💎Richemont's luxury empire
How Richemont uses economies of scale and vertical integration to dominate the luxury jewelry and watches industry.
If there is only one key point you should take away from this article, it’s this:
Richemont is the powerhouse behind luxury brands like Cartier and Van Cleef & Arpels. By managing the entire supply chain and leveraging economies of scale, Richemont ensures product quality and cost-efficiency.
Want to know more? Keep reading, then. It will be short and to the point.
Many people think that Cartier, Piaget, Panerai, or Van Cleef & Arpels are standalone brands. And to a certain degree, they are. However, all these brands have one thing in common: they are all managed by the luxury holding company Richemont.
Richemont, the powerhouse behind luxury brands like Cartier and Van Cleef & Arpels, excels not just through the prestige of its products but also through its strategic operations.
Richemont has a global reach, operating in more than 150 locations, ranging from New York to Tokyo and from Dubai to Geneva. Richemont has 2422 boutiques in total, 1367 of which the business directly manages.
Richemont operates in three different segments:
jewelry (jewelry maisons)
watches (specialist watchmakers)
clothing, accessories, and other.
By controlling its entire supply chain—from production to sales—Richemont streamlines processes, cuts costs, and maintains high quality (see image below). This control is a crucial advantage in the luxury market, where brand reputation and customer satisfaction are paramount.
Moreover, Richemont capitalizes on economies of scale, spreading fixed costs over a large output, which reduces the cost per unit. This allows the company to negotiate better deals with suppliers, get better (and cheaper) retail locations, get better advertising space, and keep its products exclusive and profitable.
Richemont's business model shows that it can survive in the changing luxury market. The company's approach supports its present profitability and effectively positions it for future expansion.
Are you interested in learning more about Richemont? Check it out on www.thedutchinvestors.com