Kwansei Gakuin University, Institute of Business & Accounting, International Management Course

Kakou Yves, #1305

Professor Grubel
International Marketing Practice
Date: october 30th 2012

L O U I S V U I T TO N I N I N D I A
Summary
The French leading luxury brand Louis Vuitton (hereafter referred to as LV) , made the decision to
formally enter India in 1999. Indians, especially the maharajahs were a familiar customers for LV
since the late 19th century. The long relationship between LV and the maharajahs had however
reached its apogee and started to decline since the bureaucratic restoration of India. This has led LV
to look for alternative customers in the ever changing Indian market. LVs task was to establish
itself as an exclusive brand to fit Indians perception about luxury goods while reaching as much as
possible its target market. Much of LVs prior strategies when entering a market were not plausible
in India.
The Indian market was unlike any in which the company was currently operating in, and simply
using LV's existing marketing strategy was not guaranteed of producing the same result. The rapid
changes in the socio-economic conditions of the emerging nation opened up opportunities for the
brand but also posed unique challenges.
In the West and much of LVs existing market, luxury goods were often sold through the companys
owned stores in luxury retail clusters spread across several blocks, predominantly in the cities
center. LV also established stores in luxury malls in cities that did not have luxury retail clusters. In
India there was a lack of both Luxury malls and luxury retail cluster, which has forced LV to
operate in Luxury Hotels. Nevertheless, an unofficial estimate shows that several real-estate
entrepreneurs had plans to open 300 luxury malls in India by 2010, and as the Indian economy
prosper so have the possibilities of having many retail clusters development.
India will soon be the worlds greatest power, both by population and purchasing power. The
potentials presented by its market are something a brand like LV cannot ignore.

Kwansei Gakuin University, Institute of Business & Accounting, International Management Course

Problem Statement:
The company is now trying to determine the best way to successfully expand its outlets in India.

Alternative # 1: Expand through Luxury Malls.

There is a nascent market waiting to explode and by utilizing the soon to come expansion of luxury
Malls in India, LV could just follow the trend and rapidly expand its outlets throughout India.
Expanding through hotels, which has

Pros

Cons

Tapping into a larger customer

base

very few luxury Malls in India

adequate customer traffic

potential windows shopper

the opportunities offered by Luxury

less expensive to operate

possibility of non-luxury stores

next to LV

malls have to be taken into

larger store size

potential lost of Exclusiveness

been by default the strategy of LV in

India has had some limitations and

consideration.
An estimate of 300 luxury malls by
private entrepreneur gives hope to

this alternative. Some of the advantages of expanding through Luxury malls include the possibility
of having a larger customer base that fit the profile of LVs target market, larger store as compared
to locating in Luxury hotels and the cost benefits associated with it. However, as the case is being
written, Luxury malls have yet to catch on as many brands including LV cant find the right place.
The ambience and environment are of utmost importance for a luxury brand, and the potential of
having non-luxury retailers positioned next to LV can impede to its brand image. Also, the
expansion of Luxury malls in India is just at a planning level and there is no guarantee that the pace
by which Luxury malls expand in India will satisfy LVs growth strategy.
Expanding through Luxury malls in India seems a promising alternative, however the current stage
of the real estate environment and the development of these luxury malls do not meet the standard
of a brand such as LV. Moreover, the example of failure of other luxury good companies in
establishing a retail in Indian luxury malls are of most concerns. Some of these concerns as
mentioned earlier, are the possibilities of having non-luxury shops to encroach LVs store thereby

Kwansei Gakuin University, Institute of Business & Accounting, International Management Course

diminishing the companys brand image, and the existence of windows shoppers that do have access
to the malls but will out crowd potential customers. Expanding through Luxury malls in India
seems an too early call to make at this time.

Alternative # 2: Expansion through Luxury retail cluster:

This alternative is the perfect scenario for LV as it would allow the Company to maintain the
exclusiveness status associated to its brand. Locating in Luxury retail cluster has always been the
first choice of LV whenever the

Pros

Cons

Maintain LVs Exclusiveness

very few LRC in India

more visibility to target customer

more expensive to operate

Control over LVs store design

require more investment

ownership of the Store

limited customers

LVs main strategy in the west

less visibility to other people

option was available. It not only

allows the company to own its store
but also gives it flexibility to design
them, resulting in the Company
having full control on how it
position LVs brand in its customers

mind.
Furthermore, this alternative allows LV to have a better display of its products and a greater
visibility to its customers.
Expanding through LRC is however more costly to the company as opposed to the latter option
because it requires more investment and induces more operational cost. Cost efficiency is however
of a least concern in the luxury good business, because LV can always charge a premium to its
customers for any cost it endures down the road. Also, the cost of locating in a luxury retail cluster
in India should be less expensive as compared to having one in a western country.
It is also worth noting that expanding LVs stores in LRC across India will represent a symbol of
the very presence of the company in the country. A luxury retail cluster in India without Louis
Vuitton brand in it is synonym of the brand not being in the country.
However, the most considerable impediment to this alternative is the very fact that there arent
many Luxury retail cluster in India at the time of the case nor is it mentioned that there will be some
development of any in the near future. LVs outlets expansion throughout India will not become a
reality anytime soon should this alternative alone be chosen.

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Alternative # 3: Expanding through more Hotels (Do nothing approach):

Expanding through Hotels has been the strategy adopted by LV so far. This option is the strategy
that the company is already accommodated to and pursuing it will allow the company to use
existing experience on hotel
Pros

Cons

Experience in doing so

losing other expansion possibilities

less costly

less visibility

targeting both locals and foreign

less control

Awareness of LVs Status

limited customers

Less risky

Opportunity loss

expansion and replicate them to

other locations across India. The
strategy has been less costly to LV
because it requires limited
employees and operational cost. It
also helps the company to target
both local and foreign customers,

those who are already aware of LVs brand. By expanding through luxury hotels, LV send a
message to the market, that is, the brand is meant for those who can afford to stay in Luxury hotels.
Hindrances to this alternative include a less visibility of the brand, as LV is confine to market its
product only in hotels; there is growing part of the new riches that do not get targeted. Also, the
company has less control of how its product are being displayed to customers.
LVs original choice of expanding through hotels in India is understandable, as it allowed the
company not to expose itself to Indias uncertain environment and maintain the LVs standing as an
exclusive luxury brand. Indias socio-economic reality is however changing and using the same
strategy as before is limiting LVs ability to reach a new type of customer: the growing new class of
millionaires in India that are not necessarily visiting Indian hotels.

Alternative # 4: Open LVs independent Stores:

Opening LVs independent stores as an approach to spread throughout India also offers significant
benefits. This alternative gives more flexibility to the company as it does not set any limit on
locations. Should the company decide to enter a city that has more than a million population but
lacks a luxury retail cluster or luxury mall, LV can set up its own independent store in a location
that it sees fit. i.e. in the business center of the city. In doing so, the company will not be relying on
existing infrastructure and will be fully in control of its destiny in the Indian market. Other benefits
4

Kwansei Gakuin University, Institute of Business & Accounting, International Management Course

to this alternative beside the ability to own its stores and chose the location, include flexibility in
designing LVs stores, more visibility and a more precise targeting of customers.
The cost associated with owning its stores, e.i. land purchase, building development, dealing with
regulators on real estate issues etc, constitute important counter-argument to this alternative. India,
as most of the emerging countries, has a very loose regulatory framework on property ownership.
Dealing with potential legal disputes that may arise, should be of the most consideration if LV ought
to select this alternative.

Alternative # 5: A combination of the above strategies (Best Alternative):

India is a country of diversification where pluralism is the norm and adaptation the key to success.
The pace of the socio-economic change within the country differs from one region to another, and
from cities to cities. In this
environment, using a one size fit

Pros

Cons

flexible

not consistent

meeting Indias realities

reaching a larger audience

adjustable

Less risky

all approach to the market

incorporates significant risk that
cannot be ignored. A mixture of the
above alternative is indeed the best
solution for a market as diversified
as that of India.

This alternative should however be implemented in the following sequence:

LV should follow its predominant strategy in cities with existing Luxury retail cluster. In the
absence of LRC, the next option should be to locate in luxury hotels and luxury malls, with an
emphasis on how the malls have been designed and who are going to be LVs neighbor tenants as a
prerequisite for the company to also locate there. In the absence of both LRC, luxury malls and
without the possibility to locate in a luxury hotel, LV may choose to create its independent store as
its last alternative, should that market really be worth the effort.
The main advantage of this alternative in comparison to the above options, is that it allows LV to be
flexible with the Indian realities by choosing the option that best fit a citys development stage.