LOUIS' FABULOUS REIGN

Holding fast to no-discount, no-sale policy may be Louis Vuitton’s best strategy to stay on top of the luxury chart. For one, it’s a practical demonstration of a value that never dips

The opening of Louis Vuitton’s latest boutique at ION Orchard was a cause celebre for a number of reasons. It is the luxury retailer’s first and largest global store in Southeast Asia, its fourth outlet in Singapore after Ngee Ann City, Raffles Hotel Arcade and DFS Scotts Walk, and the one that offers the most extensive array of products—from leather goods to fashion, timepieces and accessories. More importantly, it opened at a time when even the most avid shoppers mouth the phrase “considered spending” as self-protective mantra. That turned the event into a closely watched economic bellwether: is the fashion flock ready to return?
The 2.5-level concept store features show-stoppers beginning from a curved glass facade that mimics the folds of a scarf and a pattern that recalls the damier, the ubiquitous checkerboard design on Louis Vuitton bags. The main entrance opens to a double volume space where a nine-metre-long women’s bag bar, towering display cabinets, and a seven-metre-long men’s bag bar are laid out. A serpentine marble staircase leads to a mezzanine shop, and on to the second level where the men’s and women’s apparel and accessories sections are located. The launch showcased the “Singapore Exclusives” range, with some items bearing the Louis Vuitton Orchard Road Singapore label. If nothing else stops the fashionista dead on her tracks in this 905-sqm shop, the pleasure of space and volume, in rare supply at prime shopping hubs, will surely tell her that this is indeed her temple.

The launch also demonstrated the brand’s continued expansion in Asia, its biggest market after Europe. Continued expansion within the region is therefore to be expected. In late May this year, it dazzled fans in Japan when it opened Louis Vuitton/underground/, in Seibu, a department store in Tokyo’s Ikebukuro district. Set up like a warehouse and open for a limited time only, this concept store has somehow revived youthful interest in the brand in a country where hardcore fashionistas have been reportedly trading their designer monograms for H&M confections. Last year the brand focused on Hong Kong, where the second Maison Louis Vuitton—the second largest in the world after Paris—opened in March on 5 Canton Road. (Extensive renovation was completed on the Maison Louis Vuitton at Hong Kong’s Landmark building in 2005.)

“We have 77 stores in the region and another five are expected to open this year,” confirms Jean-Baptiste Debains, Louis Vuitton Asia Pacific president, who graced the Singapore launch. He also admitted that they are seriously considering a fifth outlet in one of Singapore’s integrated resort complexes.

Estimated to be worth over US$19.395 billion, Louis Vuitton is the 19th most valuable brand in the world according to a 2009 Millward Brown survey. Meanwhile, its peers in the luxury sector mark down their own products up to 70 percent, shrink new collections, and even host “invitation-only” end of season sales to ride out the passing storm; in extreme cases, some luxury brands, as in the case of Christian Lacroix, have filed for bankruptcy protection as sales dwindled. But not for Louis Vuitton: the brand seems oblivious to changing fortunes, never once holding sales or offering discounts. “It is important to show our customers the true value of our products,” explains Debains. And show they did.

Know By Heart
“Have you seen what the Neverfull is like inside,” asks a socialite as she talks about her enduring fascination with all things Louis Vuitton. (Her wardrobe is chockfull of Louis Vuitton apparels and accessories that she has painstakingly collected through the years.) She proceeds to turn the product inside out until it looks like a different but equally well-crafted bag. “This is the same lining that is used on the trunks,” she says as she draws attention to a striped, sturdy-looking, sepia-toned cloth. “It as if the bag is reversible because you have the same attention to craftsmanship applied to the inside as well.”

As far as Louis Vuitton die-hards go, this is standard talk. Ask anyone of them about the recent slew of ‘It’ bags from the label and you will get a litany of model names with running commentary on colour, size, and material. (Or try saying “Takashi Murakami Monogramoflage Speedy 35” without tripping.) Collaboration with independent artists such as Takashi Murakami and Richard Prince, and their respective outputs, are likewise committed to memory. So are projects involving Comme des Garcons’ Rei Kawakubo and the late Stephen Sprouse, which yielded the LV 40th anniversary commemorative bag, and the revival of the graffiti that the latter had done for the house nine years ago, respectively.

But beyond heady bag names and their availability in epi leather or damier canvas, Louis Vuitton fans know by heart that the label’s luggage are assembled and finished by hand, that an individual key will open all pad locks on an owner’s different bags, and that each trunk has a unique serial number.

A Manly Pursuit?
Louis Vuitton, which launched its first stores in Tokyo and Osaka in 1978, has established real connection with local customers. Being among the first foreign brands in the Japanese luxury market, Louis Vuitton initiated its customers early on into the label’s DNA. “Japanese customers take time to get to know the brand,” explains Debains. It’s part of their culture to examine a product with a keen eye for craftsmanship, details and construction. “Knowledge underlies our popularity in Japan. The more they know it, the more they like it,” he adds.

It is not uncommon for a Japanese shopper to know that a Stephen Sprouse bag for Louis Vuitton has 33 layers of colours, or that the hugely popular Neverfull bag is lined with the same material that is used in Louis Vuitton trunks. Such minutiae never escape the Japanese shopper and only add to his loyalty to the brand.

Perhaps the best example of Louis Vuitton’s popularity in Japan is the sustainability of its store dedicated entirely to men—a strategy rarely pursued by luxury brands with very popular women’s lines. And with the men’s luxury market developing rapidly, particularly in new economies, Louis Vuitton looks set to meet expectations fully. The brand’s well cultivated association with manly pursuits—from sailing (as originator and principal sponsor of the Louis Vuitton Cup and Louis Vuitton Pacific Series) to adventure travel (most of its elaborate trunks have been conceived for explorers such as Pierre Savorgnan de Brazza, and globetrotting musician Leopold Stokowski), and passion for new technologies—gives it unique advantage to connect with male luxury shoppers. It has a full range of products for the menfolk, from leather goods to apparel, timepieces and accessories. Special order trunks have so far included humidors, portable sound system carrier, watch cabinets, portable bars—all appealing to men.

Emotions In A Bag
Brands are digging into their past for appropriately sympathetic images to project during these less than sunny economic climate. Louis Vuitton is no exception, but it has also seized the opportunity to focus on a number of characteristics that makes the brand click with its followers. For the ageing boomers, there is the pleasant, wistful, core values campaign that reunited them with familiar icons. The campaign earlier featured Mikhail Gorbachev, an effective if unexpected spokesperson, and this time, to commemorate the 40th anniversary of the Apollo 11 mission, Buzz Aldrin. Showbiz legends Catherine Deneuve, Sean Connery, and Keith Richards have also had their star turns in separate ads that extol the wonders of journeys. The campaign was shot by Annie Liebovitz and projects a romantic longing for kinder, gentler world.

For the younger, hipper crowd, there is the second cycle of the Paris campaign featuring Madonna. The previous one showed the pop star in provocative, edgier poses, while the second revealed her softer aspects in a series of Steven Meisel photographs that suggest Tamara de Lempicka portraits. Meisel used the solarized technique favoured by Man Ray to set off varicolored planes and metallic shadows.
Tying up these two powerful ranges of images is one on father-daughter team of Francis Ford and Sophia Coppola, which also appeared in the core values campaign. Shot by Liebovitz in the meadow outside Buenos Aires, the print ad ran a tagline, “Inside every story, there is a beautiful journey”. It conveys the connection between two generations, the affection that binds them, and the values that they share.

Louis Vuitton, which has mastered visual imagery, through its various products and branding activities, is also showing its metier in emotional imagery through its campaigns. “But it’s not just the product but also the entire (brand) experience,” Debains explains. That explains how well we choose the locations of our stores and why we collaborate with the best professionals to deliver the kind of shops we have, he qualifies.

Bolstering Resilience
Louis Vuitton Malletier, aka Louis Vuitton, or simply LV, is the flagship brand of the Louis Vuitton LVMH conglomerate. It owns and operates over 60 brands, most of them high profile luxury labels such as Christian Dior, Fendi, Celine, Loewe, Donna Karan, Berluti, Thomas Pink, Kenzo, TAG Heuer, Marc Jacobs and Givenchy, among others. CEO Bernard Arnault grew the business with a series of takeovers, some of which were memorably acrimonious, in the mid-1980s, starting a trend for luxury conglomerates. Today, the Arnault Group holds a controlling 47.4 percent of the company, while foreign institutional investors and French institutional investors hold 27.4 percent and 16.2 percent shares, respectively. Its business groups include wines and spirits, fashion and leather goods, perfumes and cosmetics, watches and jewelry, and retail. The fashion and leather goods group, to which Louis Vuitton belongs, is a perennial money-maker, turning in a total profit of 1,060 billion Euros last year.

Profit from Recurring Operations by Business Group (Highlights)
EUR million
2006 2007 2008
Wines and Spirits 962 1,058 1,060
Fashion and Leather Goods 1,633 1,829 1,927
Perfumes and Cosmetics 222 256 290
Watches and Jewellery 80 141 118
Selective Retailing 387 426 388
Source: LVMH Annual Report 2008

Despite unfavourable economic scenario, Louis Vuitton sustained its momentum in Asian markets including China, Hong Kong, Macao, South Korea and others, reports Yves Carcelle, president of the fashion and leather goods business group. The group’s business in Japan accounts for 20 percent of revenue, while another 25 percent accounts for the rest of Asia. In comparison, eight percent of revenue comes France, and 21 from the rest of Europe.

Revenue by Business Group (Highlights)
EUR million
2006 2007 2008
Wines and Spirits 2,994 3,226 3,126
Fashion and Leather Goods 5,222 5,628 6,010
Perfumes and Cosmetics 2,519 2,731 2,768
Watches and Jewellery 737 833 879
Selective Retailing 3,877 4,164 4,376
Source: LVMH Annual Report 2008

In its 2008 Annual Report, Louis Vuitton LVMH revealed that China has become Louis Vuitton’s second largest customer base in the world.

Revenue by Geographic Region of Delivery
8% France
21% Rest of Europe
19% United States
20% Japan
25% Rest of Asia
7% Other Markets
Source: LVMH Annual Report 2008

Comfortable spread and market leadership have ensured Louis Vuitton’s resilience especially during the recent slowdown. LVMH group managing director Antonio Belloni said in an interview that “our businesses have different cycles, our portfolio of brands is very diversified, and we are present in all regions of the world.” These, he reasoned, are traditional factors in the solid performance of the Group.
“Uncertainty remains but we perform well,” adds Debains. Many people are not changing the way they live. There is more careful buying, but there is buying going on.