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Interesting Article About Louis Vuitton

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  • Dec 20th, 2011 3:17 am
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Interesting Article About Louis Vuitton

i bolded some key points. I think this is the sad truth with most luxury brands. It has become too common and over populated.

http://www.cnbc.com/id/45282770/

[QUOTE]Being popular is proving to be a bad thing for luxury retailer Louis Vuitton in China. The brand sells so well there, which is its second-largest market in the world, that it is becoming too common.

Lately, instead of China’s wealthy, the middle class has been fueling sales at Louis Vuitton.

Twenty-six-year-old Cherry, a secretary at a financial services firm in Shanghai, told me she scrimped and saved from her $800 a month salary to buy a $1,000 Louis Vuitton bag because she loves “the feeling” of carrying it when out with friends.

There are tens of millions of Chinese women like Cherry who aspire to buy a Louis Vuitton handbag and millions are actually buying it.

Cherry’s desire to save up to buy a Louis Vuitton is becoming a double-edge sword for the brand. It means it will have years of growth there as incomes rise but its mass appeal also risks undermining its exclusive positioning.

My firm conducted interviews with several dozen mega wealthy with investible assets of more than $10 million. The majority told us they no longer wanted to buy Louis Vuitton. As a woman in Beijing, who is worth billions, said, "Louis Vuitton has become too ordinary. Everyone has it. You see it in every restaurant in Beijing. I prefer Chanel or Bottega Veneta now. They are more exclusive."

Soaring wealth and obsession with luxury products provides huge opportunities for luxury retailers. The number of Chinese millionaires are estimated to more than double in the next five years. The Hurun Report estimates there are 271 billionaires, up from 189 in 2010. That growth is also causing challenges for Louis Vuitton and other historically dominant players like Zegna and Omega to maintain market share because the truly wealthy no longer want to buy the same fashion brands everyone else has.

Wealthy consumers looking to differentiate from the masses provide an opportunity for luxury brands like Chloe, Hermes, and Patek Philippe that target the ultra rich. Our research suggests that mega rich Chinese are less likely than ever before to buy the same brands as everyone else with the same big logos to show off status.

They are moving more towards inconspicuous consumption in handbags and apparel while becoming more flamboyant in auto purchases and jewelry to show status, which is why sales there of Ferraris and Lamborghinis are soaring.

One wealthy man in Beijing told me, “Everyone can buy Louis Vuitton now, but not many can buy a Bentley.”

To see what could happen to Louis Vuitton unless it can improvise, take a look at luxury auto firm Audi. Audi is growing in China and expects to sell 300,000 units there in 2011 up 29 percent from 2010, but still its market share has tumbled 25 percent in the last two years as wealthy Chinese prefer sexier and more indulgent brands like BMW and Porche.

J.D. Powers, a global marketing information services firm that focuses on the auto industry, estimates Mercedes will grow 38 percent this year, while BMW will grow 63 percent.

To stave off competition from very exclusive brands, and premium brands like Coach, Louis Vuitton is going to have to spend more on marketing to maintain its exclusivity. So far it has kept ahead of the curve, launching multi-story flagship stores in key shopping areas and marketing initiatives in conjunction with the Beijing National Museum.

Celebrity endorsers like Angelina Jolie also help add luster. These initiatives are key to maintaining status but will become increasingly costly, squeezing margins, as rent and labor costs go up.

Louis Vuitton’s parent group, LVMH [LVMHF 0.00 -2.33 (-1.69%)], should consider more acquisitions at the higher end to capture wealthy consumers tiring of its flagship brand. It has bought stakes in Hermes but should try buying high-end brands outright to capture the truly wealthy segment.

China is the market to win for luxury brands. Despite the rocky global economy the demand for luxury products continues to soar. Brands need to understand that China’s ultra wealthy are becoming more sophisticated and not just looking for flashy logos and brands that everyone has. At the uber rich level, there exists the opportunity to capture market share by differentiating the brand. Three years ago, everyone wanted Louis Vuitton. That is no longer the case.
[/QUOTE]

Angelina Jolie doesn't make LV more appealing.
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This is why I judge a person's outfit value by their shoes.

You can't tell if a person is rich by the car they drive, but you can tell by what property they own :)
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Rainne wrote: This is why I judge a person's outfit value by their shoes.

You can't tell if a person is rich by the car they drive, but you can tell by what property they own :)

what if they rent and posses as their bought home?
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Baller is back.

Nice article
hated on but respected.
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I just read this too! LV did a price increase around March-May of this year but it didn't stop anyone from buying, they increased prices from $50-$300. And this price increase happened once every few years.

CHANEL increased their prices twice this year already by $500 each round -_-
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lol @ Chinese people living "the life" buying their LVs on $800/month salaries (in a big city like Shanghai).
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I sometimes wonder about this section sometimes
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Aznsilvrboy wrote: lol @ Chinese people living "the life" buying their LVs on $800/month salaries (in a big city like Shanghai).
Gotta have your priorities straight.

Baller and brand names b4 basic necessities like food and shelter.

Most of those brand name items sported in China are probably cheap knockoffs like they sell in Chinatown here anyway.
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I don't mean to sound ignorant but LV IS pretty affordable. Their "entry" levelbags and the ones that are considered the "classics" are priced from $500-$800.

Chanel's classics are priced from $3000-$5000 lol (Classic flaps)
Hermes' classics are priced from $10000+ (Birkin and Kelly)

(Classics=What the brand is usually known for)

Not a fan of Chloe or Balenciaga but I believe their classics also start from the $1500s

Also, LV has more expensive bags (Mahina, Empreinte collections) which is priced from $2500+ but nobody really considers them as the brand's classics.

It would be ridiculous if LV increases the prices the prices in their classics, it's not even all leather!
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People who are broke and buy LV devalue the brand.

So when people who can actually afford to buy more then 1 bag in a year will be less likely to buy it because they see people like them buying it making it seem like its value isnt high.
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They should stop making the Speedy/Neverfull/Artsy in canvas and start using mahina leather or empreinte and then they could start charging $2000+ for the bags.

example:

$1400 Monogram Canvas Artsy

Image
$2500+ Empreinte Artsy

Image

LV's mistake was having their classics the easiest to get..but the rest of LV's collections are very expensive ($2500-4500). Chanel's classics are from $3000-$5000 but the seasonal pieces aren't as expensive $1500-$3000.
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chibsta08 wrote: They should stop making the Speedy/Neverfull/Artsy in canvas and start using mahina leather or empreinte and then they could start charging $2000+ for the bags.

i say the speedy, neverfull and eva, not artsy ruin the brand. people with these bags (under 30 years old) usually thing they are the hottest thing around with their cheap LV.

the brand was ruined when they were selling 4-600 dollar bags(before constant price increase 1 year ago). now the jacked up the price to try to keep the exclusiveness. that clearly failed to work.
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qaz393 wrote: i say the speedy, neverfull and eva, not artsy ruin the brand. people with these bags (under 30 years old) usually thing they are the hottest thing around with their cheap LV.

the brand was ruined when they were selling 4-600 dollar bags(before constant price increase 1 year ago). now the jacked up the price to try to keep the exclusiveness. that clearly failed to work.

It failed because they didn't increase the price to over $1000. They can't anyways since the material doesn't reflect the price too well.
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chibsta08 wrote: It failed because they didn't increase the price to over $1000. They can't anyways since the material doesn't reflect the price too well.

agree, i have moved onto other brands anyways.

i recently went to yorkdale LV, the sales there told me that more production has been allocated into the USA due to demand. no MIF no Care. I refuse to buy stuff that is not MIF/Germany/Italy. Even the stuff Made in spain i try to avoid.

its only a matter of time before LV starts to become made in china
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qaz393 wrote: agree, i have moved onto other brands anyways.

i recently went to yorkdale LV, the sales there told me that more production has been allocated into the USA due to demand. no MIF no Care. I refuse to buy stuff that is not MIF/Germany/Italy. Even the stuff Made in spain i try to avoid.

its only a matter of time before LV starts to become made in china

For sure. The recent Speedys, NF's are now stamped with "Made in USA"
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chibsta08 wrote: They should stop making the Speedy/Neverfull/Artsy in canvas and start using mahina leather or empreinte and then they could start charging $2000+ for the bags.

example:

$1400 Monogram Canvas Artsy

Image
$2500+ Empreinte Artsy

Image

LV's mistake was having their classics the easiest to get..but the rest of LV's collections are very expensive ($2500-4500). Chanel's classics are from $3000-$5000 but the seasonal pieces aren't as expensive $1500-$3000.

I agree with this. LV had mote then their canvas monogram bag. When I wanted to buy my wife an LV wallet I refused to get her one with the print. I ended up getting her something from the sahali collection. There is no monogram - no screaming LV. its all leather. I've not seen many people carrying them before. The sahali bags start at around 2 g I think. When was in Paris I saw a women gushing over her purhase. Some canvas bag. I guess it was get first LV. for me I would try to save up for something a little less common.
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exclusivity???

What do you think LV cares more... 1 million people buying it? or 1000 people buying it?


Sure they like to be a status symbol. But selling an already overpriced item to a million people far outweights any supposedly "exclusivity".
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Dec 5, 2006
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Really good article. I've been noticing this for the past year. I know enough girls in university who bought the entry level bags as soon as OSAP money was deposited in their accounts.
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lm9211905 wrote: Really good article. I've been noticing this for the past year. I know enough girls in university who bought the entry level bags as soon as OSAP money was deposited in their accounts.

I heard this too and some of my friends also did this. I told them they were stupid lol You dont take out a loan just to buy designer goods. Just shows how messed up your priorities are.
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