Fendi
LVMH Tier 1 brand using costly creative leadership signals to maintain alpha position during luxury market contraction.
When LVMH's fashion division shed 3% of revenue in 2024, declining to €41 billion, the group's Tier 1 brands faced what happens when the alpha's position depends on continuous growth. Fendi operates within LVMH's strict pecking order—a hierarchy where Louis Vuitton and Dior command premium resources, veto rights over corporate decisions, and first access to talent. The biological parallel runs exact: like gray wolves in an established pack, dominant brands defend their position through costly signals that subordinates cannot afford to fake.
In October 2024, LVMH dismissed Kim Jones from Fendi's creative director role. One year later, in October 2025, the group appointed Maria Grazia Chiuri as Chief Creative Officer—a €2-3 million annual signal that Fendi retains Tier 1 status despite market headwinds. This mirrors how alpha wolves increase scent-marking frequency when pack stability wavers. The signal costs more than the direct salary: creative director changes disrupt design pipelines for 18-24 months, risk alienating existing customers, and demand intensive executive oversight during transition periods.
Fendi's position within LVMH demonstrates how pecking orders reduce conflict energy expenditure. When hierarchy is clear—as it has been at LVMH since the 1990s—brands compete through product excellence rather than internal warfare for resources. Kering's €17.2 billion revenue (down 12% in 2024) versus LVMH's €84.7 billion reveals the cost of ambiguous hierarchy: Kering's operating margin collapsed from 24.3% to 14.9% while LVMH maintained 26% margins, despite both facing identical market conditions. The difference lies in whether brands know their rank without daily contests.
Fendi's challenge mirrors that of beta wolves during prey scarcity: maintain dominance signals expensive enough to deter challengers, while conserving resources for actual survival. The brand must signal Tier 1 status through creative leadership, flagship store expansion (recent openings in Doha and Amsterdam), and product innovation (the Pequin line relaunch in H1 2024)—even as tourist spending contracts and Chinese luxury demand stalls.