Ch. 5 - Developing a Global Vision

The development of Vuitton from 1854 to what we know Louis Vuitton as today:

Starting as a trunk- maker in 1854, Louis Vuitton founded his fashion house in Rue Neuve des Capucines in Paris. By 1885 the company opened its first store in London on Oxford Street. By 1913, the Louis Vuitton Building opened on the Champs- Elysees. Stores also opened in New York, Bombay, Washington, London, Alexandria, and Buenos Aires as World War I began. In 1978, the label opened its first stores in Japan: Tokyo and Osaka. In 1983, Louis Vuitton later expanded its presence in Asia with the opening of a store in Taipei, Taiwan. In 1984, Seoul, South Korea.

In 1987 saw the creation of LVMH. By 1989, Louis Vuitton was operating 130 stores worldwide. In the 90s, Yves Carcelle was named president of LV, and in 1992, his brand opened its first Chinese location at the Palace Hotel in Beijing.

Today Louis Vuitton is focusing on expanding the stores that already exist (see Marketing Environment- Ethnic Markets). Because their No 1 clientele are the mainland Chinese, Vuitton is very serious about their presence in the Asian Market, and they continue to invest in Asia- Pac. Their Long term strategy is to continue to proactively tap into fastest growing consumer market, Asia.

Ch. 4 - The Marketing Environment

Ethnic Markets

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 .

Ch. 3 - Ethics & Social Responsibility

LVMH is committed to creating diversity within the group. LVMH recognizes the influence they have on consumers; sparking a sense of pleasure solely equated from the imagery they use from luxury. They are aware they have a responsibility to act as an exemplary corporate citizen. Their practices "comply with the most exacting standards of integrity, responsibility and respect for all stakeholders, everyday and everywhere around the world." With this, they have created the following:

EllesVHM:
In November 2009, the LVMH group announced several noteworthy commitments:
- Increase the number of women on executive committees
- Ensure greater representation in succession plans for influential positions
- Develop networking actions through forums, allowing women at every level to exchange experiences with one another
- Establish a committee to support the development of women high potentials
The same year, LVMH reaffirmed its commitment to women with a striking photo exhibition that showcased the wealth and diversity of women and the work they do throughout the Group.

Internships and Equal Opportunity:
LVMH is a signatory of the International Global Pact, the French Diversity Charter, and the French Charter of Corporate Commitment for equal opportunity in Education.
These commitments are implemented with concrete measures by the Human Resources Departments of the Houses through a systematic review of recruitment practices in order to make the process more objective.

In partnership with the French association "Nos Quartiers ont des Talents", an equal opportunity advocate, Group companies sponsor young graduates from underserved areas.
LVMH is a signatory of the "Apprenticeship Charter", and has expanded its internship programs to help more young people complete their degrees. The Group welcomed over 500 interns in France in 2008.

Equal Opportunity for People with Disabilities:
LVMH's proactive initiatives to encourage employment of people with disabilities reflect priorities at the human, business and managerial levels. To coordinate and energize this commitment, the LVMH "Handicap Mission" was created in 2007.
With the active involvement of over 30 Group companies, this structure acts as a powerful driver to promote the employment of people with disabilities.
The "Handicap Mission" provides operational support for Human Resources managers to facilitate the hiring and long-term employment of people with disabilities. It also expands sourcing relationships with sheltered workshops.

In 2008 LVMH signed an agreement with AGEFIPH, a French agency for employment of workers with disabilities. The Group has made firm commitments covering integration, e-recruitment, training and career development for people with disabilities.
The Handicap Mission has notably worked with Guerlain and the Spa Guerlain on the Champs-Elysées, developing a two-fold initiative. Employees receive disability awareness training and Spa staff get special training in welcoming customers with disabilities.

In April 2011, Bernard Arnault, chairman of LVMH Moët Hennessy Louis Vuitton, traveled to Washington to receive the Corporate Citizenship award from the Woodrow Wilson International Center of Scholars. The tribute was to commemorate Arnault's work with the company. He received a high praise from President Barack Obama and British Prime Minister Tony Blair, in addition to a video toast from Marc Jacobs and performance by U2. In an article written by Women's Wear Daily they stated:

"In his acceptance speech, Arnault underscored the importance of social responsibility and a strong moral code to the success of his business of luxury and fine living. As WWD reports, Arnault said:"

“Tonight, you do not just honor me. What you honor with this special award is a commitment of more than 80,000 people with a unique ambition to delight the world, to beautify our universe and to inspire the spirit of our times. Included in these today is the idea that corporations are also citizens with social responsibilities, a concept that I think of as distinctly American. I’m proud to say that we have adopted this principle at LVMH and we apply it not just at home in France, but around the world.”

As I mentioned in the Strategic Planning section, the damage control Arnault underwent to preserve the Dior brand did not go unnoticed. In the article by WWD, they added:

"It is perhaps with that dedication to responsibility that Arnault handled the controversy surrounding John Galliano's anti-semitic rants caught on video: The company fired the Dior designer swiftly and definitively, despite the industry's infatuation with the designer's talent."

LVMH continues to recognize their roll in society. They are aware they have a social and corporate responsibility to act as an exemplary corporate citizen. Using this to their advantage they continue to create jobs, encourage diversity, give back, and mostly, respect the influence they have as a company.

Ch. 2 - Strategic Planning for Competitive Advantage

Forbes.com calls, Bernard Arnault, Chairman of LVMH "Master of the Brand", in a article written in November 2010. Mr. Arnault is the "master" behind LVMH. On LVMH's website, Arnault writes:

"For several months, LVMH has enjoyed uninterrupted growth, to which all our business groups have contributed. It would be an over-simplification to suggest that this is due to the economic upturn alone. The Group's performance is also, above all, the result of the relevance and consistency of our long term strategy. A strategy that we pursued, unchanged, throughout the recent economic crisis. The support of the enduring values of our star brands, creativity as an absolute imperative, the quest for perfection in our products, and our efforts to ensure an environment of excellence coupled with impeccable service at our stores form the wellspring of our success. To these we must also add the agility and the motivation of our organization which benefits from the hands-on enterprise culture of the men and women of our Group. It enables us to take the right decisions quickly, invest where needed and seize opportunities to increase our market share. And this applies just as much when global economies are shrinking as when they start growing again."

LVMH's selective approach to their market is downright successful. The company, through its strategic planning, knows exactly where is wants to be at all times. Although economic times have dipped, the company had an extremely successful year in 2010, increasing its stock 60%.

LVMH  is a cash cow. The brands un LVMH maintain market dominace. They have a sustainable competitve advantage, holding dominace in the Luxury Goods market share.

Through the company's sucess in Dom Pérignon, they launched several vinatages, all which recieved critical acclaim. Louis Vuitton opened in London in 2010, whiched enhanced the appeal of the brand as well as the reputation for London as a city. In the perfumes and beauty domain, Jude Law starred in five-minute movie for Dior that Bernard Arnault says, "brilliantly illustrated the unique magic created by Mr Dior." This was after the crisis that overwhelmed  Christian Dior and its Chief Designer John Galliano.- I call that "brilliant damage control."
Also, in 2010 the beauty mecca, Sephora introduced themselves to a new market, Latin America.

Louis Vuitton Bond Street Maison in London

Home to a wide range of brands, they allocate their excess cash from their larger brands to work on expanding the others, while staying true to the originality of all of them. Mr. Arnault states in his Chairman's Message: 

 The performance of many other brands are also worthy of mention: Hennessy, Moet & Chandon, Fendi, Guerlain, Givenchy, Make Up For Ever, Marc Jacobs, Benefit, Hublot... We are home to a wide range of brands, we respect and strengthen the originality of each of them, each of our brands builds its future on its own culture and its historic know-how; this is a source of unique know-how for our Group. We give them all the nurturing and support they need for their long term development, while respecting their roots, their heritage and their individual personality. Whether they have established leadership positions in their markets, or have embarked on a promising development campaign, all of our brands have enhanced their standing and their appeal. They have continued their rational expansion and acquired the strength they need for the future. This same determination to invest for the long term led LVMH to become a shareholder in Hermès International – another brand which symbolizes French know-how, whose standards we share and whose vision we support. Its culture, so particular, is to be preserved preciously and our Group, as a shareholder of this company, will guarantee it.

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. This growth is possible because LVMH stays true to each brands roots, highlighting the connection between the current work and the history of each brand.

Brief History of LVMH

LVMH Brief History 

LVMH Moët Hennessy • Louis Vuitton S.A. , usually shortened to LVMH, is a French holding company and the world's largest luxury goods conglomerate. It is the parent of around 60 sub-companies that each manage a small number of prestigious brands. These daughter companies are, to a large extent, run autonomously. The group was formed after mergers brought together champagne producer Moët et Chandon and Hennessy, a leading manufacturer of cognac. In 1987, they created a $4 billion dollar merger with fashion house Louis Vuitton in a to form the current group.

Christian Dior, the luxury goods group, is the main holding company of LVMH, owning 42.38% of its shares, and 59.3% of its voting rights. Bernard Arnault, majority shareholder of Dior, is Chairman of both companies and CEO of LVMH. His successful integration of various famous aspirational brands into the group has inspired other luxury companies into doing the same. Thus Gucci (now part of the French conglomerate PPR) and Richemont have also created extended portfolios ofluxury brands. The oldest of the LVMH brands is wine producer Château d'Yquem, which dates its origins back to 1593.