Louis Vuitton in Japan: Luxury Brand Strategy Analysis

Introduction and Brand Heritage

"Louis Vuitton in Japan" explores the history, heritage, and phenomena that have made the LV brand what it is today, and how it expanded globally to reach all consumers of luxury goods. Through the strategic extension of its network throughout the world, Louis Vuitton built itself from a single city in France into a vast system of interrelated, complex actors serving the avid fashion lover. Special emphasis is placed on the Japanese sector, which contributes an immense share of the company's annual turnover and profit (Paul & Ferroul, 2010).

Incorporated in 1854 under the name "Louis Vuitton: Malletier à Paris," Louis Vuitton, the founder, pioneered flat-bottomed trunks—an innovation for his era. These luggage items advocated lightness and superior storage volume. Thirty years later, the company expanded its geographical scope to London, England, opening a shop at the premium location of Oxford Street. By 1888, it had created the Canvas Damier Pattern to solidify its brand identity. The intention was to have an exclusive print that would resonate with every audience as a distinctively rich and elite design, embedding the Louis Vuitton brand in the consumer's mind. In contemporary terms, LV understood the concepts of brand awareness and brand recall more than 150 years ago. This identity was further captured through the branded logo "marquee Louis Vuitton déposée" (Louis Vuitton in Japan, 2010).

Georges Vuitton stepped in to fill the void created after the death of his father, the original founding figure. He was a visionary who aspired to launch Louis Vuitton around the globe and create the foundation for a corporation that would transcend international, geographical, and cultural barriers. To begin transforming that vision into reality, he participated in the Chicago World's Fair in 1893 and marketed the brand there. He then toured the breadth and length of the United States to expand his product's reach. Three years later, he created the Canvas Monogram, now recognized as the signature LV look. He obtained trade licenses globally to protect copyrights and restrict counterfeiting. When the world stood on the verge of the First World War in 1914, LV launched its Louis Vuitton Building on the Champs-Élysées—a representation of the stature, esteem, and prosperity the company had achieved. It was during this period that LV truly embarked on its journey to establish a universal footprint, opening shops and stores in far-flung locations such as Bombay, New York, Washington, Alexandria, and Buenos Aires. Georges Vuitton broadened his family's legacy, and the reins were passed to the third generation in 1936 (The Foundation, Louis Vuitton in Japan, 2010).

Global Expansion and Strategic Milestones

Gaston-Louis Vuitton grasped the importance of diversification and ventured to apply the company's famous landmark designs to small leather goods. Through brand extensions, the LV firm undertook the design and production of purses and wallets. It also launched advertising campaigns featuring celebrated Hollywood actresses and was among the first companies to strategize through product placement in motion pictures. Audrey Hepburn carried a Louis Vuitton handbag in the 1963 film Charade, directed by Stanley Donen. By the 1970s, Louis Vuitton held the greatest market share in the worldwide luxury goods sector.

The company focused its efforts on cultivating clientele in Japan. In 1977, this market was contributing $10 million in annual profits through just two stores. Over the following five years, LV further expanded into Taipei, Taiwan, and South Korea, with its concentration on the Asian market continuing to rise.

LV merged with Moët et Chandon and Hennessy in 1987 to enter the champagne and brandy industry, making LVMH the largest luxury conglomerate in the world. Revenue improved by forty-nine percent in 1988 alone, and LV now operated in more than 130 nations. Driven by the momentum of success, the company continued to pursue emerging markets.

Yves Carcelle took over as President in 1990 and launched the first Louis Vuitton store in China's capital, located at the premium Palace Hotel. LV marked the anniversary of the Monogram Canvas with extravagant celebrations across seven major cities, held in LV stores where seven designers were invited to apply the famous design to other products.

Marc Jacobs, the celebrated American designer, became LV's Art Director in 1998 and steered the brand into uncharted product categories—ready-to-wear clothing and the first-ever shoe collection. The synergies between Marc Jacobs and LV were distinctive, as Jacobs had already carved a prominent place in the international fashion arena. He helped launch the first jewelry collection in 2001 and the Tambour watch collection the following year. A collaboration with contemporary designer Stephen Sprouse produced a limited-edition series of Monogram bags that proved enormously successful. LV's marketing strategy centered on maintaining exclusivity and the allure of limited editions.

The company continued its globalization strategy by relaunching its original Champs-Élysées store as the largest in the world and opening new locations in New York, São Paulo, Johannesburg, and Shanghai. With more than fifty luxury brands under its umbrella, LVMH restructured itself into five chief business segments: fashion and leather goods; wines and spirits; selective retailing; watches and jewelry; and perfumes and cosmetics. Boasting double-digit growth across most of its premium brands, LV celebrated its 150th anniversary in 2004.

The Japanese Market: Growth and Dependence

The central dilemma that confronted Louis Vuitton after years of growth and prosperity was the need to diversify its revenue base. By 2004, more than fifty-five percent of the company's revenue derived from Japan. Times were changing with the rapid advance of information technology and ongoing revolutions in communication. Consumer behavior was evolving in response to global circumstances—including economic recession—and it was time for LV to rethink its strategy.

A second major problem was counterfeiting. The brand essence of Louis Vuitton was built on privilege, esteem, and exclusivity—qualities being jeopardized by the wide availability of fake LV-designed bags that gave a deceptive appearance of authenticity.

A third challenging component was psychological: the fear that Marc Jacobs might leave, given that it was he who had guided the company into the realm of high fashion. Additionally, retaining international control over operations, strategies, and brand image was becoming increasingly difficult as Louis Vuitton entered new markets.

Key Problems Facing Louis Vuitton

Beyond revenue concentration and counterfeiting, Louis Vuitton faced a set of interconnected strategic pressures. The brand's identity was at stake on multiple fronts simultaneously: its creative leadership was uncertain, its exclusivity was eroding, and the competitive landscape was shifting in ways that challenged LV's traditional positioning. Managing these pressures while sustaining growth required the company to make difficult choices about what it fundamentally stood for as a brand.

References

Ferroul, C. and Paul, J. 2010. Louis Vuitton in Japan, case study, Richard Ivey School of Business.

Exhibit 7, Louis Vuitton in Japan, 2010, case study, Richard Ivey School of Business.

The Foundation, Louis Vuitton in Japan, case study, Richard Ivey School of Business.