This case study deals with the opportunities and challenges of Louis Vuitton, the leading European luxury sector multinational firm, in Japan, the second largest economy in the world. The case illustrates the business strategy of Louis Vuitton in an important market, taking into account the unique features of brand management, and integrating culture and consumer behaviour in Japan. In the last decade, Japan has been Louis Vuitton’s most profitable market, representing almost half of its profits, but it seems that the global economic crisis has resulted in a decline in sales. Other European brands in the luxury and fashion sectors have also been generating one third of their profits from Japan.
Facing a weak economy and a shift in consumer preferences, Louis Vuitton has been adapting its unique strategy in the Japanese market, taking into account consumer behaviour patterns. The days of relying on a logo and charging a high price seem to be gone as there is more interest in craftsmanship and value for money. To promote sales, the company has had to launch less expensive collections made with cheaper materials. The brand has also been opening stores in smaller cities, where the lure of the logo still works.
Louis Vuitton may be French, but Japan has become a land full of Louis Vuitton lovers. Over the years, Japanese consumers have demonstrated fascination with and passion for the iconic brand. What have been the keys to Louis Vuitton’s successful business model in the Japanese market?
This case is written from public sources, including reports from magazines and newspapers, a number of books, company reports and websites. Case authors had the opportunity to visit the Louis Vuitton franchisee shops in Japan to get a real-life feel for the prices and products.