Bargain Fever: How to Shop in a Discounted World Hardcover by Mark Ellwood

Author:Mark Ellwood
Language: eng
Format: mobi, epub
ISBN: 9781591845805
Publisher: Portfolio Hardcover
Published: 2013-10-16T14:00:00+00:00

Vuitton’s Secret

A few years before the Euro meltdown that plunged Greece into Dickensian poverty, LV had picked Athens as the site of its next flagship store, a brand wonderland that would communicate the cachet of French craftsmanship to the Athenian hoi polloi. Not long after it opened, a fat-walleted businessman came into the store and eyed its stock greedily. Grabbing a sales assistant, he tried to wheedle a bulk deal on a couple of items. The staffer demurred, so the wealthy local upped his offer. “What if I buy five pieces, or pay cash? Does that get me a discount?” he puffed. Still no luck. “Okay, then. Give me the whole store. Everything. Do I get a volume discount then?” His question was overheard by one of the brand’s senior management, parachuted in to inspect the newly opened store. That exec stepped in to help the sales assistant. “Excuse me, sir, but we’d be delighted to sell you the entire shop,” he said, smiling. “We might just need a few moments to tally the cost. But it will be full price, with no exceptions.” It’s a testament to the lure of Louis Vuitton that the man left a few minutes later, having coughed up retail for a single bag.

That high-ranking exec repeated the story proudly to colleagues many times, as the perfect illustration of Vuitton’s dedication to charging full price. Such posturing is possible only thanks to the brand’s obsession with vertical integration.

The practice dates back to the 1970s, when an outsider was tasked to run the leather maker for the first time. Henri Recamier had amassed fortune and experience in equal measure as a steel magnate, and he brought both with him when he took over Vuitton, then a fusty and family-run brand. Recamier landed the job only because he’d married into the clan, and so was tapped by the Vuitton matriarch as her successor, the first non-blood relative to steer the firm. Nonetheless, he was stunned when he turned his pragmatic industrial eye on the luxury world. The business model was dramatically uneven: It was retailers, Henri noted, who made the real money, marking up leather bags by 100 percent or more while manufacturers struggled. Nixing that greedy retail middleman—in other words, opening wholly owned stores or controlling concessions—would mean Vuitton could keep that money for itself. So that’s what Recamier did. His move doubled profit margins overnight: As conventional luxury firms remained at the traditional 15 to 20 percent, his reinvented company hit 40 percent or more.

Forty years later, Vuitton runs glossy ads starring Mikhail Gorbachev and Madonna and launches splashy collaborations with artists like Takashi Murakami. This is a distraction, though, since LV is largely obsessed with two things: efficiency and control (well, that and making lots of money). Unlike many designer concessions, the LV mini boutique in your local department store sits on leased space, a retail cuckoo squatting on the selling floor. Vuitton can staff and operate it directly. Stock isn’t sold wholesale to the store, which could then bundle it into season-end sales.

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