Pharrell Williams & Louis Vuitton: the era of entertainment stars appointed as creative directors has begun

Pharrell Williams & Louis Vuitton

Pharrell Williams & Louis Vuitton are getting into bed together. This is exciting as it is the first time a fully-fledged entertainment star has taken the helm at one of the most prestigious luxury brands worldwide, as its creative director. While musician Kanye West had already broken ground, at sportswear firm Adidas, in his role as artistic director of the uber-successful Yeezy brand, no luxury conglomerate had had the balls to appoint a celebrity as creative director of one of its crown’s jewels. Well, ‟Monsieur Arnault”, eternally the groundbreaker, has reached new ground, by doing exactly that at Louis Vuitton, with Pharrell Williams. How does this strategy fit into the inverted pyramid structure of the luxury ‟maison”? Are celebrities apt at running and maintaining their fashion brands and companies, in the long term? How are luxury brands tying creative directors to themselves, exactly, via their super-secretive contracts?

1. Inverted pyramid of human resource management

The creator-manager tandem is a characteristic of luxury.

Succeeding in luxury requires to be both highly creative and imaginative (right cerebral hemisphere) and highly rigorous (left cerebral hemisphere). Unlike traditional industry (left-brain), where there is often initially one person who creates an empire alone, or art (right-brain), where there is always an individual, success in luxury is achieved at minimum through a tandem of right-brain and left-brain skills, with neither dominating the other; each has its own territory.

The partnership formed by Pierre Bergé and Yves Saint Laurent is a famous one, such as the association of Tom Ford with Domenico de Sole at Gucci or the deal between Gabrielle Chanel and the Wertheimer brothers. In fact, all luxury brands originate with a couple (or a threesome, in the case of Chanel!), and the brand can be considered their baby.

Not only can success in luxury not be the work of a single person, but it cannot be the work of a single pair, either. It is critical to seek to form complementary teams, composed of artists (who should respect the universe of the brand and take into account economic and practical reality, which is that luxury items must sell), artisans (who manufacture such luxury products), managers (who need to know how to work with artists and have, themselves, an artistic side, while remaining very left-brain individuals at the same time) and salespeople (who are in direct contact with the client).

In luxury, other than the creator, the most important people for the brand are the workers (i.e. the artisans, who make the products), and the salespeople, who are the link with end-customers. All the others are really at their service.

A luxury house, therefore, functions according to the famous principle of the ‟inverted pyramid”, except that in this case it is a real and daily practice, and not a vague slogan contradicted by the facts (who would believe that an assembly line worker at carmaker Renault, or a salesperson at L’Oréal, is more important than the CEO?).

In a house such as Louis Vuitton, a store director has priority over all other departments and always has direct access to the CEO. It is compulsory that any new employee in a managerial position of any kind begins by working in the store, in order to understand fully what goes on there and how a manager’s job can serve the sales network and thus, the client. This period in sales is not only a matter of personal training, as in the case of major successful brands, but really a structural question: the whole organisation serves the store, in order to serve the client.

Managers should always be travelling to sites in order to create, and above all maintain, personal links between everyone.

This is one of the reasons why luxury management is so difficult. Genuinely assuming the concept of the ‟inverted pyramid” is often difficult for managers accustomed to giving orders from behind their desks; travelling endlessly to the four corners of the world is tiring (not to mention, impossible, in the midst of a pandemic or war like the Covid-19 outburst or the Russian/Ukrainian conflict); knowing how to stay in the background is unnatural to the ego of the Western ‟leader”.

2. Rise of entertainment stars as fashion designers

In this context of ‟inverted pyramid”, it can be difficult to introduce fashion, with its ‟star system”, within a luxury house. The rejection may be swift, if the teams dealing with fashion do not have the right human behaviours (i.e. prioritising the workers, artisans and salespeople).

Yet, a luxury conglomerate has become very masterful at introducing some showbizz glitz at the top of its brands’ inverted pyramids, by making several stars from the entertainment sector creative directors of its luxury ‟maisons”.

Yes, you have guessed correctly, I am referring to French luxury conglomerate LVMH.

After Virgil Abloh, a trained architect who managed his own successful fashion label, Off-White, in parallel with his Louis Vuitton duties, passed away, Bernard Arnault, founder of LVMH, has made star record producer, rapper, songwriter and singer Pharrell Williams the next men’s creative director of Louis Vuitton, one of the largest (by sales, prestige and revenues) Fashion & Leather Goods’ brands from the LVMH portfolio, with Christian Dior.

Many other stars from the entertainment industry have made the crossover from music and/or film, to fashion. Most of the time, this is by creating their own fashion label, with varying degrees of success.

While the Olsen twin sisters have really hit the nail on the head, with their minimalistic, extremely expensive and highly-desirable fashion brand The Row, Beyoncé and Rihanna both failed to convince their investors (Philip Green from now-defunct Topshop, for the former, and Bernard Arnault from LVMH for the latter), as well as potential clients, that their brands Ivy Park and Fenty, were attractive propositions. The various reasons for such flops are explained with flair and aplomb by French blogger, Crazy Sally!

Other brands birthed by celebrities include ‟Victoria Beckham”, which continues to report a loss 14 years in the making, and despite hefty external investments poured into it by financial backers at inception, and ‟Skims”, a shapewear brand launched by ex-reality TV sensation Kim Kardashian.

I do not give ‟Victoria Beckham” another 10 years, as I think that its star will fade with that of its eponymous founder, ex-Spice GirlsVictoria Beckham. But Skims may be onto something, more long term, in light of the business acumen and right-brain capabilities of Ms Kardashian.

Indeed, most of these celebs’ led fashion collections, brands and companies are rare cases and, most of the time, are founded on fragile structures which do not pass the test of time. Those which will resist will be the most authentic and the best, i.e. striking, offering valuable products which are the outcome of a real collaboration between a star with a vision, and a designer who knows how to interpret it.

3. Contract between luxury brands & creative directors: freelancing but not really free

Most creative directors of French fashion houses are consultants, not employees, and therefore have the right to execute other fashion projects or contracts, for other fashion houses (for example, Karl Lagerfeld, who viewed himself as a ‟mercenary” was the creative director of both Chanel and LVMH’s Fendi).

French freelancers and consultants who work for fashion and luxury houses are not protected by French labour rules applying to employer–employee relationships, in particular in the areas of paid leave, maternity leave, medical cover and even working time. However, French labour courts are prompt at requalifying an alleged freelancing relationship into an employment relationship, provided that a subordination link (characterised by work done under the authority of an employer, which has the power to give orders, directives, guidelines, and to control the performance of such work, and may sanction any breach of such performance) exists, between the alleged freelancer and the fashion company.

In the United Kingdom (‟UK”), which has its fair share of luxury brands (Burberry, Alexander McQueen, Vivienne Westwood), most creative directors are either freelance workers, or sometimes have struck a consultancy or contractor arrangement with their brand, as self-employed individuals. This way, they can run multiple creative businesses simultaneously, such as Jonathan Anderson, creative director of LVMH’s LOEWE and of his eponymous label, JW Anderson. However, also in the UK, the type of contract is not determinative of the nature of the relationship. Employment tribunals can look beyond the contractual arrangements to how the relationship operates in practice when deciding whether someone is an employee, a worker or genuinely self-employed.

To get on the good side of their creative directors, luxury brands do not hesitate to roll out the red carpet, in terms of financial packages, often incentivising their art directors via stock options and/or minority stakes in the fashion brand. Of course, all these contracts are highly confidential and kept under wraps by the parties, but their content may transpire when art directors cash in on their stock options, with the notable example of Tom Ford, artistic director of Gucci NV, who exercised 1 million stock options in May 2003, and subsequently sold this million shares on the secondary market (since Gucci NV was a listed company), thus realising a comfortable capital gain of Euros 25 million.

Other less bombastic ways to find out about the content of highly confidential fashion brand/artistic director contracts, are when the parties go to court because of alleged breaches of such contracts. Fashion maverick Hedi Slimane filed a lawsuit, and won, against Kering‘s Saint Laurent, claiming that parent company Kering owed him an additional sum of about Euros 10 million in consideration of the minority stake agreed upon in the contract. The French court found that Saint Laurent’s ex-creative directorwas underpaid by as much as Euros 9.3 million after taxes for his last year of service”, bringing his annual salary – including his ownership share – to more than Euros 10 million. It was revealed, via the court ruling, that during his tenure at Saint Laurent, Slimane had a contractual clause that ‟guaranteed an after-tax compensation of at least Euros 10 million per year”, mainly through an agreement to buy shares in the company, and then resell them at a higher price.

A new way to incentivise creative directors, experimented on by LVMH at Louis Vuitton, is by offering flexibility in terms of schedule and time commitments. Indeed, Pharrell Williams has been appointed to succeed Virgil Abloh as Louis Vuitton’s artistic director for menswear, signing a contract with very particular conditions that allow the rapper to keep running his own companies (Joopiter and Humanrace) as well as honouring his community commitments (Black Ambition and Team Yellow). The contract signed provides that the artist will devote a third of his working time to his role at Louis Vuitton.

However, all this goodness comes at a hefty price, first in terms of non-competition clauses always built into the contract entered into between the luxury brand and the artistic designer. Via these non-compete covenants, the art director promises that, upon their separation from the brand (whether by termination, voluntary resignation or otherwise), they will not compete with their former brand for a certain period of time and/or within a particular geographic area. Raf Simons, for example, had to serve a nine-month non-compete period before completing his transition from the creative director role of Christian Dior to US high-end brand Calvin Klein in 2016, due to a strict non-competition undertaking with Christian Dior. One year seems to be the approximate length of time chosen by most esteemed European brands to appoint a new creative director: Nicolas Ghesquière took up his position as women’s creative director at Louis Vuitton on 4 November 2013, exactly one year and one day after leaving Kering’s Balenciaga, while Ricardo Tisci waited just over a year to join Burberry as art director in March 2018, after leaving LVMH’s Givenchy in February 2017. Sometimes, things can get a little bit out of end, when the creative director, although bound by a non-competition covenant, terminates their current employment agreement with their luxury brand. That is exactly what happened in 2013, when Nicolas Ghesquière and Balenciaga separated, before the new contract between them was finalised. This matter went to court, and, through French court documents, it was revealed that the brand paid Nicolas Ghesquiere ‟Euros 6.6. million as compensation for breaking his last work contracts signed in 2010 and 2012”. Nicolas Ghesquière also walked away with Euros 32 million for the purchase of his 10 percent stake in the company, granted to him when the Gucci Group bought Balenciaga in 2001.

Another important undertaking that creative directors give to their fashion brands is that they permanently assign their rights to the production and associated intellectual property rights, to their brand. This is not an automatic transfer of right, underpinning any relationship between freelancers and their clients, though (in fact, the default regime, in both France and the UK, is that the freelancer keeps his/her intellectual property rights in the works created for the client). Therefore, the contracts between art directors and luxury brands always provide for the assignment of all rights to the production and intellectual property rights, from the designer, to the luxury ‟maison”. Even then, things do not always go smoothly, as evidenced by yet another legal battle between Hedi Slimane and Kering’s Saint Laurent: the parties clashed over the rights to the photographs in Saint Laurent’s online archive, many of which had been taken by Hedi Slimane. Hence, the large-scale deletion of the content of Saint Laurent’s instagram account after Hedi Slimane’s successor, Anthony Vaccarello, was announced. And Hedi Slimane was awarded Euros 618,000 after a Paris court ruled parent company Kering unlawfully used his Saint Laurent photographs without consent (or appropriate contractual arrangements to this effect).

Finally, last but not least: like in the Hollywood old star system, luxury houses now include moral clauses and reputational clauses in their agreements with their creative directors, in a similar manner that they would do with their celebrities brand ambassadors. Adidas learned the lesson the hard way, after it decided to unilaterally terminate its relationship with troubled, yet supra-bankable, rapper and Yeezy creative director Kanye West, losing up to Euros 250 million to its net income in 2022, as a result of this decision.

So, we wish good luck to Pharrell Williams at Louis Vuitton: while him and his handlers definitely seem to have struck a sweet deal from LVMH’s Bernard Arnault, something tells me that he will sweat blood soon, in order to fulfil the high expectations of ‟Monsieur Arnault”. And, Pharrell, don’t forget: always have your models carry bags on the catwalk, as Marc Jacobs learned the hard way, from ‟Monsieur Arnault”, when he, too, was creative director of Louis Vuitton!

Crefovi’s live webinar: Pharrell Williams & Louis Vuitton – era of celebrities as creative directors – 31 March 2023

Crefovi regularly updates its social media channels, such as LinkedinTwitterInstagramYouTube and Facebook. Check our latest news there!


    Your name (required)

    Your email (required)

    Subject

    Your message

    captcha

    Leave a comment

    Your email address will not be published. Required fields are marked *