Louis Vuitton in Japan

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Justin Paul and Charlotte Feroul wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmission without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Richard Ivey School of Business Foundation, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca. Copyright © 2010, Richard Ivey School of Business Foundation Version: 2011-10-24

In Japan, whether you are in Tokyo, Osaka or Nagoya, just turn your head and Louis Vuitton is everywhere. The celebration of the 30th anniversary of the presence of the illustrious, glittering French multinational in Japan took place in Aoyama, one of Tokyo’s fashionable districts. A unique vision of luxury took shape when Louis Vuitton opened yet another new store inside Comme des Garçons on September 4, 2008, in the heart of Japan’s capital. The pop-up store situated on the prestigious Omotesando Street was an illustration of Louis Vuitton’s attachment to the Japanese luxury market. Yves Carcelle, chairman and CEO of Louis Vuitton, said, “This project not only brings a new meaning to luxury, but also speaks volumes about how the know-how and heritage of Louis Vuitton have always been perceived in Japan, including by its foremost designers. We are very proud to have been able to help Rei Kawakubo2 relive her memories in such an original and creative way.”3The Omotesando guerrilla marketing event reflected Louis Vuitton’s success in Japan. Louis Vuitton had been following an aggressive marketing strategy in the country, opening extravagant stores such as those in Ginza or Roppongi.Take a walk on Ginza’s main street, Chuo Dori, the centre of a paradise for shoppers, with longestablished department stores, such as Mitsukoshi, Takashimaya and Matsuzakaya. Continue through the high-end fashion street Namiki-dori. Stop. There it is. You have reached the massive flagship Louis Vuitton store. When Louis Vuitton, the world’s biggest luxury-goods firm, inaugurated its huge shop in 2002 in the district of Omotesando, Tokyo, hundreds of people were queued outside. During the first few days, sales exceeded the initial estimations by ¥1 million.4 In the last decade, Japan had been Louis Vuitton’s most

1 This case has been written on the basis of published sources only. Consequently, the interpretation and perspectives presented in this case are not necessarily those of Louis Vuitton or any of its employees. 2 Rei Kawakubowas a famous Japanese fashion designer. She founded the fashion house Comme des Garçons Co. Ltd in 1973. The designer, known for her anti-fashion, austere and conceptual universe, was the guest designer of Louis Vuitton for one of its collections in 2008. 3 Lesley Scott, “Louis Vuitton at Comme des Garcons in Tokyo,” http://fashiontribes.typepad.com.Accessed July 11, 2008. 4 “Japan’s luxury-goods market — Losing its shine,” The Economist, September 18, 2008, www.economist.com. US$1 was equivalent to approximately ¥150 (yen) in 2002.

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profitable market, representing almost half of its profits, but it seemed that with the 2008-2009 economic crisis, there might be the start of a decline in sales. Facing a weak economy and a shift in consumer preferences, Louis Vuitton started adapting its strategy in the Japanese market. The days of charging a high price for products with a proprietary logo seemed to be gone in Japan. The company had to launch relatively...
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