Introduction

• Louis Vuitton, fashion and leather goods business unit of LVMH Group headquartered in Paris, France luxury goods conglomerate targeting the “super rich” people.

• For seven decades Louis Vuitton remained a single-product brand of the company which produced only handmade leather bags before diversifying into leather accessories.

• In 1987, Louis Vuitton merged with Moët Hennessy, a French wine maker of 1743 vintage, to form LVMH Group.

• LVMH went on an acquisition spree during the 1990s, targeting heritage brands. By 2000, the company had over 60 brands in its portfolio

• Louis Vuitton, was the flagship brand of the company’s fashion and leather goods business segment generating over half of the group’s profits.

• Louis Vuitton was keen on projecting itself as a luxury brand with a distinguished heritage and not a fashion brand that changed with the times.

• The fashion and leather goods business had 14 production workshops 12 in France and 1 in Spain and 1 in California

• Some of the brands other than Louis Vuitton the company has: Fendi, Donna Karan, Loewe, Marc Jacobs, Celine, Kenzo, Givenchy, Thomas Pink, Pucci, Berluti, Stefanobi, Rossimoda and eLuxury

• By year 2007, 2,048 stores worldwide, over 2000 stores worldwide, 71,000+ employees, sales revenue of €16.5 billion and a net profit of €2.3 billion for the year

Why do people buy luxury goods?

Social Assertion Exclusivity

Status Symbol

"Money in the bank when you die means you have not enjoyed life.“

Logical

ImpulsiveEmotional

Functionality and superior quality

Extensive Pre Purchase survey

Logical

ImpulsiveEmotional

Emotional

Impulsivelogical

Acceptable Exclusivity

I have made it

Feel good factor

Self Indulgence

Three categories of consumers

HIGH END PRODUCTS IN A LOW INCOME ECONOMY

ITEMS UNIT PRICE (INR ₹)

Suhali Handbag 1,28,000

Eye Love Handbag 1,28,000

Tambour Chronograph watch 1,89,000

Suitcase 7,00,000

Belt 18,000

ENTRY INTO INDIA

Category Annual Income Range (US $)

No. of Households (000s)Urban Rural

Super Rich Over 228890 126 16Sheer Rich 114940 – 228890 219 37Clear Rich 45980 – 114940 825 212Near Rich 22990 – 45980 1793 581Strivers 11500 – 22990 4629 1544Seekers 4600 – 11500 14313 7955Aspirers 2070 – 4600 29249 46055Destitutes Less than 2070 18019 96345

With the first two stores in luxury hotels, LV catered to the super rich. Now with its entry in luxury malls, it was aiming at the next lower level – the sheer rich

Targetmarket

Target Groups

• Indian Royal Families

• High Net worth Individuals

• Wealthy individuals looking for superior functionality and quality

• Wealthy individuals looking for exclusive appearance and status symbol

• Younger individuals who see luxury products as a means of self-indulgence

MARKET SIZE

Product Segment

Potential Customers

New Customer Group

FACTORS HINDERING THE PURCHASE OF LUXURY GOODS IN INDIA

CHALLENGES

• 87% of population lived on less than Rs.165 per day • 266.5 million people bellow poverty line

EXTERNAL FACTORS

• High customs duties on imports

• Official ban on imports of leather goods

• Concern entry of MNC would place domestic leather trade at risk

Retail Clusters

• What are Retail Clusters?• Why do Luxury Goods Marketers form

Retail Clusters (LRC)?

• Louis Vuitton & LRC

Pros ConsExclusivity Very few LRC in India

Visibility More expensive

Control over Store Design High investment

Ownership of Store

Success in the West

Why do certain luxury brands look for store locations in luxury hotels?

• Luxury Hotels – Social hub• First halt for tourists• Target segment availability• Premium ambience• Next best option after High Streets• Adjacencies of other exclusive

brands• Good security facilities

Alternatives and the way ahead

• Luxury nibbling• ‘Brand conscious but Price conscious’• Lack of single main streets and luxury

malls• Brands targeting heritage buildings

High street location: Rs. 450-550/sq.ft* Luxury Malls: Rs. 350-450/sq.ft Luxury hotels: Rs. 600-800/sq.ft

• 10-12 footfalls in a mall/day while 2-3 in a luxury hotel/day**

• Emphasis on attracting various customer segments

• Creating an exclusive environment

• Sources: *Cushman & Wakefield• **Business Today

How does luxury malls work for luxury markets?

• India has three such malls—DLF Emporio in Delhi, Palladium in Mumbai and UB City in Bangalore.

• Malls specially cater to luxury brands: Ambience, Space and Footfalls

• Five-star hotels: footfalls remain a challenge

The key statistic is the number of visitors that stores get.

“As far as footfalls go, if a brand store gets 10-12 footfalls in a day in a mall, the same would get two or three in a hotel and sales per sq. ft also would be in that proportion,” said Kapoor of Genesis.We get customers from all sorts of places. They could be people from across India and even tourists from South Africa visiting the city. The number of walk-ins are at least 10 times higher (compared with five-star hotels) and customers who are visiting the mall are curious to check out the brand, know the prices and see the collection,” said a store executive at Jimmy Choo’s Palladium store.

Developers aren’t all that enthusiastic because of the limited number of potential tenants. Most luxury brands plan to expand their presence to anywhere between two and six stores and not much more beyond that