Louis Vuitton raises prices again… Why? Because it can!

Louis Vuitton raises prices again… Why? Because it can!

Imagination experience labs

Imagination's blog for industry insight, innovation, inspiration and general life contemplation.
OPINION Global
  • Carlos Virgile
  • Global Head of Retail and Leisure
0

Louis Vuitton raises prices again… Why? Because it can!

I raised a knowing eyebrow last week at the news according to HSBC that Louis Vuitton had quietly raised prices across all markets for its non-leather handbags – the “bread and butter” of their business. LV prices have gone up by at least 10 percent in the UK and USA, and by 5 percent to 10 percent in Asian markets including China.

Almost simultaneously, Louis Vuitton announced plans to slow down retail expansion in 2013 due to ‘over-exposure’ in new markets - a warning sign for luxury brands believing in a non-stoppable and ever-increasing growth. What is interesting of the current scenario for LV is to ask why, if the demand is in recession, they are actually increasing prices.
 
It seems a strategy that defies any retail logic and purely based on a real belief established by the rules of anti-marketing that only luxury brands can afford to adhere to.
 
The rises in price of their most commercial line is clearly a straightforward way of levelling their balance sheets and achieve their expected revenue results, keeping Monsieur Arnault and his shareholders happy. However, as Jean Noel Kapferer mentioned, not without a touch of irony in his recent talk at Imagination as part of the Is Luxury history? event: as far as luxury pricing is concerned, the only way is up!
 
Shocking as Kapferer statement sounded to its audience, in order to maintain their luxury status, brands claiming to be part of an exclusive and tantalising world, where demand always outstrips supply, higher prices become just a small detail for the real consumer target.
 
Comparison is the language of premium - as soon as you begin to justify a purchase value, it is not luxury. Likewise, imitation is the language of fashion – as soon as something is fashionable, by definition it can become unfashionable for those in the know. True luxury should be everlasting, steeped in history and heritage.
 
Fashion site Styleite highlighted that the higher prices will only spur counterfeiters but, is this a bad thing for Louis Vuitton? Of course false merchandise is a real threat that results in great business losses particularly in new markets, where the stronger association might be with the prestige of just showing off the brand monogram than in the real value and pleasure of the exquisite craftsmanship and high quality they might produce.
 
However, wearing a cynical hat, it also fuels the cult and quasi-religious fervour around the real thing. Cheap imitations, whilst taking a considerable part of the brand sales, also serve further service to boost the mystique of the brand and intensify the legend of the real article.
 
By following this double edge strategy, working both ways, commercially and strategically, it’s easy to assume that Louis Vuitton will most certainly not be consigned to history anytime soon; rather it simply will continue to make it.

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