Luruxy brands are more than just products.
They carry decades, sometimes even centuries, of tradition, art, and cultural significance. And most of the time, we have family offices to thank for their preservation.
Preserving and maintaining a luxury heritage brand is no easy feat. It requires dedication from the team, the owners, and, most importantly, an interest in the brand itself. This is gained from family offices.
Family offices are key players that help maintain, safeguard, and even grow these brands. By working for a long-term vision and with infinite private funding, family offices ensure that luxury brands retain their legacy while staying relevant in today’s competitive market.
Let’s discuss this further.
Challenges Faced by Luxury Brands
Despite their reputation and name, luxury heritage brands face a range of challenges in today’s market. So much so, that luxury brands are estimated to have lost 50 million customers in the last two years.
According to Andrew Schneider of FON Media, luxury brands are struggling to keep up with the evolving demands of modern consumers, and without adapting to these new industry dynamics, they could risk losing relevance.
One of the most pressing issues for luxury heritage brands is the balance between legacy and modernity. These brands are built on years of cultural traditions. However, in today’s fast-paced world, they must also embrace innovation.
Additionally, the popularity of fast fashion has altered the perception of exclusivity. Consumers now turn to cheaper, trend-driven options that can mimic luxury aesthetics. This trend has forced many heritage brands to rethink their pricing and marketing strategies.
Lastly, economic volatility and the constant rise in inflation can severely impact luxury spending among consumers, particularly when income declines.
Family Offices as Stewards of Luruxy Brands
This is where family offices come into play. Oftentimes, family offices play a pivotal role in preserving and enhancing a luxury brand.
Preserving Legacy
Family offices fund studies on the background and cultural relevance of a luxury brand, therefore strengthening knowledge of its development.
This dedication to legacy helps to create authenticity and enhances the brand’s character. Furthermore, family offices preserve the quality and originality that set legacy businesses by helping conventional workmanship and techniques.
Giovanni Agnelli, who supported Ferrari’s development
Andrew of FON Media highlights how family offices, such as the Agnelli family’s support for Ferrari, demonstrate the power of investing in heritage research to preserve a brand’s authenticity while honouring its legacy of craftsmanship and excellence.
Strategic Leadership
Aligning luxury brand values with family principles ensures consistent and compelling storytelling. Customers looking for authenticity and custom will find resonance in this connection.
Using seasoned experts helps family offices to properly mix historical values with contemporary market needs. Family companies that use their legacy to improve brand awareness and client loyalty have seen this kind of approach work.
Belstaff’s revival under Ineos exemplifies this approach. By aligning the brand’s heritage of craftsmanship and adventure with Ineos’ commitment to long-term growth, Belstaff got a second chance.
Real-Life Examples of Family Offices Preserving Heritage Brands
1. Hermès Family Office
The Dumas family is responsible for Hermès’ independence and long-lasting reputation, making it one of the most iconic luxury companies. Their family office has been very important in stopping corporate takeovers, most notably LVMH’s efforts to get a controlling stake.
Instead of giving up, the family put a high priority on staying true to its handmade roots while also working to grow the business globally in a controlled way. This approach has helped Hermès stay associated with quality and exclusivity.
2. Pinault Family
Brands like Gucci, Saint Laurent, and Balenciaga are part of the Kering Group, which is run by the Artemis family office. Kering has been led by the family to support both new ideas and old traditions.
François-Henri Pinault, current CEO of Kering
For example, Gucci has done very well by mixing its famously high-quality Italian craftsmanship with bold, modern styles that appeal to younger people. Kering has a long-term strategy that is shaped by the Pinault family’s commitment to sustainability.
Andrew of FON Media agrees that the Pinault family’s approach of combining sustainability with luxury craftsmanship has allowed Kering to lead the way in eco-conscious luxury, aligning with the changing values of today’s consumers.
3. Berluti and the Arnault Family
Berluti, a heritage shoemaker under LVMH, has successfully preserved its traditional craftsmanship thanks to the involvement of the Arnault family office.
Bernard Arnault’s vision and his family office’s focus on luxury have enabled Berluti to expand its product line without compromising its artisanal roots. This approach exemplifies how family offices can strike a balance between heritage and innovation.
Antoine Arnault, in blue turtleneck, attends a Berluti show during Paris Fashion Week in January
Benefits of Family Office Stewardship
Protection of Heritage
Being dedicated to protecting the cultural and historical importance of the luxury brands they back is one of the best things about family offices.
Family offices tend to be more patient and focused on the long term than professional investors, who may be more focused on short-term financial goals. They protect a brand’s history, craftsmanship, and personality by not putting pressure on it to make money right away.
Private Funding for R&D
Family offices can access a lot of private wealth, which makes them a good choice for funding research and development projects that push the limits of innovation in the luxury market.
This money is usually used to make new, innovative goods or improve the customer experience, both of which give any luxury brand an edge over its competitors.
Family offices can think about the long term more than publicly traded companies do, which may be more limited by yearly financial expectations.
Economic Resilience
A family office’s wealth is more spread out and stable, which lets them handle market drops and changes.
According to Andrew Schieifenider, FON Media’s CEO, this stability allows family offices to provide a long-term vision for luxury brands, protecting their operations and allowing them to continue delivering high-quality products even when the market is volatile.
Wrapping It Up!
Family offices are the unsung heroes behind the success of many luxury heritage brands. They act as guardians of brands, preserving their rich heritage while fostering growth and innovation.
By focusing on long-term goals, they ensure that these brands continue to thrive in an ever-changing market. This unique approach not only safeguards the past but also paves the way for a bright future in the world of luxury.
There’s no doubt that family offices will continue to protect the legacies of luxury heritage brands that thrive today and for generations to come.
