Case Study Of LVMH Group

With sales of almost € 36 billion in the previous year, the LVMH group has truly earned its title as the world’s leading luxury products group. Founded in 1854 by French-born Louis Vuitton as a packing-case company exclusively using high-quality materials for maximum durability, the family-owned business has consistently increased its luxury over the years. More than a century later, Louis Vuitton acquired Hennessy, the market leader in the high-end spirits segments, which had previously merged with champagne manufacturer Moët et Chandon in 1971 in order to form a conglomerate able to compete in various markets. Lead by investor Bernard Arnault, the newly-founded LVMH group with its 70 “houses” would become the only luxury enterprise with stakes
Unsurprisingly, LVMH has added the ASEAN region, home to an emerging middle-class, to its country portfolio by pursuing a series of strategic partnerships within Southeast Asia (LVMH, 2016).
According to a Bloomberg report of 2014, Southeast Asia with its rising consumer class has the potential of becoming one of the most attractive markets for luxury goods. The city of Singapore holding on to its status as one of the most important financial centers in the world, lures investors and wealthy individuals to the city by offering a highly favorable business environment and tax & regulatory regime. By 2023, the city is expected to host close to 5,000 people with $30 million or more in assets (Bloomberg, 2014).
But who is this Southeast Asian luxury shopper? Eugene Ho (2015) of Deloitte offers a compelling
With the region’s consumer societies becoming more self-assured and confident in their purchasing decisions, their spontaneity and ‘impulse’ purchasing will grow. Increasingly, they prefer to buy what they like as opposed to buying ‘on societal expectation’ or peer comparison. Addressing this change will require improved customer relationship management systems enhanced by technological developments among luxury players.” (Deloitte, 2015)
It is exactly these technological advancements that have helped LVMH to successfully enter markets where the group has had no previous footprint in terms of stores. With the help of its two online arms in the beauty (sephora.com) and lifestyle segment (eluxury.com), the group has been able to capture market share early on. However, becoming a local player in an already booming beauty market in which competitors have failed, requires significant consideration and a careful selection of partnerships or acquisition targets (Pan,