LVMH's international diversity plays a major roll in its target market. As mentioned earlier, LVMH continues to develop and expand into cities, and countries with pockets of wealth. Among its 2,468 retail stores there are now outposts in Ho Chi Minh City, Vietnam; Phnom Penh, Cambodia; Yekaterinburg, Russia; Macao; and Abu Dhabi. With their vision to expand into new markets consisting of wealth, LVMH is growing in global, ethnic markets.
According to an article written in September 2011 by The Business Times LVMH "will continue to invest in the Asia-Pacific region as it taps demand from growing numbers of the wealthy from the region."
Louis Vuitton's opened their first floating boutique at Marina Bay Sands in Singapore on Saturday, September 17th 2011.
"There will be less net opening of stores and more investment into improving the size of stores, because 'luxury retail has to be a luxurious experience". - Yves Carcelle, who runs the fashion and leather goods unit for Louis Vuitton.
The company is working to expand their already existing stores. Louis Vuitton is adding a level to its Lee Gardens store in Hong Kong store to double its floor space. Vuitton is expanding its stores in Manila and in Ho Chi Minh City in Vietnam. While the largest market in the world is still Japan, their No 1 clientele are the mainland Chinese, who, when travel, shop to a great extent at stores in cities such as, Singapore, Hong Kong, Macau and Paris.
Consultant McKinsey & Co has estimated that Luxury goods sales in China are set to rise 18 per cent a year to 180 billion yuan (S$34.88 billion) between 2010 and 2015. After posting a 46 per cent increase in Asia-Pacific sales in the five months through August, they see no signs that the demand is weakening;
They do not, however, see a growing market in India, even given the fact that the middle class population is expected to grown to 267 million in the next five years. Because of the foreign direct investment (FDI) in the retailing sector, the Indian government only allows a maximum of 51 percent for foreign investment. Louis Vuitton feels the Indian market is not a place for their continuously growing brand.
Frankly, I agree. What Louis Vuitton does not mention is that the FDI proposal is accompanied by the following: the minimum investment is $100 million, 50 percent of the foreign investment has to be channelled into supply chains; 30 percent of sales have to come from small traders; and foreign retailers have to source at least 30 percent of manufactured items from local small and medium-scale enterprises.
That being said, this seems like unnecessary additional work for a brand that already has their supply chains, sourcing, and manufacturing down to a science.
LVMH foresees a successful future in the growing ethnic markets. Mr Carcelle sees no signs of slowing demand for luxury products in Europe or America.
'Even in period of crisis, people want to treat themselves, we don't see any signs of slowing down whether it's in Europe or in America. The world of luxury doesn't obey the same rules.' -Mr Carcelle .
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