woensdag 2 oktober 2013

LVMH and Longchamp Stick to Strategy and Value-for-Money Luxury; photo Djamila Celina Melcherts - Louis Vuitton

LVMH and Longchamp Stick to Strategy and Value-for-Money Luxury; photo Djamila Celina Melcherts - Louis Vuitton
Longchamp and LVMH are two companies in their own matter benefiting from slowing growth in luxury demand. While Louis Vuitton seek to combat slowing growth by curbing retail expansion and increasing prices, closely held Longchamp is adding stores and sticking to its smart marketing and more affordable prices. The result: revenue growth that is faster than many of its rivals. Longchamp, which opened its biggest European boutique in London in September, announced sales up 16% to € 454 million in 2012. That compares with sales growth of 14% at LVMH’s fashion and leather-goods division and a 10% overall growth for the luxury industry. LVMH’s strategy has been one of purchasing other blockbuster brands that would allow the company to reduce its reliance on smaller labels such as Fendi and Celine, while buying it time to burnish Louis Vuitton and develop its other fashion lines. After raising prices and including more leather in its handbag collections to increase their appeal, LVMH is focusing on improving existing Louis Vuitton stores and limiting new openings as it seeks to control the label’s growth Bonno van der Putten, retail expert for Private Equity powerhouse Monarch Capital estimates Longchamp’s revenue growth to slow around 10% this year as economic instability hits consumer spending. That’s still double the rate of the estimates for the luxury sector. Sticking to the strategy while others are changing theirs is creating opportunities, not least in finding decent new store locations and refurbishing existing ones Longchamp’s just opened boutique on London’s Regent Street gives the Paris brand more visibility to customers in the big city, where it so far had only 2 smaller shops, and allows it to display in one place the full range of goods, including women’s clothing and shoes. More new boutiques will follow still this year in Rome, Tel Aviv, Abu Dhabi and Sao Paulo, whereas Munich and Barcelona are planned for 2014 where Longchamp has spent “years” looking for decent retail locations without finding them, said Bonno van der Putten. More and larger stores, particularly in Europe’s most visited and frequented cities, will help support top line growth as the region attracts travelers from Asia and the Americas, van der Putten said. Luxury business can build their business on two legs, the locals and the tourists, van der Putten said. As we most likely all know, sales to non-Europeans are rising faster than sales to Europeans, who account for a larger share of the total. At the same time, the move by some luxury brands to target the wealthiest clientele with more expensive products is leaving room at a more affordable price point for players like Longchamp. Longchamp’s leather bags, sold through its Le Pliage Cuir bags brand, range from about € 250- € 800, while Louis Vuitton bags can range from about € 1,000 to € 3,000. Luggage and shoes are areas where Longchamp and LVMH aim to grow. Commercial ambitions are more muted in ready-to-wear, which mainly serves as marketing communication tools and a trigger to come and visit the stores.

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