Luxury Markets and Strategies

1.

Luxury Markets & Strategies
Prof. Dr. Andrea Bookhagen
WS 2017/2018
Vera Khobotova, Benjamin Munkhart, Anna Sophia Viola
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Vera Khobotova, Benjamin Munkhart, Anna Sophia Viola
© MA IB, Winter 2017/18, page 1

2.

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Vera Khobotova, Benjamin Munkhart, Anna Sophia Viola
© MA IB, Winter 2017/18, page 2

3. LVMH – Corporate Film 2012 Source: https://www.youtube.com/watch?v=NVrbHJl7u3g

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Vera Khobotova, Benjamin Munkhart, Anna Sophia Viola
© MA IB, Winter 2017/18, page 3

4. LVMH is the largest luxury goods conglomerate worldwide and focuses on creativity and excellence.

1. Company Profile (1/2)
Foundation in Paris in 1987
Merger of Moët Hennessy & Louis Vuitton
Global Player in Luxury Goods Industry with 70
houses in 5 major sectors
CEO Bernard Arnault
“Our business model is anchored in a long term
vision that builds on the heritage of our Houses
and stimulates creativity and excellence.
This model drives the success of our Group and
ensures its promising future.”
- Bernard Arnault
Picture 1
[Sources: LVMH Annual Report (2016); LVMH Corporate Website (2017);
Picture 1: LVMH Annual Report (2016)]
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Vera Khobotova, Benjamin Munkhart, Anna Sophia Viola
© MA IB, Winter 2017/18, page 4

5. LVMH was formed by the merger of two players: Moët Hennessy and Louis Vuitton in 1987.

1. Company Profile (2/2)
1743 – Foundation of Moët
1832 – Moët & Chandon #1 Champagne provider in Europe
1854 – Louis Vuitton opens his own packing and
trunkmaking business in Paris
1885 – Louis Vuitton expands internationally
1969 – Louis Vuitton enters the Asian market
1971 – Merger Moët & Chandon and Jas. Hennessy &
Company
1984 – Louis Vuitton goes public
1987 – Louis Vuitton and Moët-Hennessy merge in a $4
billion deal
Picture 1
[Sources: James Press (2000): LVMH Moët Hennessy Louis Vuitton SA History;
Picture 1: LVMH Corporate Website (2017)]
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Vera Khobotova, Benjamin Munkhart, Anna Sophia Viola
© MA IB, Winter 2017/18, page 5

6. LVMH is divided into the five major BUs Fashion & Leather Goods, Wines & Spirits, Perfumes & Cosmetics, Watches & Jewelry and

LVMH is divided into the five major BUs Fashion & Leather Goods, Wines &
Spirits, Perfumes & Cosmetics, Watches & Jewelry and Selective Retailing.
2. Corporate Structure
[Sources: LVMH Annual Report (2016); LVMH Corporate Website (2017)]
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Vera Khobotova, Benjamin Munkhart, Anna Sophia Viola
© MA IB, Winter 2017/18, page 6

7. LVMH sets the taste of qualities and the art of luxury living.

3. Company Values
LVMH has successfully preserved the family spirit focusing on long-term perspective.
BE CREATIVE AND INNOVATIVE
CULTIVATE AN ENTREPRENEURIAL SPIRIT
DELIVER EXCELLENCE
«The mission of the LVMH group is to represent the most refined qualities of Western "Art de Vivre" around
the world. LVMH must continue to be synonymous with both elegance and creativity. Our products, and the
cultural values they embody, blend tradition and innovation, and kindle dream and fantasy».
[Sources: LVMH Annual Report (2016); LVMH Corporate Website (2017); James Press (2000): LVMH Moët Hennessy Louis Vuitton SA History]
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Vera Khobotova, Benjamin Munkhart, Anna Sophia Viola
© MA IB, Winter 2017/18, page 7

8. Visual Merchandising, Celebrity Ambassadors, Special Editions, Impressive Events and Sponsorships are means to draw target

customers´ attention.
x. Marketing Approach
Special Editions
Sponsorship
Picture 3
Picture 1
Visual Merchandising
Picture 2
Picture 5
Celebrity Ambassador
Impressive
Staging of Events
Picture 4
[Sources: LVMH Annual Report (2016); LVMH Corporate Website (2017); Hudson, M. (2017): https://www.thebalance.com/the-5-most-important-elements-of-visual-merchandising-2890501;
Picture 1: http://www.itsliquid.com/polka-dots-for-louis-vuitton-by-yayoi-kusama.html; Picture 2: http://cdn.pursuitist.com/wp-content/uploads/2015/01/cara-delevingne-tag_heuer_2-e1422279010295.jpg;
Picture 3: LVMH Corporate Website (2017); Picture 4: http://www.vogue.com.au/celebrity/events/fendi+great+wall+of+china+show,1283; Picture 5: http://de.louisvuitton.com/deu-de/lv-for-unicef/lv-for-unicef#/home]
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Vera Khobotova, Benjamin Munkhart, Anna Sophia Viola
© MA IB, Winter 2017/18, page 8

9. LVMH´s strategy can be subdivided into four segments, all contributing to the overall goal of sustainable growth.

x. Strategic Approach – Sustainable Growth
The elements of the LVMH strategy.
Decentralization
Merger &
Acquisition
Synergy
Effects
Quality & Control
[Sources: LVMH Annual Report (2016); LVMH Corporate Website (2017); Author unknown (2015): https://www.ukessays.com/essays/marketing/international-strategic-management-of-lvmh-marketing-essay.php]
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Vera Khobotova, Benjamin Munkhart, Anna Sophia Viola
© MA IB, Winter 2017/18, page 9

10. BUs Fashion & Leather Goods and Selective Retailing contribute 2/3 to the total revenue, achieving 37.6 bn € in 2016.

BUs Fashion & Leather Goods and Selective Retailing contribute 2/3 to
the total revenue, achieving 37.6 bn € in 2016.
x. Facts and Figures – Overview 2016
Revenue: 37.6 bn €
74% female employees
492 stores in France
1
Perfumes & Cosmetics
Revenue: 4.95 bn €
Top Market: Europe (37%)
Top Seller: Makeup (44%)
Fashion & Leather Goods
Revenue: 12.78 bn €
Top Market: Asia (40%)
Stores: 1,508
Wines & Spirits
Watches & Jewelry
Revenue: 4.84 bn €
Top Market: US (31%)
Top Seller: Cognac
Revenue: 3.47 bn €
Top Market: Asia (42%)
Stores: 397
Selective Retailing
Revenue: 11.97 bn €
Top Market: US (41%)
Top Store: Sephora
[Source: LVMH Annual Report, (2016)]
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Vera Khobotova, Benjamin Munkhart, Anna Sophia Viola
© MA IB, Winter 2017/18, page 10

11.

x. Key Performance Indicators
Financial KPIs:
LVMH stock market data (Stock Value)
Dividend
2016 revenue (by region/business group)
Number of stores
Profit from recurring operations
Non-financial KPIs - LVMH Initiatives For the Environment (“LIFE”):
Cut energy-related emissions by 25% between 2013 and 2020
Environmental Performance Index (EPI) of its products
Best practice applied in 70% of the supply chains, to reach 100% in 2025
Environmental improvement of 10% between 2013 and 2020, valid for all Maisons, at each of
their production sites and stores
By 2020, all LVMH sites must be ISO 14001-certified and must have implemented a system to
ensure continuous performance improvement in their operations
[Source: LVMH Annual Report, (2016)]
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Vera Khobotova, Benjamin Munkhart, Anna Sophia Viola
© MA IB, Winter 2017/18, page 11

12. A main focus is put on the reduction of each product´s environmental footprint as well as compliance of suppliers and raw

materials.
7. Non-financial KPIs - LVMH Initiatives For the Environment (“LIFE”) (2/3)
LIFE 2020
lays out the goals in four strategic areas, a roadmap for LVMH’s progress and sets respective KPIs:
Sustainable product design
improving the environmental performance of all their products
sustainable design principles, which seek to reduce the environmental footprint of products over their entire life cycle
over 80% of a product’s environmental impact can be attributed to choices made in the design phase
Improve the environmental performance of all products
KPI:
Environmental Performance Index (EPI) of its products
Suppliers and raw materials
• pursuing a sustainable supply chain strategy by working closely with suppliers and subcontractors
• purchase and produce all of their strategic raw materials in compliance with the highest environmental standards
for materials and production sites alike
• compliance of materials and substances used to manufacture
KPI:
Best practice applied in 70% of the supply chains, to reach 100% in 2025
[Source: LVMH Annual Report, (2016)]
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Vera Khobotova, Benjamin Munkhart, Anna Sophia Viola
© MA IB, Winter 2017/18, page 12

13. Vera Khobotova, Benjamin Munkhart, Anna Viola

Thank you very much
for listening!
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Vera Khobotova, Benjamin Munkhart, Anna Sophia Viola
© MA IB, Winter 2017/18, page 13