Louis Vuitton in Japan Case Study

Topics: LVMH, Luxury good, Luxury vehicle Pages: 5 (1635 words) Published: November 3, 2014
Introduction to Louis Vuitton
Louis Vuitton, one of the oldest fashion houses in the world was established in France in the year 1854. It became famous for its impeccably handcrafted leather bags and trunks which were handcrafted to perfection. The brand opened its first overseas store in London in 1885 and has not looked back since. Since its early stages, the brand was inspired by Japanese and Oriental designs which is evident by the trademark design of the LV Monogram canvas. Georges Vuitton; Louis Vuitton’s son; initiated the brands global outreach by opening international stores and participating in World Fairs to showcase their products and expand their recognition. Gaston- Louis Vuitton; the third family member to head the firm; was the one behind initiating the expansion of the product line to small leather goods. By the mid 1970’s Louis Vuitton had seen tremendous growth and went on to become the largest luxury brand in the world in terms of market share. They became a brand synonymous with luxury, high class, high quality and a must have status symbol amongst the rich and famous. One of the most significant event for the brand was the creation of Louis Vuitton Motet-Hennessy (LVMH) in 1987; a merger between Louis Vuitton, Moet et Chandon and Hennessy; making it the largest luxury goods company in the world. The appointment of designer Marc Jacobs, as the art director of Louis Vuitton, took the brand to an all new high. He created limited editions, infused the brand with a fresh new energy and also launched a new jewelry division and shoes & ready to wear collections. In 2008, the group’s revenue had reached €17.1 billion, out of which fashion and leather good accounted for €6 billion (Exhibit 1 & 2).

Louis Vuitton and Japan: Changing trends
Since the mid 1970’s, the company mainly focused on establishing a large Japanese clientele and by 2005 Japan accounted for 26% of global revenue. The brand not only represented luxury, but it had a whole experience weaved into the shopping process. The Japanese market is a very fashion conscious market and also has one of the highest per capita spending on luxury fashion goods. According to an estimate by HSBC Bank in 2009, Japan was the final destination of 45 per cent of the total luxury goods sold worldwide; making Japan one of the biggest markets for all major luxury brands. In Japan, Louis Vuitton grew at such a rapid rate that within a decade of opening stores, roughly 20million Japanese women owned a bag of the brand. The Japanese psychological and traditional culture of status driven pressures and the women being more beauty conscious than their European counterparts helped ignite the rage of luxury shopping. Even during the economic crisis of 2008-2009, there was no noted slump in consumer spending on luxury items and the market was expected to keep growing at a steady pace. Louis Vuitton roped in famous Japanese artists like Murakami to create new lines of merchandise and also launched various limited edition ranges which boosted profits and were successful all over the world and not just in Japan. Although Louis Vuitton enjoyed a long successful run in Japan, changing country trends and consumer mindset put the brand at risk. The current risks which the brand faces are: 1. Consumers becoming increasingly price conscious. They wanted affordability and wanted the in-style trendy designs that brands such as Zara and H&M were able to offer. 2. Extensive use of limited editions and the mass expansion and distribution of the brand had created a doubt in the mind of the consumers about the exclusivity of the brand. It began to be interpreted as a disposable item instead of tradition and longevity; the true essence of the brand. 3. The extent of the population which owned a Louis Vuitton product (more than three quarters of the women aged 20 years), the brand logo had become as common as the Mc Donald’s golden arches. This phenomenon combined with the new epidemic...
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