Since Louis Vuitton entered Japan’s market in the 70s, it became the most popular luxury brand with nearly thirty percent share in Japan’s market. Louis Vuitton controlled 54 stores through a directly owned shop network in Japan and its parent company LVMH as a group had more than 250 stores in Japan. The key success of LV in Japan is mainly influenced by the proper balance in keeping the brand recognized internationally, while localized at certain areas for Japan. Louis Vuitton’s consistency in product quality, expansion strategy, and brand image were deftly controlled and eventually the Japanese clientele developed a fixation towards Louis Vuitton.
What made Louis Vuitton’s business model successful in the Japanese market can be explained by its efficiency in design, productivity and manufacturing. Their efforts to continuously improve their management practices has even enabled them to cut production time. According to the case study, in 1999, the firm took 12 months to launch a new product, but in 2004 the time was reduced to six months. They had established a strict controlled distribution network from its headquarters, with exports from European countries to Japan. In addition, to add value to their products, Louis Vuitton put a lot of attention on the quality of their products. They stick to their “made in France” brand association which guarantees them high quality. None of their manufacturers are built outside of France, which causes high labor prices, but the reputation and customer loyalty allowed Louis Vuitton to mark up their prices and still be able to sell to consumers. Test laboratories are also established for quality checking. According to the case study, bags are zipped up about 5,000 times, and the leather chosen has little to no blemishes. Being that quality is a huge factor in Japan, Louis vuittons strict quality control processes appease Japanese consumers.
Louis Vuitton was very successful in entering Japan’s global market because of the strategy they had implemented. They were able to early detect the demand for high fashion in Japan, and took advantage. With the changing trends that occurred, they also learned to adapt and revise their strategy to the changing markets. Most importantly, Louis Vuitton took their time to understand the culture of Japan, and study the purchasing power of consumers. They were also able incorporate the Japanese culture into their brand imaging. The acquirement of Marc Jacobs as their artistic director, in conjunction with strategic collaborations was also a huge part in their success in the Japanese market.
Despite Louis Vuitton’s success in the Japanese markets, they faced many new challenges. One of its major challenges was reducing its dependence on the Japanese market. According to the case study, in 2004, 55 per cent of revenue came from Japanese consumers. In order to reduce the dependence on this market, the brand’s goal was to continue to build its sales in the United States, and tap into new emerging markets, for example China and India. Another challenge’s was the fight against counterfeiting. Louis Vuitton has always been synonymous with status, persuading consumers that purchasing Louis Vuitton had placed them in a higher status in society.
The global financial crisis that occurred in 2007-2009 had a major impact on the Japanese economy and the purchasing power. This was a threat to Louis Vuitton because their products were priced very high. In addition, the buyer personality was shifting. Luxury goods held a different position in the mindset of consumers, compared to previous generations. Young Japanese women were no longer eager to purchase Louis Vuitton products, and were more eager to purchase lower-priced accessories and small leather items, such as clutches, wallets, and travelers. These lower-priced accessories had reported a huge sales increase in the recent past.
Despite the global crisis that took place and the change in purchasing trends in Japan, there are ways that Louis Vuitton can overcome the challenges that rise. The market is not oversaturated in Japan as of yet, and because of Louis Vuitton’s long-term history in the Japanese markets and it being the more favorable among upper-middle class and upper class groups, Louis Vuitton should continue to expand by opening more shops in cities where both classes exist. The Japanese still have high regard for quality, and this is a strength of Louis Vuitton that has been one its highest recognitions amongst the middle and upper class.
Another solution is to lower their prices of their products and make them more affordable while increasing value. Making their products more affordable may appeal to the younger generation and may push them to purchase their products. Louis Vuitton has to be strategic and careful when lowering their prices, because even though this would allow them to reach more people because of the affordability, it may dilute their luxury status. Therefore, along with decreasing prices, Louis Vuitton should work to produce a wider range of products, within their accessories, jewelry, and ready to wear lines. Lastly, Louis Vuitton should focus on entering other emerging markets. Markets in China and India are becoming increasing invested in fashion, and most importantly, growing in population. Louis Vuitton’s entry in the other Asian markets may not be as difficult only because they were able to do with the Asian market, Japan.
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