Luxury Brands Can Do Better With a Conglomerate Behind Them

Luxury brands are finding it increasingly difficult to thrive as standalone companies in the fashion industry. Cash-rich conglomerates like LVMH and Kering have a competitive advantage due to their large spending on social media marketing and hiring of star designers. These conglomerates are well-positioned to invest in emerging markets like mainland China. Consolidation in the luxury sector provides shared resources and negotiating power, and allows conglomerates to withstand consumer trends and demand fluctuations. This trend has led smaller brands to seek the security of larger groups. However, the consolidation of the industry by a few key forces raises questions about how long it can continue. Some brands, like Chanel, Rolex, and Hermès, have chosen to remain independent and are resistant to acquisition attempts.

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