LOUIS VUITTON IN INDIA1
R. Chandrasekhar wrote this case under the supervision of Professor Shih-Fen Chen 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. Ivey Management Services prohibits any form of reproduction, storage or transmittal 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, Ivey Management Services, c/o Richard Ivey School of Business, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail email@example.com. Copyright © 2008, Ivey Management Services Version: (A) 2009-03-30
Luxury: from the Latin word luxus, meaning indulgence of the senses regardless of cost.2 In January 2008, Louis Vuitton, the fashion and leather goods business unit of LVMH Group, the Parisheadquartered luxury goods conglomerate, was at a crossroads in India. It was to open a new store, its third in the country so far, in a luxury mall scheduled to launch in a few months in the city of New Delhi. The move would be a departure from the protective environment of luxury hotels playing host to the two stores Louis Vuitton had established in the country. The new location would also mean a change in the profile of its customers in India. The company would be moving from targeting the “super rich” who travelled, shopped abroad, and formed part of a captive pool, to what a local business magazine called those at the “next lower level,” representing, in the view of Louis Vuitton’s top executives, “a tipping point” for the company.3 Louis Vuitton had to plan its route ahead in a new landscape. The luxury mall business model, per se, was new to India. COMPANY BACKGROUND
Louis Vuitton had its origins in Paris. In 1854 a French craftsman invented the flat-topped trunk (which stacked better during travelling than the traditional dome-shaped trunk) with a canvas cover (which, when
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 LVMH Group or any of its employees. 2 V. Vedpuriswar, “The Marketing of Luxury Brands,” Catalyst Magazine, The Hindu Business Line, http://www.blonet.com/catalyst/20005/03/03/stories/2005030300170200.htm, accessed June 29, 2007. 3 Priya Srinivasan, “Brussels, Madrid, New Delhi, Mumbai: Louis Vuitton's Chairman and CEO insists they are in the same league,” http://archives.digitaltoday.in/businesstoday/20041219/trends4.html, Business Today, December 19, 2004, accessed December 24, 2007.
varnished, rendered the cover waterproof).4 The company, bearing the founder’s name, flourished with the growth of travel by rail and ship. It soon opened a store in London, U.K., but for seven decades Louis Vuitton remained a single-product brand of 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. In its early decades, Louis Vuitton thrived in Europe because of the general attitude towards luxury in the region where aristocracies formed the ruling elite. Luxury in Europe was for the chosen few. For those chosen few, luxury was about feeling exclusive. This was to prove a contrast to the U.S. market, where luxury was about feeling special. The American luxury market had democratic roots where luxury was for all. Europe and the United States were to become the two largest consumers of luxury products but the differences were marked. European luxury brands did not have price points aimed at...