CASE 2: LUXURY RETAILER LOUIS VUITTON IN CHINA: LOSING LUSTRE OR ADDING COLOUR? – Due date: Session 6
What are the strengths and weaknesses of Louis Vuitton Retail strategy in general, and in China in particular?
The retail strategy LV adopted is the direct store management, they have exclusive channel of distribution. It is Located in high street locations or exclusive shopping malls with other designer brands.
Direct control of every retail operation process
Advantage to manage brand experience easily
Higher brand awareness
More challenging to manage
Exclusive distribution may limit its presence, limited coverage and network Huge investment on staff training
Louis Vuitton adopted ‘big store’ strategy in China, focusing on “inland expansion”. Recently, it slows the expansion in China. Reasons may include the lack of well-trained sales force, and diffusion of brand image by the widely availability.
Moreover, it adopted a differentiation strategy, to separate Chinese consumers into 3 categories. The three segments are: aspirational buyers, male customers, and shopping for gift giving purpose. These different profiles determine how they would emphasize on different appealing factors.
After your visit to “Louis Vuitton Maison” at Plaza 66, please list the pros and cons
of such an investment for such a well-known brand as Louis Vuitton. Pros
The Maison would be impressive and possibly it would be a destination itself to most people, help to give a comprehensive artistic and cultural presentation of the brand: the heritage, brand identity, and range of products.
Inside the Maison, they set up a workshop, where they showcase the procedures to customize the product. This is would put emphasize on the craftsmanship they have and value.
For a new Louis Vuitton customer, the Maison would introduce them to the history, heritage and brand universe of Louis Vuitton.
Shopping experience at Maison would make customers feel more exclusive and valued, therefore enhances the brand image.
It has the best location possible, helping to promote the brand as a
High fixed cost. The investment for building a Maison is huge: the infrastructure to build, the recruitment and training of the staff, and the cost for maintenance. Moreover, it is also more challenging to do in-store retail operation management.
The layout and the product display is basically the same from other stores, might create a “deja vu” feeling for the consumers, and this would be tiring and repetitive.
“Right now, Louis Vuitton is the dominant player but they are going to have massive problems in the coming five years as people start to buy their second or third luxury handbag. After you've bought Louis Vuitton or Gucci, do you go back to Louis Vuitton and Gucci or do you try something different?”. They commented that Luxury brands growth needed to be managed in order to retain its long-term value. "Our paradox is how to grow without diluting our image", said Carcelle, CEO of Louis Vuitton. What recommendations would you give Yves Carcelle in order to manage this paradox and to deal with the counterfeit of LV products in China?
(Please be very specific in your suggestions)
First of all, any brand loyalty from a customer and a brand involves a personal connection between the two. LV could put great emphasize on building a personal, significant, and long-lasting link to the customers. This might involves personal care for every customer, this caring may not be expensive, but has to be thoughtful. For example, offering customized products catering to the specific requirements to VIP customers. For example, if there is a family who prefers to use photos to record every important family moment, LV can offer to make personalized family photo album, with the leather and decorations of choice. By demonstrating the thoughtfulness of the brand and the superior craftsmanship, this would...
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