Deluxe: How Luxury Lost Its Luster by Dana Thomas Read Free Book Online

Vuitton, the eighty-year-old family matriarch, asked her sixty-five-year-old son-in-law Henry Racamier to take over. Racamier was quite a presence: he stood six feet two and was regally handsome, with a manner both polite and genial. Like Louis Vuitton, Racamier was from the mountainous Jura region in the east of France. In 1943 , he married Gaston-Louis and Renée’s third daughter, Odile. He then started his own sheet steel company, called Stinox, and ran it so efficiently that it became the leader in its market sector. In 1976 , just as the steel business was taking a downturn, Racamier sold his company to the German firm Thyssen and retired. He was too dynamic to be content doing nothing, so when his in-laws asked for help, he agreed.
    Racamier looked at the books and discovered that retailers—mostly franchisees—were making the biggest profits. At the time, most luxury companies were still small, run by the original founders, and their expertise was in creation and production, not merchandising. It made more sense, particularly overseas, to let someone else risk putting up the money for the store and its stock. The local merchants knew their clientele far better than any Paris-based designer ever would. The merchants bought the product wholesale from the brand, sold it for twice as much—or more—at retail, and made a killing.
    Racamier wasn’t a fashion person; he was a businessman. He decided to implement a strategy called vertical integration at Vuitton: he cut out the middleman and opened Vuitton–owned-and-operated stores. It was revolutionary in luxury fashion and a roaring success financially. Within a few years, Vuitton was enjoying a whopping profit margin of 40 percent when most of its competitors were still earning 15 to 25 percent. Today most luxury companies follow Racamier’s model and are now vertically integrated.
    Racamier expanded production at the Asnières compound and built new workshops in the provinces. He introduced a new, popular line called Epi, whose products were made of leather with fine, uneven horizontal stripes; arranged for Louis Vuitton to sponsor the qualifying races for the America’s Cup regatta to raise the brand’s profile; and opened stores throughout Asia and on Fifty-seventh Street in New York. In 1984 —only seven years after Racamier took over—sales at Vuitton had increased fifteen times, to about $ 143 million, and profits by almost thirty times, to about $ 22 million. That same year, Racamier listed Vuitton on the Paris Bourse and the New York Stock Exchange. Going public forced the company’s executives to work more professionally, but it also made the company vulnerable for takeover.
    In 1986 , Louis Vuitton acquired Veuve Clicquot, a champagne and perfume group that included Parfums Givenchy, the perfume and cosmetic company that was aligned with but independent of the Givenchy fashion house. The following summer Racamier orchestrated a merger between Louis Vuitton and Moët-Hennessy, creating the group LVMH, then the sixth largest company listed on the French stock market. In 1988 , he added the Givenchy fashion company to the portfolio—at the then-astronomical price of $ 45 million—and promised its founder, Hubert de Givenchy, that he could remain as designer until he wanted to retire.
    In less than a decade, Racamier had turned Louis Vuitton from a small family business that sold to an elite clientele to a powerful, publicly traded brand with substantial sales and even more potential. By merging it into an existing and stable corporate group, and then by adding Givenchy to create a luxury fashion division, Racamier gave Vuitton the heft and the organization it needed to conquer the world. Racamier saw globalization as luxury’s future, and used the synergy among brands in the group to map out and launch their expansion; he turned luxury fashion from a one-man or family-run affair to a corporate industry focused on the bottom line, and he managed to do