In the world of luxury more so than any other – perception matters. Perception is a very large chunk of the margins being charged, so perception requires very careful management or else…
In France that battle over perception has just gotten public when it comes to the big luxury concerns. Chanel, Hermes, LVMH and Richemont all make a healthy amount of profit, so how they can respond to this crisis can vary greatly when compared to how less profitable or smaller businesses can.
A few weeks ago as the Covid19 crisis started to get ugly in France, the government announced measures whereby employees of struggling businesses could move on partial unemployment, with the government helping to pay for lost wages.
Hermes and Chanel responded by saying: ‘Non merci”. Because, their treasure chests are of such size that they decided they’d ride it out using their own mega profits. Hermes explicitly mentioned it would continue to pay salaries for all its employees, all 15000 of them. A very worthy way of dealing with this.
LVMH instead, perhaps a bit too eager to protect profit margins, went ahead and moved some of its workforce on the government scheme. LVMH is controlled by the third richest human in the galaxy. The people have now understood what happened and the response, as you can surely imagine, is not overly fantastic.
This latest scandal overshadows the previous, noble, effort of LVMH to convert some of its factories to produce hand sanitizers destined for healthcare professionals.