By guest author Kati Chitrakorn from Vogue Business
The luxury conglomerate is banking on the marketing power of the NBA and athletes like Megan Rapinoe to drive growth in brand awareness and affinity.
Key takeaways:
- The streetwear boom and rising demand for wellness-themed products have led luxury brands to deepen their commercial relationships with athletes.
- Athlete partnerships can help upscale labels, who still depend on lower-priced items like perfumes for profits, reach an even wider audience than conventional marketing channels.
- Working with politically vocal athletes is an opportunity with risks, so LVMH will have to carefully navigate ongoing tensions between China and the NBA.
When Louis Vuitton announced it would design in-game outfits and a trophy carrying case for Riot Games’ League of Legends World Championship, some were left scratching their heads. But it was only the beginning of the luxury fashion house’s latest push into competitive sports.
On Wednesday January 22, 2020, Louis Vuitton and the NBA confirmed they would enter a multi-year partnership that includes an annual capsule collection of apparel and accessories designed by Virgil Abloh, the brand’s artistic director of menswear. Louis Vuitton will also craft a bespoke case to display the Larry O’Brien trophy awarded to the NBA team that wins the Finals.
The deal marks Louis Vuitton’s first partnership with a major North American sports league and follows LVMH sister brand Loewe’s new Autumn/Winter 2020 campaign featuring Megan Rapinoe, the World Cup-winning co-captain of the US women’s national football team. “The opportunity here is to attract an instant consumer following, in a similar way to celebrities like Rihanna,” says Bernstein analyst Luca Solca.
Athletes regularly land campaigns for watches, fragrance and underwear; a few (David Beckham, Victor Cruz, Russell Westbrook) have made it into the realm of high fashion. Prada and Adidas also recently announced a long-term partnership, while Dior unveiled a sneaker with the Jordan Brand at its pre-fall men’s show in Miami.
But for the most part, luxury brand collaborations with athletes have been rare. That’s starting to change as consumers increasingly prioritise health and wellness. “There is something to be said for working with athletes who have achieved success on the basis of their performance as opposed to their fashion pursuits or social followings,” says Anusha Couttigane, principal fashion analyst at Kantar.
The timing of LVMH’s deals are also opportune: the Olympics take place in the summer, and the NFL is marking the 100th anniversary of its inaugural season.
Endorsement inflation?
The cost of Louis Vuitton’s deal with the NBA cannot come with a cheap price tag, especially if the luxury house is going up against well-funded sportswear giants like Nike or Adidas that have dominated athletic sponsorships. The latter have also increasingly become involved in fashion weeks as sportswear becomes part of daily wear. (Louis Vuitton declined to comment for this story.)
“There is a lot of competition to sign the most high-profile sportsmen and women, so the price gets higher by the year,” says John Collard, chief executive of Sports Impact, a consultancy. “It can take a film star a long time to monetise their profile, but sports stars are often catapulted into stardom based on a single performance watched by millions at an event like the Olympic Games. The growth in senior sporting competition has also given top sports stars longer promotional value and appeal to a growing population with disposable incomes attractive to luxury brands.”
“LVMH is interested in escalating the fixed costs to compete in the industry. They are larger and therefore have to gain if fixed costs escalate,” says Solca. LVMH had a market capitalisation of around USD 230 billion during Thursday trading in Paris, ahead of Nike’s USD 129 billion and Adidas’s USD 69 billion.
Athletes often have sponsors that may be partial competitors: Rapinoe, for instance, represents Loewe but is also signed for Nike. And without seeing a specific contract, it is hard to determine how those tensions are managed and what an ambassador is allowed to endorse. At times, however, this can be beneficial for both the brand and the athlete. “For star athletes, having an association with a fashionable luxury brand can also attract lucrative promotional deals with other brands… so there is a win-win relationship if projected in the right way,” says Collard.
Couttigane believes that a deal with Vuitton instead of, say, Nike, has the potential to be bigger in terms of customer awareness and acquisition. “A sports brand like Nike is a natural fit for the NBA, but that also means that brand familiarity for NBA shoppers is already high,” she says. “Conversion is likely to be higher among an audience that does not already organically engage with Louis Vuitton.”
Going mass
Louis Vuitton has a long history of producing trophy cases for events like the America’s Cup and the FIFA World Cup. But, broader collaborations offer reach to the wider audience who buy more accessible categories like perfumes and accessories that drive most luxury house profits.
Basketball, by some measures the world’s second-favourite sport, is one of them. “One cannot ignore the huge audience derived from sports culture, nor the loyal following that many major league sports enjoy,” says Couttigane.
“Louis Vuitton is one of the world’s most iconic luxury brands and has been associated with some of the world’s most coveted sports trophies,” says Ralph Rivera, managing director of NBA Europe and Middle East. “This partnership provides fans around the world another unique way to connect with the NBA brand.”
Sportswear is also overtaking traditional fashion in some categories. The NPD Group forecasts that sports shoes will become the largest footwear category in the US by 2020, beating out “fashion” footwear, which includes shoes, boots, sandals and slippers.
“While basketball players no longer drive big sales of their on-the-court shoes, some have said that the trip from the bus to the locker room is the new runway,” says Matt Powell, senior industry advisor of sports at NPD, adding that luxury’s shift to sports presents an opportunity for brands to work with athletes in a different way. “Brands want to showcase their off-the-court styles.”
Political risks
Signing athletes like Rapinoe, who has become a progressive feminist icon, also comes with some risk. Evidence suggests that Western customers reward brands who have a positive message, but that may not be the case in China.
Louis Vuitton, for instance, will have to navigate political tensions between China and the NBA. While the NBA may have been the primary gateway to Chinese consumers for some of its sponsors, Louis Vuitton already has a large presence in the country. “If the Chinese consumer turns on the NBA, Western brands could be pulled into the fight,” says Powell.
“It’s a trade-off that Louis Vuitton may have to make,” says Couttigane. “While a number of Chinese companies have suspended their business deals with the NBA, we have not witnessed the Chinese government banning all brands associated with it. Furthermore… banning a cultural phenomenon often has the effect of making access to it feel more exclusive and desirable.”