Fashion Blogs

Introduction

Louis Vuitton (LV) was established as a family conglomerate under the leadership of its founder Louis Vuitton Malletier. Later on, the company was rearranged when Bernard Arnault, the chairman, ousted Racamier, a descendant of Louis Vuitton, from the board of directors by taking 45% of the controlling stake, hence expanding the business. LV's luxury products have been in the market for generations and are known for their high quality and craftsmanship that maintain heritage, tradition, and exclusivity. Leather and fashion are at the core of this brand. The products of the company are bought by customers as the latter strive to look extraordinary, possess commodities of high quality, and/or be able to identify themselves with the elite of the society. Despite facing various challenges, LV expanded its markets by opening stores across continents, hence targeting the variety of customers, namely absolute, aspirational, and accessible clients. Hence, even though there are some concerns about the ability of the new management to maintain LV’s market position, it is clear that new strategic measures should be employed to expand the company’s performance.

Reasons for Buying Luxury Goods

Only customers with certain characteristics can afford to purchase the luxury goods. Hence, there are various reasons as to why certain groups of people choose to purchase such commodities. One of the main reasons is exclusivity. Rich people desire to get something that might differ them from the rest. Since the luxury goods are affordable to them, it is the experience that comes with the purchase of such products that counts the most. Some factors influence the purchase of luxury goods, for example, Louis Vuitton bag. The craftsmanship that is placed on manufacturing of such accessory is exceptional, including the best quality of material as well as the legacy and tradition of the brand. Therefore, three groups of customers have been identified according to their pattern of purchase. At the top, the customers enjoy the luxurious experience, which is ceremonial but private in nature. The second group focuses on the quality of their purchases, while the third group identifies themselves with the elite group.

The Performance of Louis Vuitton Company

Louis Vuitton has undergone a lot of changes in its products and management. Its performance has improved since the establishment, while its expansion was affected by the Second World War but later revived under the new management. The company’s authorities have yielded big profits and allowed to get a stable position in the market of luxury products and services. Additionally, the acquisition of Celine in 1996 and Givenchy in 1998 has been beneficial to the company by boosting its productivity. In comparison to its competitors, LV has surpassed them all. Being the biggest player in 2011, LV managed to attain sales of over €23 billion. For example, PPR attained sales of over €12 billion, while Richemont achieved sales of over €9 billion in 2011. In terms of revenues, LV recorded the highest figures compared to Gucci, Bottega Veneta, Prada, Hermes and Chanel S.A. LV attained €8,712 million in revenues, €3,075 million in recurring operating returns, and 458 stores were opened globally by 2011.

The Performance of LV Leather and Fashion Group

LV has various branches, one of them is the leather and fashion group. It is one of the oldest business sectors that LV covers. Products under this group include handbags and leather products under different brands, such as Marc Jacobs, Loewe, Fendi, Louis Vuitton, and Donna Karan New York; they target different customer segments. For instance, Fendi and Marc Jacobs are for aspirational clients, while Loewe is suitable for both the absolute and aspirational clients. Each of these brands has its own price tag. For this case, Loewe’s prices are ranged from $2,000 to $4,000, while Fendi prices are ranged from $800 to $2,500. Moreover, the department of fashion and leather has been performing well in comparison to other company’s businesses, such as the wines, spirits, perfumes and cosmetics. By 2011, all the above-mentioned departments recorded returns of over €2,950 million each, while the fashion and leather department helped the company to get over €7,950 million. Revenues from the leather and fashion businesses grow from year to year. For instance, there was a growth rate of 15% in 2011, hence making this department at the core of LV.

Reasons for LV Success

Through the years, LV has been successful due to a number of reasons. Firstly, the management of the company has contributed to its position in the market. The founder of LV, Louis Vuitton Malletier, was very innovative. He used the unique design for his commodities that was very hard to copy; thus, he became the official packer and trunk maker for the elite customers across continents. His successor, George Vuitton, his son, continued his father’s work and started making the handbags while continuing to expand internationally. Later on, Racamier, who was a relative from the matriarch side, took over the management of LV after the Second World War. He pushed the performance of LV by diversifying its products, acquiring new companies, and embracing new technologies. Soon after, the Vuitton family was not responsible for the executive decisions of the company, and Bernard Arnault took over the management of LV. Under his lead, the acquisitions of enterprises, such as Givenchy and Celine, played a major role in its growth and development. As previously discussed, LV is a stable market player. Its sales, especially in 2011, were higher than its competitors since LV targeted all segments of the market, namely the absolute, aspirational, and accessible customers, while its competitors were limited. Additionally, compared to other brands, such Gucci, Prada, Botegga Veneta, Hermes, Chanel S.A., and Coach, LV had a huge number of stores opened globally, thus ensuring huge revenues.

Challenges Facing LV

LV has enjoyed continuous success in all its business groups. Despite this achievements, LV has also faced its fair set of challenges. Firstly, the use of austerity measures by the government to reduce the budget deficit in Southern Europe, especially in Italy, dropped the purchase of luxury goods in 2011, hence lowering their demand. However, the increased number of tourists in Europe helped to avoid the major losses and supported the sales of luxury products. Additionally, the alteration in management brought a new challenge for LV. Concerns about how the new executives would sustain current performance came into question. Although Michael Burke was experienced and his previous work proved his ability, the new position came with pressures that required balancing the heritage and values of LV of over 150 years.

Measures to Mitigate Problems

A low demand for luxury goods is a main challenge for LV company, especially at times when certain countries go through a recession or austerity measures. In such instances, as discussed above, advertisements targeting tourists can improve the situation. Such measure can also be helpful when tourists from the absolute sector prefer to indulge in luxury experiences and services rather than buy luxury commodities. Additionally, lowering prices for aspirational and accessible customers may be a viable solution. Hence, during the recession in a country, luxury industries should put more focus on tourists. Additionally, LV could employ measures to assure their customers that their goods are not counterfeit in order to increase sales.

A Senior Manager Position at LV

LV had been under the management of Yves Carcelle for a long time, and Michael Burke was chosen to take his position of senior management at the end of 2012. Michael Burke’s experience proved that he was more than capable of handling the senior management position at LV. Furthermore, LV should adopt the practice of training the executives from various business groups to choose one candidate who shows competence and responsibility of handling the senior management role. It would be a better option than searching for other top managers in the market, thus saving the company’s resources.

Conclusion

In conclusion, Louis Vuitton has been one of the largest successful businesses in the world. In comparison to its competitors, LV’s performance has surpassed them all. Through various changes in management and production, productivity and efficiency allowed the company to thrive even further. Through its luxury products, LV has satisfied its customers’ needs and demands. Apart from that, many business departments under LV have also played a huge role in boosting its profits over the years. Although LV has faced some challenges, it has been able to counter them all. As a result, LV has played a major role in the worlds’ luxury market, thus affecting people around the world.

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