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Lunch at the Tribeca Grill with Daniel Lalonde

Published by The New York Sun on 2005-05-16

Daniel Lalonde, president and CEO of LVMH Watch and Jewelry for North America, looks as though he's stepped out of one of his global company's glossy catalogues for luxury brands like TAG Heuer, Louis Vuitton, Moet & Chandon, Christian Dior, Celine, Loewe, Kenzo, Givenchy, Thomas Pink, Fendi, Emilio Pucci, Donna Karan, Marc Jacobs, Berluti, Guerlain and Stefano Bi.

He exudes success. He's tall, wears a smartly tailored striped suit, and, of course, the fabled TAG Heuer Carrera watch, which has been a market leader for 41 years. He's also unfashionably late for the appointment.

That's understandable. The Canadian-born Mr. Lalonde's office is in Springfield, N.J., and on this day he's had multiple meetings for some of the world renowned brands that are part of the watch and jewelry division: TAG Heuer - one of the world's biggest selling luxury watches after Rolex - Christian Dior, Chaumet, and Zenith watches, Omas pens - which cost anywhere from $250 to $5,000 - and De Beers LV, the luxury retail venture of LVMH and the De Beers Diamond Company, among others.

"I'm having fun at this," said Mr. Lalonde, who's marking the completion of his third year at LVMH, after 5 years as chief operating officer of Nestle' Nespresso S.A. headquartered in Paudex, Switzerland. Under Mr. Lalonde's leadership, Nespresso - which creates innovative coffee-making technology, and premium portioned coffee - reached the number 1 position in global sales for 4 straight years; he raised annual sales from $25 million in 5 countries to $360 million in 30 countries.

And before joining Nespresso, Mr. Lalonde was managing director of the retail-store division of Haeagen Dazs Europe S.A. Deploying his earlier experience with the Rothschilds, and at a management consultancy in Paris, as well as the rigorous academic skills acquired while obtaining an MBA at France's Insead, the ambitious mathematics graduate of Canada's University of Waterloo transformed the ice-cream manufacturer. He developed a network of 130 stores in 12 European countries in a short time span, thereby tripling the business.

"The key was to surround oneself with smart people from different disciplines," Mr. Lalonde said, articulating a philosophy that he continues to espouse. "You have to set a very clear vision. A leader must find the time to explain that vision to his colleagues, and then he needs to summon the energy and wherewithal to mobilize talent. A leader must challenge the people around him and be challenged as well. You need to transmit to them the notion that business growth can only be generated by taking chances, by prudent risk."

Now he's brought his marketing magic to LVMH, doubling sales in America - which accounts for 25% of the company's worldwide revenues; last year, LVMH's global sales were $16.1 billion, an increase of nearly $1 billion over 2003. Net income in 2004 was $1.29 billion, an increase of 39.7% from 2003. In the first quarter of 2005, LVMH - which has 56,000 employees globally - has reported worldwide sales of $3.9 billion, representing a growth of 11% over a comparable period last year. The Louis Vuitton brand - widely believed to be the world's best known luxury brand - reported a double-digit increase in sales, especially in the U.S. and Asian markets.

"From the very start, I asked, 'What will it take to double our business in America? Where could we create the opportunities for faster growth?' - and I set out to get the answers," Mr. Lalonde said. When he became LVMH's chief executive for America, TAG Heuer was number 5 or 6 in sales of luxury watches. Now it's number 2. In fact, TAG Heuer sales last year represented more than 50% of the growth in the luxury-watch industry in this country.

(Various estimates have put the total value of the American watch market at nearly $2 billion, according to Europa Star, an industry publication. Mr. Lalonde is especially targeting the 5.6 million households - or 5% of American households - who are in the "super affluent" category of earning more than $150,000 annually. "The consumer is more interested in luxury watches than ever, although we still have a long way to go," he said. "Only 5% of the U.S. population wears a luxury watch, so the sky is the limit.")

Mr. Lalonde provided his management "answers" through an aggressive strategy to strengthen LVMH's position in watches and jewelry in America.

That strategy included working with other top LVMH executives in coaxing the golf champion Tiger Woods to start a relationship with TAG Heuer in May 2003: Mr. Woods has helped design the TAG Heuer Professional Golf Watch, an ergonomically precise watch that golfers can wear while playing the game. Sales of TAG Heuer watches jumped 30% when Mr. Woods came aboard as one of Mr. Lalonde's "ambassadors." The watch - which costs around $1,300 - has pre-sold 3,000 units; it will be on the market today.

It took Mr. Woods and TAG Heuer nearly two years to come up with the watch. But their collaboration illustrated how much faith Mr. Lalonde has put in developing "ambassadors" for TAG Heuer, a watch that originally created by Edouard Heuer in 1860 in Switzerland. In addition to Mr. Woods, Mr. Lalonde has persuaded Jeff Gordon, the NASCAR star, to endorse TAG Heuer. NASCAR has more than 70 million fans in America, of whom 40% are women - for whom LVMH makes exquisite watches not only in the TAG Heuer line but other brands as well.

He also led the signing of Maria Sharapova, the 2004 Wimbledon women's tennis champion; massive hoardings featuring her are all over the New York metropolitan area. TAG Heuer also recently signed up the actress Uma Thurman, racing-car ace Juan Pablo Montoya and his professional partner, Kimi Raikkomen. The company also signed by actor Brad Pitt, who favors TAG Heuer's Carrera watch. All of these luminaries have been photographed by the celebrated lensman Patrick Demarchelier.

"These stars convey a certain message that is implicit in our brand - a determination to win, to succeed in life, to surpass expectations," Mr. Lalonde said. His own drive took him from Cornwall, Ontario, where he was born to Raymond and Diane Lalonde, both teachers, and from aspiring to become a professional hockey player, to moving to Europe in early recognition of globalization and its market potential for luxury goods.

Besides roping in celebrities, Mr. Lalonde has promoted the "shop in a shop" concept for LVMH, whose products are featured in 225 special shops at the nation's top 1,000 retail outlets. And he's developed what LVMH - a conglomerate formed in 1987 by Bernard Arnault, France's richest man - calls customer relationship management (CRM), which means staying in touch with buyers after their purchase. The company's global advertising budget last year was around $250 million, making it among the world's top 100 corporate advertisers.

"Passion is probably the most important thing when you're selling a product," Mr. Lalonde said. "It's about establishing a winning mind set. But it's like being an athlete - you've got to keep winning to be considered a genuine success."

Pranay Gupte,
Senior Writer and Global-Affairs Columnist

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