Thursday, January 24, 2008

A Response to Louis Vuitton Makes the Right Move

I agree with Jeanna's comments, Louis Vuitton's new designs don't remotely resemble Gucci. It's just their signature Damier canvas in a new palette, like the Damier Azur collection. It doesn't represent real innovation as much as the artificial construction of something new for Louis Vuitton to sell without putting much thought into design and much investment into production, something at which they have become astoundingly good. Time will tell if it achieves the same level of success as the Azur line.

In any case, where will LVMH and rival Gucci Group stand in the face of the changing economy? LVMH has a completely diversified portfolio covering both the high- and low-end, and while many luxury houses across the board are indeed starting to feel the crunch, both the Gucci Group and LVMH have the resources to stick it out. It's true that LVMH does 25.6% of their business is the ailing US market, but Gucci Group itself finds 19.3% of their market here as well, and still Gucci Group is expected to ride high on the continued success of their Bottega Veneta revival. Gucci Group shows that it's possible to survive as a luxury player in the US market, but it requires the right brand with the right product.

What exactly is the right product for LVMH? It's not entirely clear yet. I don't think that this supposedly "freshening up" of the Damier canvas is as remotely important to LVMH as the Richard Prince collaboration for Louis Vuitton, which has received multiple times the publicity thanks to an expensive ad campaign and flashy fashion shows highlighting the collection. LVMH is hoping for a home run along the lines of the Takashi Murakami collaboration that is still making money for them (see the Louis Vuitton boutique that opened in MOCA's Murakami retrospective). In terms of actual innovation and possible financial success, LVMH is placing its bets on that artist collaboration more than the safe bet that the new Damier canvas is sure to be. Both Gucci Group and LVMH are rapidly expanding in India and China with very promising results, instilling brand recognition in countries with low luxury-brand recognition with their logo-laden products and splashy publicity machines like the Richard Prince line. It is a necessary part of their strategies to get the new consumer wanting their products. Even if the US market proves difficult for LVMH, there's no doubt that LVMH will find new markets for their high-margin canvas goods. It's mostly a matter of how rapidly they can replace the failing sectors of the US and Japanese markets with new emerging ones. Any future success in the US and Japanese markets relies on their higher-profile collections, but they certainly don't have as much to worry about as any of the independent fashion houses that don't have the portfolios to stay afloat when the going gets tough. LVMH's success in the short-term evidently relies more on the Prince collaboration and the brand awareness it can build more than anything else right now. I'm anxious to see if that is indeed the "right" product to keep the conglomerate going.

1 comment:

Cameron Newland said...

Just for clarity, I posted this in response to Jeanna and this post:

As to the Gucci reference, the grey/black Damier resembles a lot of what Gucci has been putting out - from a distance.

Their trademark GG fabric looks checkerboard when you're more than 10 feet away, as seen on this bag:

And I've seen Gucci do this pattern in black and grey, which makes it look VERY similar to the Damier, again, from a distance.

Surprised I was the only one to see similarity between them!