According
to the majority of studies, Louis Vuitton is the most famous luxury
brand, well above Dior, Gucci or Hermes.
Nevertheless,
contrary to Hermes, the sale growth of Louis Vuitton is decreasing
these last years.
How this situation can be explained?
LVMH,
the group which owns Louis Vuitton has to face the paradoxes of the
Luxury industry. By seeking a maximization of profits and sales increase, there is a risk of democratization and banalisation of the
product and subsequently, the image of the brand! But the huge margins of
Louis Vuitton (40%) depends on its sales capacity thanks to its
quality but also the rarity...
As
said Rahul Sharma, General director of Neev Capital: “ The beauty
of luxury products is their rarity, and from this point of view, a
high price is reassuring. Nobody wants something that is expensive
and extremely widespread”.
Moreover,
we can see lately that many people who “don't fit” the image of
the brand, such as TV reality-show personalities, “Bling bling”
Hip-hop singers are wearing an LV product. We are clearly assisting
at a tiredness of the monogram from the real customer. Also, the plague
of the counterfeit doesn't help at all.
A
discreet luxury quest
The
vision of people towards luxury goods has started to move, even in
emerging countries such as China, where showing its success and
social status was really important, it seems that these customers are
now more looking for discretion rather than a too visible product
printed with the LV Monogram. What matter to them now is the quality,
the use of precious raw material that it is hard to copy.
With
its “ultra” exclusive strategy, Hermes is totally in this trend.
Indeed, as I mentioned in a previous article, Hermes counts on the
rarity of their products (only 5 Berkins bags are produced per week
and don't hesitate to stop the production of a goods which have become too popular, like in 2005 in Japan with the entry level canvas bag) in addition to the
high quality of their products. Hermes has succeeded to fit its brand
mantra, by cultivating its high Know how and its exclusivity (they
have only 20 stores in China today whereas Louis Vuitton has opened
35 stores in 2010) . The increase of its sales this year (+28% ) is
an illustration of the success of this strategy.
Louis
Vuitton has started to understand this trend, and Bernard Arnault, its
Presidents has confirmed that they will slow down the opening rhythm of their boutiques. Moreover, the entrance of the Artistic Director, Nicolas Ghesquière could help the company to focus on its new
strategy: going toward a more premium image and quality, by betting on leather raw material rather than printed canvas (which represents today more than 50% of their products), without the monogram.
Audrey
H
Sources
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