Brunswick Review Issue 11

Designing a dynasty

The third-generation CEO of Longchamp, Jean Cassegrain, tells Brunswick’s Agnès Catineau the secret of his family’s longevity

Longchamp, purveyor of luxury handbags and accessories, is one of the last family-owned leather goods manufacturers in France. In business for over a half century, the company branched out from its roots in small leather goods and became an important player in the fashion world, with a brand presence in 80 countries and an annual revenue of €566 million ($600 million).

A third-generation direct descendent and namesake of the Longchamp’s original founder, CEO Jean Cassegrain joined the family enterprise in 1991 after graduating from the École Supérieure de Commerce de Paris and working at the French Trade Commission in New York and a management consulting firm, eventually becoming CEO.

Cassegrain spoke with Brunswick about how the company and the brand have evolved with each generation and his strategies for navigating the digital marketplace.

Longchamp has grown into a large company. What were the key turning points?

My grandfather founded the company in 1948 focusing on leather-covered pipes. Brands weren’t as prevalent then but we realized that one way to develop the business was to create the Longchamp brand. We extended our product line from pipes to smoking accessories, including tobacco pouches and cigarette cases, but always covered in leather, the common thread. We targeted men for the first 30 years, but later marketed to women, which was an important development. We created nylon bags in the 1970s, which was innovative. More recently, we expanded into clothing and footwear.

The company also expanded abroad. We’ve always had an international clientele, starting with the young Allied troops in the early days in Paris after the war. Today we have distribution in 20 countries, including through our own stores. Single-brand stores didn’t really exist in the 1950s, 1960s and 1970s, but it’s now impossible to survive as a brand if you don’t have them. In the 1990s and 2000s, we bought back our distributors in the US, Japan, China and Russia, which meant new investments and teams to integrate. We also invested in the production team, our people, our savoir faire.

How has the company been handed down from generation to generation?

One key moment was the death of my grandfather, who died suddenly in 1972 – my father found himself in charge at the young age of 35, and decided to gradually buy up his brothers’ and sisters’ shares. He felt that his children were ready to join him, but perhaps not his siblings.

You have a longstanding relationship with supermodel and designer Kate Moss. Why did you decide to enlist her?

In 2006, we recognized that the brand was evolving and doing exciting things, but we needed to communicate it in a more affirmative way. So we made the choice to have Kate Moss as the face of the campaign. That was seen as a controversial move,but it gave the brand a lot of visibility.

What advantages does being a family business add to the brand’s value?

It gives the brand a lot of stability. We have few competitors that are still familial. We also are sheltered by not being publicly listed or owned by a private equity fund. Market pressure can be good but often leads to short-term reasoning. With family stability, there’s not a risk of a 180-degree strategic shift, which is appreciated by employees, customers and suppliers. But we do challenge ourselves. We are in a dynamic market and you can’t let yourself fall asleep at the wheel.

What are some of the risks you have to keep an eye on?

In the fashion world, the designer collections change regularly, in a kind of a rhythm. That imposes a constant renewal challenge for the company and its product lines. Also, the mechanism behind competition in our sector is more Darwinian, with the weakest being taken out and only large, efficient operators remaining. Twenty years ago leather goods and fashion were separate and we had less of that pressure, but that’s no longer the case.

What does being family owned mean in terms of business investment?

We’re independent and independence only works if the company is sufficiently profitable. Being a family-owned company doesn’t absolve you of the responsibility to make the same level of investments as others. To finance that, some will go public, others will take on a new partner. Since we choose to remain independent, the self-financing has to be there.

What do you see for the next generation?

In my generation, everyone is on board, including my brother and my sister. Everyone has their own role. Our children are still young but I hope that we have people ready to carry the baton in the next generation.

Are you open to outside managers who might want their own stake in the company?

We have four family members and five outside members on our management team. Managers who have worked for big companies are happy to be in an environment that is a bit healthier and less political. There are possibilities for career advancement that we can’t offer as easily. But people are happy to be able to contribute to building something and seeing the brand develop over the long run.

How do you attract talent?

Communication and visibility. People increasingly want to consume more intelligently and ethically and thus want to know the companies behind the brands. So that has us communicating not only through the brand but also through the company. If a brand is caught doing something negative, it exposes it to considerable risks. Is being virtuous compensated in the same way? I’m not so sure, but I do think that it’s a differentiating factor and a source of long-term value and attractiveness.

How do you cope with Millennials, who typically don’t like to stay very long at a company?

We recruit a lot of young people. We are lucky this sector is attractive for them – the brand too. We often wind up with too many candidates for the number of positions available.

Family-owned businesses tend to generate more employee loyalty – is that part of the appeal for the younger generation?

I’m not so sure they ask themselves that question. They are first and foremost attracted by the brand. How have you managed the digital revolution? Longchamp became the first French brand to start selling online in 2001. We were able to make the decision quickly because of our independence and short line of decision-making. We also decided to do it all ourselves. A lot of mid-sized and large companies have subcontracted their internet sales. But given its growing importance, it’s a bit like giving the Champs-Élysées flagship store to a franchisee to manage.

Does digitalization imply stores will close, putting longstanding employees at risk?

The goal is to keep everyone on board, but you have to be able to evolve. If you think about it as a zero-sum game, that you are transferring profits from one place to online, you are sure to have social consequences. Our approach is one of curiosity, of trying new things and assessing what works to maintain growth; this is rather well-adapted to the digital universe.

JEAN CASSEGRAIN

A graduate of the Ecole Supérieure de Commerce de Paris, Jean Cassegrain worked for a year at the French Trade Commission in New York City. He later worked as a management consultant before coming to work for the family business of Longchamp in 1991. He later succeeded his father as CEO of the company.

Agnès Catineau is the founding Partner of Brunswick’s Paris office, specializing in corporate and brand management, crisis issues and finance.

Illustration: Shout

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