents a critical challenge for Luxury brands. Their consumers are expecting more than just 75 the best quality, so Luxury brands will need to give them the experience they are looking for, whether online or in stores. In other words, what we call ‘experiential marketing’ has become a must. So here are the three keys to engaging today’s Luxury consumers through experiential marketing. Speak to their hearts: delight them! People used to experience the world in superficial ways. Travel was about seeing many countries for short stays and getting snapshots of the top attractions. Luxury travelers tended to stay in five- star hotels that offered rather uniform, European-style service, regardless of the location. Shopping abroad often meant going into the same European boutiques found in most major metropolis around the globe. Today, millennials are driving major changes in the travel and retail arenas. They are searching for authenticity: a local, in-depth experience outside the beaten path. What we were seeing in pre-Covid travel is that millennials were more likely to stay at an Airbnb to experience the city like a local and search out foods, wines and unique products made by local artisans. They want to be immersed in an experience that they will carry in their hearts for a lifetime… and the pandemic has contributed to accelerate this trend even further. How does this translate to Luxury retail? The DFS Department Store in Venice, Italy, offers us a striking example of experiential marketing that helps brands speak to consumers' hearts. In the restored and revitalized T Fondaco dei Tedeschi, one of the largest buildings in Venice, architects Rem Koolhaas and Jamie Fobert have meticulously respected Venice’s unique heritage while integrating touches of modernity. With an entire floor dedicated to exhibitions and events open to the public, they have created a new cultural hub for Venetians and tourists alike. You do not just go there to shop, you go to be immersed in an experience. In 2021, with the paradigm shift due to the pandemic, the Fondaco has also reinvented itself via online channels that complement and, if necessary, replace the physical retail experience: in this way, customers can be delighted through new technologies that allow consultation and shopping experiences close to the physical ones. Art speaks to observers on an emotional level. Studies have found that exposure to art can even reduce stress! Art piques curiosity too: today’s consumer wants to learn and understand the artistic process. Art offers a powerful axis through which to speak to the hearts of consumers. Some brands have launched dedicated museums, like the Louis Vuitton Foundation in Paris, for example, which makes art an integral part of Louis Vuitton's brand storytelling. The Christian Dior Exhibit at the Musée des Arts Décoratifs offers another striking example of art taking a central place in a brand’s ecosystem and helps legitimize the founder as an artist in his own right. Chaumet launched an exhibition within their own beautifully restored salons at 12 Place Vendome in Paris. The exhibition was titled ‘Joséphine et Napoléon, une histoire (extra)ordinaire’, and was set to celebrate their life together and to mark the bicentenary of the Emperor's death in 1821. The exhibition featured 150 pieces of jewelry, paintings, works of art, correspondence and illustrated documents between the two lovers, who were known to write exquisite love letters to one another, yet again immersing us in the story of the Maison. 76 But the Luxury-art union also unravels through other forms of collaboration and creation that go beyond museum exhibitions. Dior has repeatedly brought its own creations to ballet, such as those for Philip Glass-composed ballet in Rome. Guerlain, on the other hand, inaugurated a few years ago a women's solidarity project that speaks through images, those of photography. ‘Femmes en regard’, in the series in May 2021, was a dialogue between conferences and photography exhibitions staged at their boutique on avenue des Champs-Élysées in Paris, meant to give voice to the exhibited artists. All examples that reinforce the idea that art and Luxury go hand-in-hand. Speak to their minds – Entertain them! Storytelling is one of the best ways to engage consumers. Today’s consumers are hungry to learn about the history of each brand, their creative processes, and their artistic inspirations. They want to be engaged on an intellectual level but also entertained, both in-stores and online. This growing desire translates to a burgeoning “content craze”. Content is indeed key; however, it also needs to be credible, authentic, unique, and fun to fully involve customers. Visual storytelling is particularly powerful. Images, for example, offer a shortcut to the brain: images are processed by the human brain 60,000 times faster than words and are more readily memorized. Videos are even more effective: people tend to spend five times more time looking at videos than static images. Plus, when you show a video, studies show that there is much better recall of the brand. Even very short video content can be incredibly effective. Storytelling takes consumers on a journey of discovery, even if that journey was only a few seconds long. This immersive experience can be created through numerous tools. Christian Dior, for example, has experimented it with the presentation of Haute Couture by creating short films that have the ability to engage the viewer and take them into another dimension. With ‘Le Mythe Dior’ (2020) or ‘Le Château du Tarot’ (2021), the clothes from the catwalks blend into a different universe, where the scenery absorbs and immerses the viewer completely, who is taken into the world of the Maison. Tied even more closely to the theme of entertainment, the Maison launched Dior Talks, a series of podcasts that explore the creative imaginations behind the brand's success and that give a voice to female artists, athletes, and actresses who have inspired Maria Grazia Chiuri with their courage, passion and talent, their embodiment of the bold empowerment Dior admires and who are linked to the Maison through collaborations and projects. In the wake of infotainment, the public is involved, entertained and captured by a new dimension that opens the door to the brain behind the myth. The same can be said for the phenomenon of gamification in a market that is growing by 20% annually, a phenomenon to which LVMH has responded promptly with the alliance between Louis Vuitton and Riot Games, where they partnered in the League of Legends game with branded collections for the characters. A branded entertainment for Luxury consumers - a segment of consumers constantly looking for a new and fresh kind of experience. Speak to their senses – Immerse them! 77 the keywords. So, when I said “Roman”, when I said “magnificent”, when I said “contemporary”, if you are contacted in CRM, our staff will immediately use those words. Of course, it’s a process that takes time, not only just a few months. My role as Bulgari CEO Bulgari is really larger than life, and surely much larger than its CEO, fortunately. Therefore, myself as a CEO, I’m not Roman, I’m French; I’m not magnificent and I don’t pretend to be; and I’m less and less contemporary as age is increasing. So, how am I myself an ambassador? How do I convey the Bulgari DNA messages? I think it’s very much about diving deep inside the history, the heritage, the culture, the style, the environment, the lifestyle (the dolce vita), but also contemporary Roma, still a very active, energetic, joyful city. It compels you to become really an ambassador of that DNA. Discover Brand Management at Parfums Christian Dior By Nina Cooper, International Marketing Director for the Makeup Category at Parfums Christian Dior Key roles as Marketing Director Being an international marketing director means that you navigate through a wide variety of touchpoints and everyday feels different from another. The most important part of your job is to define the global strategy of your category, in line with the Brand DNA. Once the strategy is established, you work the category positioning and long-term image within the brand while in parallel creating a product innovation plan. You define the identity of your category through the campaigns and the storytelling, but also through the packaging and formulas. For this part, we work in close collaboration with Peter Philips, our Creative and Image director. We also study our consumer to work on a tailor-made omnichannel activation plan for each lunch. We lead the entire 360 activation: on & offline media campaign, merchandising, training, sampling, CRS; and of course, we do it at a global level but we drive and design centrally all operational aspects for the key countries. Another big part of the job is managing and monitoring the top-line and bottom-line growth of your category, the market share performances, profitability & complexity. Brand Management at Parfums Christian Dior Brand management for me means working on two pillars: 1) Define the brand DNA. Which core values does the brand stand for? What messages, what story do you want to convey when people think about your brand? This is fundamental to work on the brand mission, because by definition it is what will build its long-term desirability, and also how your brand will stand out from all the others. 2) Get to know your client. In the cosmetic field the competition is quite ruthless, and new brands are launched every day, but a lot of them die in the two to five years of their launch because they didn’t manage to keep a strong link with their clients across time. The main challenge of brand 80 management for an international label like Dior, is to stay relevant locally while conveying your global brand image. The main challenges in the Beauty Industry There are many challenges we’re facing in the beauty industry, and one of them, the most important of them, is for me the omnichannel approach. Beauty – and especially makeup – has been for the past decades all about trying the products in store and having a great Brick and Mortar exposure. Now, and especially since COVID, e-commerce is sometimes the biggest distribution channel. Our customer is in need of a privileged online experience that feels as good as the offline one. That said, it doesn’t mean that our customers are not looking for unbelievable and never seen before multisensorial and immersive experiences. This is where the omnichannel approach is more important than ever. You need to understand how your clients shop and on which touchpoint you’ll better engage with them. Key pillars to develop Brand Desirability Nowadays customers don’t expect from a global brand like Dior to only have beautiful packaging, institutional campaigns and the biggest show ever. They need to feel that they’re sharing the same values as your brand. When you’re one of the beauty leading brands, I strongly believe that values like sustainability, inclusivity and female empowerment are true must-have to defend but you need to find your own way of doing it. A way that feels authentic to your core values and heritage. Sustainability is a matter of eco-design but also an everyday approach in asset creation […]. This is encapsulated in our beauty as a legacy brand statement. Since 2023, we offer 43 shades to match all skin tones and all skin types; this is inclusivity and diversity. Christian Dior said: “Whatever you do in life, do it with passion”. Operational Brand Management at Kenzo Parfums By Laure Corvaisier, Marketing Director at Kenzo Parfums France My job consists in driving the fragrance strategy for the French markets, meaning trying to execute as is best the launch plan for the fragrances and also to carefully monitor my investments in trade, media, BCs (Beauty Consultants), training. Can you give me an example of the campaigns you run? At Kenzo, it’s really a test-and-learn House. That’s why this year, we create the Fete du Printemps for our pillar Flower by Kenzo. It celebrates the first day of spring. For that special occasion, we distribute perfume poppies in the streets, creates very storytelling advertorial in magazines and put poppies everywhere within the Sephora store thanks to a very exclusive partnership. What is like to work at LVMH? 81 It means working for a very powerful and leading group in the luxury industry, because we have a lot of means to facilitate our day-to-day work. Another point is that you can share with all Maisons a lot of data. Customer knowledge, customer studies, and it’s really important to know perfectly your clients. Key takeaways #1 Kenzo is a test-and-learn House #2 All the laboratories are synergetic #3 The Maisons share a lot of data #4 Dare to create your own network and give your point of view Discover Brand Management at Veuve Clicquot By Carole Bildé, Chief Marketing and Communications Officer at Veuve Clicquot Brand Management vision 4 key pillars to have a clear brand management vision: 1. IDENTITY Veuve Clicquot has this chance to play in the league of the rare brands who have an iconic color. The Clicquot yellow is an amazing asset; when you enter a shop you recognize it immediately, and given the fact that we are a wholesale business, this is key. But beyond recognition, what does this yellow stand for? Our Clicquot yellow present on our bottle labels since 1877, is the color of the rising sun: it is an ode to energy, audacity, and to the profound conviction that each new day offers fresh possibilities, a legacy of Madame Clicquot’s optimism. As you can see, yellow has more depth than just being a color. 2. LEGACY Strong brands usually have a founding myth in their history, one which is defining the whole journey. Ours is called Madame Clicquot. She was not the founder of the company, yet everything started with her when in 1805 she took the reins of the Maison after the death of her husband. She was 27, she had a little girl, and at this time, women did not have the right to work or even hold a bank account. However, she revolutionized the sector through major innovations. Our story is one of boldness, creativity and entrepreneurial spirit. 3. CULTURE In 2022, we celebrated our 250th anniversary. A solaire culture of joy and optimism, shared through an ambitious, immersive, traveling exhibition, a deep dive into the heritage, savoir- faire and cultural imprint from 1772 to the present day. 10 women artists were commissioned to celebrate Madame Clicquot remarkable achievements and offered their contemporary vision of a 19th century influencer who paved the way for generations of female entrepreneurs. The exhibition traveled to Tokyo, Los Angeles and London and was called “Solaire Culture”, of course! 82 Love is like a diamond: complex and multi-faceted. It changes with each person and their story, and with each society and its history. Brand expression The expression of the brand lives way beyond a magazine advertisement. In order to deliver a clear message to clients and consumers, synchronization and close partnership across functions is essential. We work with so many teams to bring an initiative to life, from the website to visual merchandising, employee training, PR and category management, just to name a few. Branding strategy When working on an initiative, a helpful framework that we use to develop our strategy is “inspire, elevate and educate”. First is inspire. As a nearly 200-year-old brand, you can imagine the number of stories we can tell. We bring archival storytelling into our initiatives to inspire and delight our clients in a way that only Tiffany can. This can manifest in a number of ways. We might have advertising copy that speaks directly to an archival story, etc. Next is elevate. It means always making our product the hero. Our products are expressions of love. For advertising, we could shoot very detailed images, which show the intricate and amazing details of each piece, etc. Last but not least is educate. Wearing jewelry is a very intimate and meaningful experience. Our goal is to educate clients and consumers about how each of our collections symbolize expressions of love. In global marketing, we cure these things: o Develop a framework to set an initiative on a clear path (like the “inspire, elevate and educate” framework we have just seen); o Collaboration, creativity and hard work that comes from our cross functional partners drive success; o To add to the legacy of the Maison, it is important to move in forward and drive relevance while also honoring its past. Course 4 – Operations & Supply Chain First things first: a 360° view of Operations What do we mean by Operations? Which teams are involved? What are the stakes? By Yves Dallery, renowned expert of Operations Management in the Luxury sector and professor of Supply Chain Management at CentraleSupélec How to define Operations and Supply Chain? 85 Operations refer to all the activities that transform raw materials, components and packaging into finished goods and then distribute those products to the final customers. This chain of activities is referred to as the Supply Chain. To make this more concrete, let me illustrate this notion with the perfume supply chain: As you can see, the central players of the perfume supply chain are LVMH Maisons, such as Dior Parfums and Guerlain. The manufacturing operations of these LVMH Maisons are in charge of first producing the fragrance, from basic ingredients provided by external suppliers, and then bottling and packaging the fragrance with components again supplied by external suppliers. These Maisons are also responsible for organizing the distribution of their products from the world-wide stock, located next to the production site, to their regional stock. Most of the products are then distributed to the final customers by retail companies such as Sephora, in an omnichannel mode through their traditional store channel and the newer e-commerce channel. In summary, operations deal with various activities, such as manufacturing, transport and supply chain. Supply chains in the Wines and Spirits Maisons are pretty much organized the same way. On the other hand, fashion and leather goods Maisons are more integrated since they’ve their own network of boutiques and thereby fully control the supply chain up to the final customers. This is, by the way, also the case for Watches and Jewelry Maisons. 3 important decisions for Operations and Supply Chain Let me now take you through an overview of Supply Chain and Operations’ most important decisions, that can actually be segmented into three layers: 86 The first one pertains to the design of the supply chain. It consists of locating and designing the plants, deciding of the strategic suppliers, as well as designing the distribution network. These are the more strategic decisions because they usually involve high investment in automation – whether in the manufacturing processes or in the logistics centers. The second layer is everything pertaining to what is called “planning the supply chain”, which includes, on the one hand, the estimation of future demands, that is building forecast through a process called demand planning; and, on the other hand, how to best manage the resources and flow of products to respond to the demand, which is referred to as the supply planning. The last layer is the management of the daily operations of manufacturing and logistics and transportation activities. Having efficient daily operations relies on well-established processes, empowerment of human resources, and also relies on continuous improvement approaches, such as Lean Manufacturing. All of these operations decisions must be taken with the goal of optimizing the end-to-end supply chain. What do we mean by Sustainable Performance? 87 Focus on Fashion Supply Chain management By Laurent Raoul, Co-founder and Head of the Supply Chain Department at L’institut Francois de la Mode What is Supply Chain Management? Supply Chain Management means all resources, all methodologies, all tools, aiming at: - Deliver the right item; - Deliver the right place; - At the right moment; - At the right quantity; - At the right quality; - At the lowest cost. To make it as much as we can in terms of quantity, quality with the lowest investment as possible. It covers two kinds of practices, the first one being very classical. It means what we call logistics, meaning everything which is physical. Supply Chain Execution Logistics: o Purchasing; o Manufacturing; warehousing; o Distribution; o Transportation; o Administrative tasks. This is the physical part, what we call Supply Chain Execution, the quite classical part of our Supply Chain Management. But there’s another one which is less known, which we call the Supply Chain Planning:  Sales & Operation planning;  Forecasting & Anticipation;  Allocation & Inventory management;  Balancing & Replenishment management. Everything that is more intellectual and digital. It doesn’t mean physical; it means digital in a way. 90 History of Logistics and Supply Chain The history comes from the beginning of the 19th century, with the element of art of War, an English book that has been made during the Napoleonic Wars, during which, and in this book, the word “logistic” appears. It covers everything that is behind the war (bringing something to eat for the soldiers, bringing weapons, etc.). Let’s move to the beginning of the 20th century, with Ford. The US, the 20s, the 30s, the science of production, the 40s model, if you know this history, which is the Taylorism, the production, the mass production and everything dealing with manufacturing, how to organize, to supply the market, in a very fast-growing market. This is a second milestone important in the history of logistics and supply chain. The third one is the appearance of the word “Supply Chain” during the 80s. the word appears in a famous book about Supply Chain Management, and then we have another important milestone during the beginning of the 21st century, which is continuous replenishment, “never out of stock” goods. This is an important milestone when Porterian companies, like in perfumes, or food industry, try to deliver the market as much as they can with a continuous flow of production. The last one was in the beginning of the 21st century: this is the appearance of the green Supply Chain Transparency and we’re in this moment of time, when the Supply Chain doesn’t aim only at delivering the goods, but also to make it with the lowest impact on the environment and planet. What is the role of Supply Chain Management? We have two different sides in the market. We have the market itself, the sales, which has its own behavior, sales curve more and more chaotic. The other side, at the opposite, is the production and manufacturing side with its own behavior, its own mandatory practices. The movement of the two sides is not exactly the same. If I had an image to describe the Supply Chain, it’s a kind of damper: it’s a damper between the demand, the market and the offer, the production and the supply. 91 To damper those two sides we only have two levers: either we make the products in advance, it’s the inventory that we produce at the initiative of the supplier of the brand, or we don’t provide anything to the market, we wait for the market to express an order and in this case we are providing lead time delay, because the customer – if the product is not on hand – has to wait for the product to be produced, purchased, transferred up to him. That’s the two levers we can work with: either we make stock or we make lead time. The Supply Chain aims at balancing the two. What are the Key Wording Elements in Supply Chain Management? We have three different main parts of the Supply Chain. Because we’re in Fashion and novelty is important, every year, we have to supply new products to let the designers provide new creations. We have the first phase which is the design moment/phase. Second, we have to manufacture (this is the real Supply Chain moment: supply means to provide something to the market). The last one is the demand. That’s why we have three words that we can hear listening to people working in the Supply Chain:  Demand Chain;  Supply Chain;  Global Supply Chain. 92 The second reason is the increase in initiatives allowing consumers to assess a product’s impact. It’s what Yuka is doing right now, for example. Thirdly, comes the binding changes in legislation, particularly in France, where in 2022, the destruction of unsold non-food products will be banned. The recent COVID crisis has also accelerated this awareness! The 3 challenges to improving Environmental impact What do we mean when we talk about improving environmental impact in manufacturing? It’s about addressing three challenges: the first, most obvious challenge is to reduce the environmental impact of each product (minimize the impact of a product). The second is avoid destroying products. The third, which we often overlook, is to maximize the products’ lifetime. Minimize the environmental formula: Minimizing products’ environmental impact It means the cradle-to-gate impact, from raw material extraction to the purchase of a product in a shop, which takes us to the end of the cycle. The extraction of raw materials in the luxury industry, especially with leather goods, textiles and shoes, is very impactful, accounting for 60 to 80% of the product’s total impact. The choice of raw materials is therefore key. The second point, the second link in the chain, is the suppliers, who need to be eco-responsible. That’s why, for example, at LVMH there’s the EcoVadis program, which ensures that its suppliers are doing things right environmentally. The third factor is manufacturing, because when you produce, you consume energy and make CO2. The most visible link in the chain – though it doesn’t count as much as the others – is transport. When you make products in France, which the luxury sector does a lot and is proud to do, and you deliver in Asia or the USA, in some cases transportation is made by plane, and even the boutiques themselves have an environmental impact, so it’s all this we must measure. Avoiding destruction To avoid the destruction of products there are two main levers: 95 1. The collection size. With larger collections, there’s a risk that some products won’t sell, which increases the risk of waste. One way to get around this is by personalizing products – listening to the client placing the order. This way, you’re sure the product will be sold and not destroyed. 2. A mix of levers: agility, and supply chain performance, and reducing the cycles of suppliers, implementing smaller batch sizes, otherwise the risk of waste is high. The better forecasting of sales is also important. Maximizing products’ lifetime The third and final lever is the lifecycle of a product – which inevitably has marketing elements, like offers for second-hand products and rentals, etc. But there’s also a supply chain element, because if you want to encourage your client to repair a product, the process must be efficient with short cycles and plenty of information visibility. There’s nothing worse than having a watch repaired and not knowing when it will be ready. 360° overview of Operations at LVMH By Mohamed Marfouk, Operations Director of LVMH “In terms of Operations, LVMH is unique in a sense that we are the only Luxury group present in 5 different sectors with very different Operations, with a high level of autonomy given to each Maison which is why LVMH has a Talents community that develops excellence in different areas”. Defining Operations Operations cover all steps to transform a creative design into a product delivered to the final customer. To achieve this, we need excellent talents at each of our four stages: 1) Planning; 2) Sourcing; 3) Manufacturing; 4) Logistics. Let’s now talk about one of those four stages: manufacturing. 96 Manufacturing is more than just production. It starts with product development and industrialization, moving from a drawing into a prototype, an ability to produce hundreds of items. This is a crucial step that requires mastering our artisan savoir-faire inventing new ones, working hand in hand with design and manufacturing. Then, we move to production, including quality assurance at each step and quality control. To support production, we need:  Engineering;  Continuous improvement;  Intra logistics;  Planning teams. Operations at LVMH: main challenges LVMH’s main challenge in operations is to continue to offer excellence to our end clients despite a never-ending volatility of our environment. To achieve this, we are building agile and resilient end- to-end supply chain based on three pillars: 1. People; 2. Process; 3. System. Let me start with planning. Planning needs to determine how many bags do we need to ship to Japan tomorrow, and how much whisky we need to distil and age for our 2034 sales, ten years from now. To achieve this, we need talents with excellent analytical skills as well as soft skills. This work is based on our robust sales and operational planning process that planning community continuous to enhance through best practices sharing. Our talents and processes are supported by very sophisticated forecasting and planning systems. We are using AI at different stages to gain more insights, to have the right product at the right place, at the right time. Let me now give you another example in logistics. At Sephora, and during some peak events, like Mother’s Day, we may have to pick, pack and deliver a million units. There is no way to achieve this without skilled logistic teams, supported by automated warehouse from shuttle to cobot and the warehouse management and a warehouse execution system. Operations: what sets LVMH apart? In terms of Operations, LVMH is unique in the sense that we are the only Luxury Group present in 5 different sectors with very different operations. Add to that, a high level of autonomy given to each Maison, and you end up with the community that has developed excellence in different areas based on the needs of each Maison. This excellence is then shared and becomes the foundation for further enhancements. Our decentralization allows us to minimize risks by experimenting different processes, systems and automations within different Maisons before scaling the winning options. CSR and Operations Regarding CSR, we have global shared conviction within LVMH: our success can only be achieved if we take care of: o People; 97