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French company founded in 1854, HQ in Paris Opened its first store in London, U.K Merged with Moet Hennessy in 1987, to form LVMH group Acquisitions resulted the company with over 60 brands by 2000 Initially focused on European market Four business segments: - Wines & spirits - Watches & jewellery - Perfumes & cosmetics - Fashion & leather goods

F & L Segment
Generates more than half the groups profits Flagship brand being LV Some other brands: Fendi, Thomas Pink, Marc Jacobs, Celine, Kenzo, Berluti etc 14 Production workshops Focus was on craftsmanship & not mass manufacturing Had an international logistics centre catering to 382 stores in 59 countries 2048 stores by 2007 Positioning of LV: Luxury brand & not a Fashion brand Store did not sell more than 5 units to a customer at a time Same merchandise in all the stores

Started in 19th century Growing Indian economy post liberalization

The rich in India were flying to London, Dubai, Singapore, NY, Paris to shop
Decided to enter India in 1999 Long term goals: - LV store in every Indian city with a population of 10mn + - Acquire a customer base of 1 mn by 2010

First store in The Oberoi Hotel in ND, March 2003

In 2004, Taj Mahal Palace and Towers hotel

Does a high-end brand have a market in a low income country? National Council of Applied Economic Research, in 2001-02 there were 20,000 families in India with annual incomes greater than INR 100 million which was expected to grow to 140,000 by 2010 Although 87% of the Indian population lives on an income of less than $2.50 per day the high net worth consumers are growing. NCAER reported India the worlds 2nd fastest growth in HNW Size of luxury product market - $444 mn, expected to grow to at 20% annually


WEAKNESS Limited customer base Absence of promotional offers Restricted retail opportunities

Biggest luxury brand in the world Exclusivity Strong advertising Offer custom made products Loyal customers

Leveraging on its brand equity Capitalize on other modes of promotion 100% FDI single brand retail

Limited infrastructure Economic scenario Competition

Customers in India
States Reorganization Act of 1956 Lost titles and riches abolition of annual financial grants in 1971 oblivion Few emerged as entrepreneur Influential viral marketers Gateway to India Bespoke customers

Customers in India Contd.

Target Customers Elite (New Gen. Customers) Start-up owners Tech., Manufacturing & Services Professional CEOs in their 30s & 40s NRIs returning home Small & medium retailers Big-brand Franchisee's Bollywood actors Closet spenders Politicians & Bureaucrats

Buying Behavior
Exclusivity Super rich - crme de la crme Maintain the gap Gratification, Social assertion, Propensity to make statements driving factors Super rich & cell phone services Similar to US NY Jan 07 32.5% of women in Target & 11.6% in Wal-Mart

Buying Behavior Contd.

Worldwide Categories Superior functionality and quality Reward - gratification Self-indulgence

Superior functionality and quality

Older & Wealthier Pay premium for enduring value Extensive pre-purchase research Logical and not emotional or impulsive Product quality and information appealing factor Connoisseurs largest segment

Perceive luxury products as reward Status symbols I have achieved feeling Motivated by a desire to be successful Eager to showcase Do not want to be lavish or hedonistic Want to be smart but do not let society criticize Indian consumers, emerging women consumers

Smallest, younger consumers Higher proportion of males Enjoy luxury for feel good factor Emotional Do not care about longevity or enduring value

An Indian is a homo hierarchicus. In India, a persons self-worth is almost exclusively determined by the rank he occupies in the profoundly hierarchical nature of Indian society and the determination of relative rank (Is this person superior or inferior to me?) remains very near the top of the subconscious questions in an interpersonal encounter. - observes Sudhir Kakar in his book, The Indians.

The Indian luxury consumer is extremely discerning and well informed. So, the topmost priority for brands must be to have the latest collection in the store When it comes to luxury, Indians look for what is worn by their global peers. The only change you will see is some regional specific inspirations like a Hermes sari or a Canali bandh gala suit, shares a design expert.

Sourcing the right collection is important, as the preferences of Indian consumers and the climatic conditions vary widely across the country. For example, the bulk of the Indian women who own luxury badges of handbags do not take it to work; instead they flaunt it at kitty parties.
This influences the size and shape of bags which are sourced. The colours are important too. Many who buy luxury bags want it to complement both Indian and Western attire, explains Deepika Gehani, creative head (merchandising and marketing), Genesis Luxury

Launch of Louis Vuitton

International Stores in Boulevards Luxury Plazas housing high-end brands High Streets with symbolic clusters of luxury retailers Tradition of opening stores in luxury hotels in Asia India Continued brand association with Indians Entered in late 1990s Started looking for retail stores in 2001 Lack of high-streets in India Opened first store in The Oberoi Hotel New Delhi Second store at Taj Mahal Palace & Towers Hotel

India is graduating from the start of the money stage, wherein only an elite segment is shopping for luxury goods, to the show off stage (where China is today), where people with new money are rushing to acquire luxury brands as symbols of wealth. As a proportion of total income, it is the Professional and not the Inheritor or the Selfmade who splurges the most to maintain high lifestyle
not as overwhelmingly consumed by the desire to build up wealth that their children can inherit quite willing to let their progeny come good on their own

Louis Vuitton - Business Segments

Fashion and Leather Leather Bags Ready to wear Shoes Accessories Perfumes and Cosmetics Cosmetics Skin Care Fragrances

Wines and Spirits

Champagne Wines Cognac Spirits

Watches and Jewellery

Selective Retailing

The beige and brown marble floors and muted interiors ensure that the fantastic range of products on display retain centre stage there is a collection for both men and women
bags crafted from rare leather and those that are embellished, have a separate space within the store where they are showcased

Need for shift from high-end Hotels to high street locations or luxury malls:
Higher footfalls Comparatively lesser rentals (30% -40% lesser) Getting within the reach of the growing tribe of affluent buyers

The key challenge for global brands is figuring out how to get access to the Indian consumer lack of high streets The challenge is infrastructure. Luxury requires an ecosystem. Its pointless having a luxury mall on a road that is potholed. Even the so-called luxury malls in India are not really luxury. They have issues with basic infrastructure, with training of staff, its just not a luxury experience. - Anand Ramanathan, manager at KPMG Advisory. A significant percentage of the non-metro ultra HNIs prefer to buy their favourite branded clothes abroad, rather than in India, perhaps suggesting the dearth of showrooms in these areas and that they combine overseas trips with their shopping Its difficult, its frustrating, to do business here. Real estate regulations, bureaucracy, it takes years to set up office Bertrand Michaud, Herms India

With import duties of up to 30 percent, luxury goods are often far cheaper outside India
In a recent popular Bollywood movie titled Zindagi Na Milegi Dobara (You Only Live Once), a lead character asks his friend living in Europe to buy the Hermes Ostrich Kelly bag worth 12,000 euros ($17,000) as a gift for his fiance in India, reflecting the limited variety in Asia's third largest economy. When Nita Ambani went shopping for 25,000 pieces of high-end Japanese crockery, she did not go to the Noritake store in her posh neighbourhood of southern Mumbai. Instead, the wife of the richest man in India called a Noritake store in Sri Lanka, where the upscale dinnerware for her new $1 billion home would be far cheaper.

The variety is much more overseas, the service is much better, the whole experience is much nicer overseas Biggest sources of counterfeit goods: Turkey, China, Morocco

Louis Vuitton took the highest spot for a luxury fashion house at 201 on the Global 500 list by Brand Finance with a current value of $4.9 billion Pinault-Printemps-Redoute (PPR), a French luxury holdings company that includes such brands as Yves Saint Laurent and Gucci

Compagnie Financire Richemont, a Swiss luxury company that includes such brands as Cartier and Montblanc
Hermes ($3.4 billion) Prada ($3.3 billion) Burberry ($3 billion) Dior ($2.5 billion) Gucci ($2.7 billion) Jimmy Choo Armani Canali Salvatore Ferragamo Reliance Brands Madura Fashion Genesis Luxury Murjanis

India: Market of contrasts

Source: Glyn Atwal & Soumya Jain

Future in India
Indias growth, even at its lowest, has far exceeded that of both its developed and emerging market peers
+ Population Size + Young Labour Pool + Inherent Industrial Strength

100% FDI in Single Brand Retail and 51% FDI in multibrand retail Signs of flexibility from bureaucracy to appease more foreign investments

Developing Existing Markets

Close to Delhi Airports Terminal 3 is Aerocity, a development thats a mix of hotels, offices, malls and convention centres, it is expected to emerge as a huge draw from luxury shoppers once its up and running
Bharti is developing a 1.5 million sq. ft. integrated office and retail project, Bhartis Worldmark, thats expected to be operational in the next six to nine months In Noida, another real estate developer, 3Cs, is developing a luxury arcade in a premium mixed use property called Delhi One DLF is now replicating their success with a luxury mall in Gurgaon and another one in Chanakyapuri

Top of the Pyramid

India Ultra HNI Untouched by Uncertainty

What slowdown!? There is nothing wrong with the economy, but the fact that people are comparing growth levels to 2008 levels. That was an exception and cannot be used as a benchmark since we might never reach those levels again, Slowdown? As if we care! We are used to a certain lifestyle and it is not easy to change it, even if there is a slowdown it is not impacting us so much that we need to change or cut our lifestyle. Shhh Slowdown cant stop us from flaunting There is a slowdown but people are not willing to show that their lives are affected. I will curb on things that will not show that I have altered my life in any way. So, instead of business class, I will travel economy class, but I will still throw a big party where I will invite everyone,

Luxury apparel an essential item for super rich

A number of items that may qualify as luxury to most other individuals are essential (non-discretionary spends) items for the super rich Luxury apparel is considered a far more non-discretionary item

India is graduating from the start of the money stage, wherein only an elite segment is shopping for luxury goods, to the show off stage (where China is today), where people with new money are rushing to acquire luxury brands as symbols of wealth

Steps for Luxury Brand Engagement

the hope and hype that has been generated about India both globally and domestically is due in large measure to the important reforms that were carried out in the 1990s and the early years of this decade, and their all-too-visible, beneficial, trickle-down effects It is important that the country continues down the liberalisation path, on all fronts be it inviting greater foreign direct investment across sectors, or lowering duties, deepening capital market reforms or even playing facilitator and building further on previous reforms

As growth rebounds and the economy rights itself, more and more investments are expected to flow into India, resulting in more wealth creation, swelling in numbers and in riches of Indias nouveau riche

Must target kids market too

emergence of kids as an independent buyer group owing to increased media exposure, peer pressure and rise in nuclear families as well as disposable incomes parents wanting to fulfil their childrens expectations by giving them the best Giorgio Armani is launching of Armani Junior in India, with the assistance of local designer Suneet Varma

Chaotic high street, limited quality real estate availability Luxury Malls like DLF Emporio, a safe bet But suitable environment must be duly developed to facilitate luxury shopping high streets hold the key to future of LVMH in India We should develop places like Connaught Place in Delhi and Colaba in Mumbai landmark heritage shopping districts into luxury high streets Colonial heritage location shall add to brand presentation of LVMH