Hermès, Vuitton : Two Brands of Excellence..: Luxury and bags market overview

The global luxury market does not really suffer from the economic crisis. It currently stands for 1200 billion Euros. In 2013, the luxury global market should record a growth of 217 billion dollars which is superior to 2012. This growth is mainly boosted by the American consumers which recently tend to be more than the Chinese ones. European brands stand for 70% of the global luxury market. Exports are mainly made out of Europe. However, even it deals with a booming sector, the market growth between 2012-2014 will be lower than the one recorded between 2010-2011 (+10%).

And what about the luxury bags market? The luxury bags market represents the fourth segment of the global luxury market. It accounts for 10% of the global market which corresponds to 11.5 billion dollars. The luxury market bags recorded a growth slowdown in 2012. It incited luxury brands to question their business models. Customers in luxury industry are now mainly from emergent countries (Brazil, Russia, India, China) and from the USA. They are well-known for being exigent and they are more and more looking for specific brand experiences which create an emotional link between the brand and the customer.

In this context, we also assist to a phenomenon a re-localization. Bags luxury brands tend to the re-localize their production in order to promote the “Made in France”. The market leaders do not focus on the logo anymore but mostly on the leather. Bags luxury brands are enable to increase and justify the product prices. As for the distribution channels, the development of the stores is concentrated on new markets (China ranks first). Some luxury brands even rethink their retail strategy. Indeed, we can observe a consolidation of the retail distribution channels just after a step of the multiplication of the POS. Bags luxury brands clearly want to improve the experience in the retail stores. Their strategies are thinking in terms of services, comfort, precision and emotions.

To go further....

The SWOT analysis ( Strenghts, Weaknesses, Opportunities, Threats) enables to highlight the strengths and the weaknesses, the opportunities and the treats of a company or a sector in order to find a development strategy. We analyzed the luxury bags sector in order to more understand the competitive environment of Louis Vuitton and Hermès.


Internal analysis	Strengths: · Brand image · Does not suffer from the economic context · Financial situation · Visibility · Know-how, excellence, quality	Weaknesses: · Hostility to the risks · A too classical image · No uniformed laws about forgery in Europe
External analysis	Opportunities: · New costumers: “Henrys” High Earnings, Not Rich Yet · The international development · The purchasing of bags: · The increasing of the purchasing of power in emerging countries	Threats: · Forgery coupled with the development of the 2.0 · Raw materials price increasing · A concentrated sector · Anticorruption measures decided by Xi Jinping government in China · The yen devaluation in Japan