Global Summit on

Management Cases
GSMC 2017

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LOUIS VUITTON:

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LUXURY REIGNS IN INDIA

Dr. Abha Rishi

Birla Institute of Management Technology
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Shreshth Goyal
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Birla Institute of Management Technology

Anwesha Singha Roy

Birla Institute of Management Technology
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Dhwanit Gupta
Birla Institute of Management Technology
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The case study is intended to be used as the basis for classroom discussion rather than to
illustrate either effective or ineffective handling of a management situation. It is based on secondary
research.
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GSMC 2017, IIM Raipur © ET CASES

Cases in Management www.etcases.com

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LOUIS VUITTON: C
LUXURY REIGNS IN INDIA
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Dr. Abha Rishi
Birla Institute of Management Technology

Shreshth Goyal
Birla Institute of Management Technology
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Anwesha Singha Roy

Birla Institute of Management Technology

Dhwanit Gupta
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Birla Institute of Management Technology

Louis Vuitton (LV) has always carried its image of elegance, exclusivity, royalty and
heritage since its inception. LV has its presence in almost every fashion city across the
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globe with more than 400 stores worldwide. LV’s founder, Louis Vuitton, decided to be
a trunk maker at the age of 16 and therefore joined a Persian box-maker and packer
named Monsieur Marechal as an apprentice. He opened his first store on Rue Capucines
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after seven years and with his wood crafting skills improved the customer’s trunks,
keeping in mind the practicality, security and appearances. He also revolutionized the
baggage industry by finding an alternative to leather called the “Trianon grey” which
was much lighter than leather and also odour-free and added a sense of luxury to the
trunks.

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 Louis Vuitton: Luxury Reigns in India

In 1876, LV introduced its iconic beige and brown stripe designs and logos in the market.
Its first UK store was opened at Oxford Street, London in 1885 which marked the beginning
of the expansion stage of LV. With the invention of unpickable tumbler locks in 1890, the
brand completely diversified its presence globally by providing the most secure lines of
luggage in the market. With the change in the family generations taking over the LV legacy

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ahead, the company revamped its signature monogram and also introduced new product
lines of purses, bags and wallets which contribute largely to the company’s revenue in
developing luxury markets.3

Global Presence of Louis Vuitton

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Since its inception in 1854, LV has come far ahead from what its identity has been. From
being a company whose value propositions were luxury and quality in its early years, it has
emerged as the most desirable luxury brand keeping its exclusivity and heritage as it
progresses in the luxury market. In the half-yearly results of the 2016, LV posted total
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revenue of 6655 million dollars (approx.) in fashion and leather goods category with a
profit of 1843 million of dollars (approx.) from recurring operations. Today, 27% of the
company’s revenue comes from the Asian market with 35% revenue coming from fashion
and leather goods, primary business category for LV.4
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According to Bain & Company, Inc. (2015), $282.7 billion of business came from the
continuous borderless consumers and the constant global currency fluctuations.5 LV holds
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a brand value of $27.3 billion and 19th most powerful brand globally as per Forbes.6 Today,
LV is the 3rd most followed brand in the world after Nike and Adidas Originals.7
Madonna, Audrey Hepburn, and Jennifer Lopez are a few among the many celebrities who
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have endorsed and are the loyal customers of LV. Apart from famous celebrities, LV has
used various mediums of brand communication including print ads, billboards and events
like LV CUP in the past. LV recently aligned with many organizations, artists to position
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3
“Amazing Louis Vuitton Stores That You Must Visit”, http://www.elitetraveler.com/features/amazing-louis-
vuitton-stores (accessed date: August 20th 2016)
4
“LVMH group presentation”, https://www.lvmh.com/news-documents/backgrounders/lvmh-group-
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presentation/, September 2016 (accessed date: August 20th 2016)

5
D’Arpizio Claudia, et al., “Luxury Goods Worldwide Market Study Fall-Winter 2015: A Time to Act—
How Luxury Brands Can Rebuild to Win”, http://bain.com/publications/articles/luxury-goods-worldwide-
market-study-winter-2015.aspx, December 21st 2015 (accessed date: August 22nd 2016)
6
“The Most Valuable Brands”, http://www.forbes.com/powerful-brands/list/ (accessed date: August 22nd
2016)
7
Meghan Blalock, “The Most Followed Fashion Brand on Instagram Will Surprise You”, http://
www.whowhatwear.com/most-followed-fashion-brand-instagram, September 11th 2015 (accessed date:
August 21st 2016)

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itself as a luxury brand in the minds of the travellers and also launched a television
commercial for the same. Today, LV sees India and China as a major attraction for expansion
in the Asian market and in Japan and Europe. Thus, entering into new markets and aligning
the company goals according to the changing economies have posed a big problem in
terms of maintaining brand identity as well as creating a customer base for the brand.

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Asian Luxury Market
Today 27% of the company’s revenue comes from the Asian market with fashion and leather
goods accounting to 35% of the total revenue for LV. A look into the country-wise luxury
spending reveals that China contributes 31% followed by America and Europe with 24%

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and 18% respectively (Exhibit I).8
Also LV is losing its mark in the Asian market in terms of the perceived value of the brand
in turn of profits by opening more number of stores. Along with competition from brands
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like Hermes, Breguet, Chanel, etc., fake products also pose a major concern for the company.
People who perceive luxury out of their reach go for cheap copies of luxury brands like LV.
Such cheap replica wallets, purses and beltsare easily available in the market and this has
hampered the brand image as a whole. Today, LV has dropped from the premium core
segment to the accessible core segment in the market (Exhibit II).9
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Luxury Market in India
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While India is an emerging market for luxury goods, most of the purchases are likely to be
made outside the country. “The reports on luxury retail tend to take into account goods
bought in the country. But, in reality, almost 99 per cent of luxury goods are not bought in
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India. While the Indian psyche is driven towards value luxury and discounting, there is a
fine line between what they aspire and the price they are willing to pay for their aspirations,’’
observes Vijay KG, Founder, Luxepolis, an online portal for selling pre-owned luxury
goods.
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Giving more insights into the luxury market, Anupriya Acharya (CEO, Publicis Media
India) adds that the country is witnessing a change towards the luxury segment with the
increasing number of High Net Worth Individuals (HNWI) and the luxury market will
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cross $18.3 billion by the end of 2016, according to a new study released by the Associated
Chambers of Commerce of India (ASSOCHAM). Among the top sellers in the luxury

8
“Luxury Goods Worldwide Market Study Fall-Winter 2015: A Time to Act—How Luxury Brands Can
Rebuild to Win”, op.cit.
9
Emil Anton, “HOW LOUIS VUITTON LOST ITS LUXURY STATUS”, http://www.alux.com/louis-vuitton-
luxury-status/ (accessed date: August 20th 2016)

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 Louis Vuitton: Luxury Reigns in India

market are the fragrances, watches and jewellery segments closely followed by apparel,
dining and skin care.10 For luxury goods, the Delhi NCR market has the highest potential,
followed by Mumbai, Bengaluru and Chennai and non-metro cities such as Ahmedabad
and Chandigarh.
Pricing and distribution are the other key challenges. India’s pricing of luxury goods are

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generally over 20% more expensive than other major markets, after including duties and
taxes. High import duties in India has led to the affluent class travelling abroad for their
tourist and luxury shopping and choosing international destinations to buy luxury goods at
much competitive prices. Adventure sports like parasailing, river rafting, skiing, etc. propel
travelling abroad along with them, luxury shopping seems catching up with Indians. The

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hotel room rates are another determinant while choosing destinations. The rising cost of
hotels in India is another factor which allows travellers to compare the high costs and
choose international destinations over domestic travel.11 The hot destinations essentially
are in South-East Asia, Europe and United States while half of the outbound Indian tourists
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travel to Colombo, Thailand, Dubai, Malaysia, and Singapore. The newer destinations
chosen from these for Indians largely are Manila, Hong Kong, Istanbul, Greece and Macao.12
Compared to other countries, India has the highest tariff barrier following Brazil. Compared
to China and Japan imposing custom duty of 17% and 11% respectively on leather goods,
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India imposes 38%.13 The sale of luxury watches is also affected by the custom duty as high
as 49% in this segment.14 Thus, high taxation policies and limited infrastructures capabilities
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slowed down the growth of luxury market in India. Thus, luxury retailing is still at a very
nascent stage limited to few cities in India. As the number of HNWI increases, more number
of brands proliferates in the Indian market. Interestingly, the High-Income Group (HIG)
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10
Purvita Chatterjee, “Luxury brands may not have it easy in India: Report”, http://
www.thehindubusinessline.com/companies/luxury-brands-may-not-have-it-easy-in-india-report/
article8693752.ece, June 5th 2016 (accessed date: August 23rd 2016)
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11
“Indian tourists in foreign nations”, http://www.nriol.com/blogs/indian-tourists-in-foreign-nations.asp,
(accessed date: October 5th 2016)
12
Maneesh Pandey, “Get ready for a summer stampede! Indians flock to book overseas flights as holidays
abroad work out CHEAPER than staycations”, http://www.dailymail.co.uk/indiahome/indianews/article-
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2318536/Get-ready-summer-stampede-Indians-flock-book-overseas-flights-holidays-abroad-work-
CHEAPER-staycations.html, May 2nd 2013 (accessed date: October 5th 2016)
13
“High custom duty barrier to luxury brands in India”, http://www.livemint.com/Industry/
fS4D5KWoifwnyrsq86XeGL/High-custom-duty-barrier-to-luxury-brands-in-India.html, November 1st 2014
(accessed date: October 4th 2016)
14
“High customs duty hindering growth of Indian luxury market: Olivier Bernheim”, http://www.business-
standard.com/article/news-ians/high-customs-duty-hindering-growth-of-indian-luxury-market-raymond-
weil-president-ians-interview-114092800414_1.html, September 28th 2014 (accessed date: October 4th
2016)

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consumers spend over 40% of their monthly income whereas the Middle-Income Group
(MIG) consumers spend only 8%-10% of income on luxury products and services.15
Five luxury consumer segments are emerging in India – the Classpirational (who believe
luxury is about quality and trusted brands), the Experiencer (who say luxury is about discreet,
unique experience), the Absolute Luxurer (who want exclusivity and customization), the

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Fashionista (who say luxury is about being a trendsetter) and the Megacitier (who say
luxury is being part of a global trend). In India, the average age of the consumer starts at
25-30 years, unlike China, where the purchase of luxury goods starts at a younger age, says
Mumbai-based Karishma Bhalla, Principal, BCG.16

Louis Vuitton in India: Growth, Challenges and Opportunities

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In India, there is a varying perception of luxury between those born into wealth and those
of first generation wealth-creators. Various factors that define luxury apart from the aspiration
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are gratification, social assertion, ego fulfillment as well as exclusivity it creates include
the self-image, brand image, the desire to seek consistency between the two.
LV had its presence in India between 1890-1940 prior to its re-entering the market in 2003.
Its main customers were the royal families and maharajas for whom the company used to
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provide custom-made bags and accessories shipped form Paris and London.17 The traditional
customers of LV in India were the maharajas whose consumption of luxury was natural and
an extension to who they were. After India became independent in 1947, the maharajas
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were forced to join the mainstream and lost their individualism in the newly formed
democracy. In 1971, in pursuit to the socialist policies the royalty faded into oblivion.
However, the root towards luxury still remain strongly positive and the mind set has a long
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lineage.18 When LV entered the Indian luxury retail market in 2003, it had a pre-existing
database of LV loyal maharajas and their extended families, and industrialists who had
studied and lived abroad. “Louis Vuitton was the first to come to India because the brand
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15
“India’s luxury market to cross $18.3 B in 2016”, Enterprise Innovation, http://search.proquest.com/business/
docview/1757751493/D0BA683195E746FAPQ/57?accountid=145616, January 18th 2015 (accessed date:
August 13th 2016)
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16
“Consumer Behaviour: Who is coming to my store?”, http://search.proquest.com/business/docview/
1618984888/31E7D75F157D413EPQ/1?accountid=145616, November 1st 2014 (accessed date: November
1st 2016)
17
Kaushik Manu, “OUI for Louis: Louis Vuitton once made luggage for Indian royalty. Today, it is reaching
out to millions of stylish upwardly mobile Indians”, http://www.businesstoday.in/magazine/cover-story/
luxury-special-louis-vuitton-upwardly-mobile-indians/story/197642.html, September 1st 2013 (accessed
date: August 23rd 2016)
18
Shin-Fin Chen, “Louis Vuitton In India”, https://iveycases.com/ProductView.aspx?id=26865, December
23rd 2008 (accessed date: August 22nd 2016)

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 Louis Vuitton: Luxury Reigns in India

had a history here and the incentive already existed as there was an appreciative market,”
said Tikka Shatrujit Singh, adviser to LV.
Post-liberalization, a new fleet of elite class emerged in the Indian market for which luxury
was a source of gratification rather than a way of life. Thus, LV has a primary objective of
creating a new customer base in tune to the brand appeal in the country. At the lowest level,

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the average annual household income of India’s social hierarchy was $2,070 in the
2001-02. With increasing GDP and 2025 projection by Mckinsey Global Institute, over
291 million people would be well over 10 times from to 583 million and more than
23 million would be among the country’s wealthiest.19 This was the number LV was focusing
on and therefore had an initial target of achieving one million customers by 2010. From

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2006 to 2013, the number of HNWI people with more than $1 million in onshore liquid
assets grew 200% in India. From 2006 to 2013, households grew at the rate of 60% to
1.1 million, with the annual disposable income of over $10,000.20
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According to Goldman Sachs, Indian market will be shaped by its 440 million millennials
and 390 million Gen Z. Goldman Sachs calls the work force in India as “urban middle” (or
one that earns $11,000 annually) is much smaller at 27 million of the population. With the
average earning on $3200, the 130 million urban mass will fall in the new generation of
Indian youths. (These are people who make up about one-fourth of the Indian workforce
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wherein about 32 million are the ‘Educated Urban Mass’ who have an undergraduate degree
and are employed in non-labour intensive jobs and the rest of the Urban Mass are blue
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collar workers or migrant labourers.)21

Thus, with the new emerging market and the average income group increasing, LV looks
forward to open new store in every city having a population of 10 million or more in India
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with its existing stores in Delhi, Mumbai and Bangalore on the same basis. LV entered
India by opening its first store in Delhi’s Oberoi hotel. The primary reason for opening the
store in a luxury hotel was that it perfectly addresses a luxury brand. The profile of guests
offers a captive customer pool and provides a contemporary value as LV was considered as
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a travel product. The synergies were even greater with heritage hotels like the Taj in Mumbai.

19
“The Bird of Gold: The Rise of India’s Consumer Market”, http://www.mckinsey.com/global-themes/asia-
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pacific/the-bird-of-gold, May 2007 (accessed on: August 23rd 2016)

20
Punj Shweta and Kaushik Manu, “Money can buy you luxe: Indians in greater numbers are starting to
understand what luxury means, and they have the attitude and the money to buy it and flaunt it”, http://
www.businesstoday.in/magazine/cover-story/how-luxury-brands-are-changing-to-win-the-indian-market/
story/197547.html, September 1st 2013 (accessed date: August 23rd 2016)
21
MeghaBahree, “The Indian Consumer Market Will Be Huge, But Very Different from China’s: Report,
The Indian Consumer Market Will Be Huge, But Very Different from China’s: Report”, http://
www.forbes.com/sites/meghabahree/2016/06/02/the-indian-consumer-market-will-be-huge-but-very-
different-from-chinas-report/#570cfa3d7aa4, June 2nd 2016 (accessed date: August 22nd 2016)

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LV took a great leap forward when it decided to shift in the luxury mall DLF Emporio in
2010 to mark its strong presence in the Indian luxury retail market. The luxury mall similar
to clustering helps to achieve both scale and scope economies in distribution. Thus, it
provides the customers a destination shopping which in turn generates more traffic to the
mall and also reduces inventory costs to the stores.

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Louis Vuitton is one of the most desired luxury brands in the country with extravagant
product line of accessories, jewellery, travel bags, etc. Women hand bags have distinctively
made their mark in the Indian market. Although there is a boost in the number of male
customers, females tend to be the main revenue generators.22 The 2015 LV mens wear
collection was based entirely on the state of Rajasthan. It had elements for the colour, tone

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and fabric that define the state and also showcased shirts based on the colours of the turbans
the locals wear. There is also a new V bag collection with LV’s classic Gaston V patch
stitched on them. This includes multipurpose bags. LV also reversed its classic monogram
in the new line of bags and also created eye wear collection inspired by Jaipur Royal
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Swami Ram Singh II, bag charms as well as guitar pendants in malachite.23 According to
Tikka Shatrujit Singh, Advisor of Louis Vuitton India, the company has to focus on many
young individuals who are making INR3-4 lakh every month and can be acquired by the
company easily.24
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Competitive Landscape in India
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Gucci, Hermes and LV have been competitors since ages in the global luxury market
(Exhibit III). Hermes opened its first stand-alone store Mumbai in 2011 and was the first
luxury brand to do so avoiding luxury malls or hotel. It entered into the Indian market with
the offering of 27 limited edition saris inspired by Indian culture and ethnicity.25 Gucci is
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one of the most-known brand among Indians and entered India in 2007 in competition to
LV. Along with its retail sales, Gucci also sources embroidery from the country for its
worldwide operations.26 Thus, LV could also use India as a manufacturing hub. It can also
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22
“OUI for Louis: Louis Vuitton once made luggage for Indian royalty. Today, it is reaching out to millions
of stylish upwardly mobile Indians”, op.cit.
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23
“Kim Jones: In defence of a lifestyle wardrobe”, http://search.proquest.com/business/docview/1663199524/
BCBA24C3565A4D1DPQ/1?accountid=145616, March 14th 2015 (accessed date: August 23rd 2016)
24
“OUI for Louis: Louis Vuitton once made luggage for Indian royalty. Today, it is reaching out to millions
of stylish upwardly mobile Indians”, op.cit.
25
Kazmin Amy, “Hermes sees sari as way in to India”, https://www.ft.com/content/5c73d1b2-f0bf-11e0-
aec8-00144feab49a, October 7th 2011 (accessed date: August 24th 2016)
26
Zargani Luisa, “EXPANDING GUCCI SETS SIGHTS ON INDIA”, http://search.proquest.com/docview/
231194011/7CB573C27A064692PQ/1?accountid=145616, September 25th 2007 (accessed date: August
24th 2016)

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 Louis Vuitton: Luxury Reigns in India

get into the business of developing luxury mall through joint ventures with real estate
companies in India to ensure its healthy future.

Challenges in India
Major challenges that the company faced during its initial years in the country were

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advertising platforms, credit cards and retail outlets. Although India has a thriving print
and electronic media, it is highly fragmented. There were few lifestyle magazines and
TV channels delivering focused readership and viewership to advertisers and the credit
card culture was fairly new at that time. There was a lack of Luxury Retail Clusters and the
luxury mall development was still at its nascent stages. Although LV opened its first store

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in luxury hotel, but, the major limitation was the low traffic as these hotels were not the
shopping destinations for the people within that city.27
Real estate prices are a major problem in India apart from the lack of proper infrastructure
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facilities. The prices are 50% more than that of China creating a huge gap in the number of
stores in the country. High import tariffs in India compared to countries like Dubai and
Singapore also possess a big set-back as the foreign brand find it costlier to operate in
India. The norms of 100% FDI in single-brand retailing for 30% of the raw material being
sourced from within the country hinders the operation of LV.
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India is a land of diversified cultures. Cultural barrier was an issue that the company had to
handle with care. Consumers in India come from diversified cultures, religions and
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economies with predetermined perception for a product, service or brand, each having
their own entry and acceptance barriers with the entry barriers of the country as a whole.
LV has managed to maintain its identity of exclusivity and heritage as it does not believe in
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creating different collection for different markets as it hampers the true sense of the brand.
Instead, they try to gain cultural insights into each market and use them to enlarge their
product portfolio for worldwide sales. For example, LV added two new bags from India to
its permanent collection, designed by Marc Jacobs namely, the ‘Suhali’ range, named after
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and Indian desert wind, comprising of three handbags inspired trunks that were produced
in 1854 and are now made with goat skin, in India.28
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27
“Louis Vuitton In India”, op.cit.
28
Ibid.

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Counterfeit Products
Other major challenge that LV faces is that its products are the most counterfeited globally
and have a huge market both online and offline.The global socio-economic impacts were
estimated to cross $1.7 trillion by the end of 2015, according to 2011 report of the

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International Chamber of Commerce.
With an annual budget of $16.68 million to handle counterfeit, the company takes strict
action to safeguard its heritage and exclusivity. Landmark cases have been LV vs Singga
Enterprises, with Singga sentenced to pay damages of $1.4 million, and the case of
LVMH vs eBay, in France, where the Paris Commercial Court ordered eBay to pay $43.48
million in damages.29

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Counterfeit market in India is growing at a rate of 40%-45% annually which constitutes
7% of the overall luxury market. It is estimated to beover $22 billion of the $320 billion
global luxury industry. As per a 2013 ASSOCHAM-YES Bank study, 5% of the overall
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luxury market is accounted for by fake luxury goods in India.30 Study by Business actions
revealed that current value of counterfeit goods which is currently at $650 billion, is expected
to double by 2015.31 As per Euromonitor reports, counterfeiting accounts for 5%-7% of the
world’s trade which is about $600 billion. According to FICCI report, the exchequer
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accounted a loss of $3.9 billion.32 Over 100,000 pieces of fake luxury products including
hang bags, watches, shoes, apparels were seized by anti-smuggling unit in Mumbai in
2015-16.
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According to AbhayJyotishi, Principle Commissioner of Customs (Preventive) in Mumbai,

“There had been increase in smuggling of counterfeit from China, Taiwan and others market
is swamped with fake products, commonly called first copy. Under IPR enforcement rules,
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if the brand owner is registered with customs, there is proper communication and brand
owner can join the enquiry. They destroy the seized goods if the owner declares them as
fake”. According to the FICCI report, places like Palika Bazaar, Nehru Place in New Delhi;
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29
Kimiya Shams, “As Louis Vuitton Knows All Too Well, Counterfeiting Is A Costly Bargain”, http://
www.forbes.com/sites/realspin/2015/06/25/as-louis-vuitton-knows-all-too-well-counterfeiting-is-a-costly-
bargain/#7916f5f34662, June 25th 2015 (accessed date: August 22nd 2016)
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30
Menon Bindu D., “Louis Vuitton ups ante against online fakes”, http://www.thehindubusinessline.com/
companies/louis-vuitton-ups-ante-against-online-fakes/article5610220.ece, January 23rd 2014 (accessed
date: August 23rd 2016)
31
SUVARNA PATIL & ARUN HANDA, “COUNTERFEIT LUXURY BRANDS SCENARIO IN INDIA:
AN EMPIRICAL REVIEW”, International Journal of Sales & Marketing Management Research and
Development (IJSMMRD), April 2014 (accessed date: August 24th 2016)
32
Khushboo Narayan, “Counterfeit products: Top Global luxury brands agree to join customs probe”, http:/
/indianexpress.com/article/business/business-others/counterfeit-products-top-global-luxury-brands-agree-
to-join-customs-probe-2761371/, April 20th 2016 (accessed date: August 24th 2016)

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 Louis Vuitton: Luxury Reigns in India

Manish Market, Heera Panna, Lamington Road and Fort District in Mumbai; Richie Street
and Burma Bazaar in Chennai; Chandni Chowk in Kolkata are the markets in India that
need to be watched out for high-volume illicit trade.33

Alternate Channels and Re-Used Goods

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Another important challenge is the immergence of e-commerce making luxury affordable
for many. New start-ups Envoged, Luxepolis and Confidential Couture are targeting
‘aspirational’ yet ‘value’ seeking Indian consumers for whom a Louis Vuitton bag or Jimmy
Choo footwear will now be within reach, with discounts ranging from 50% to 70%.
Ecommerce sites selling used luxury goods are well-known among fashion seekers who

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want affluent brands at cheaper prices. Indian re-selling sites like Confidential Couture,
Evoged, Refashion and Zapyle following the steps of international ones like Rebagg,
Poshmark and Tradesy are now challenging Indian e-commerce companies of fashion and
lifestyle like Myntra and Jabong.34 From Louis Vuittons to Guccis to Fendis, these e-trailers
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are targeting customers who want to flaunt luxury goods at affordable prices.
It is an untapped market and investors see growth in this business since we fulfil the needs
of aspirational buyers like college students. There is a feel-good factor attached to luxury
and affordability makes it a more attractive proposition. Pre-owned luxury is a 4.5 million
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category today but can go up to 9 billion by 2020. Others like Envoged.com, which started
late last year, also believe that since FDI policies are still not clear, luxury brands find it
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difficult to sell online through their own sites and market places and this makes the
second-hand goods market more suited to dispose-off unsold inventory. Thus, new formats
are not only making luxury affordable for everyone but are also hindering the online market
place for the luxury market players trying to maintain their heritage, offerings and exclusivity
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through their own websites.35

Re-selling of luxury has become a lucrative business in foreign countries with sites like
instantluxe.co.uk selling LV bags at half the price. With website’s promise for authenticity,
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it’s hard to determine that the product is re-used. Encouraged from her experience in England,
Anvita Mehra co-founder of Confidential Couture came up with the idea of selling used
luxury goods online as per their mantra, luxury must be enjoyed by mass and not just
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33
“Counterfeit products: Top Global luxury brands agree to join customs probe”, op.cit.
34
Digbijay Mishra and Anand J., “Selling second hand goods from luxury brands becoming big business in
India”, http://www.gadgetsnow.com/tech-news/Selling-second-hand-goods-from-luxury-brands-becoming-
big-business-in-India/articleshow/50252889.cms, December 21st 2015 (accessed date: October 4th 2016)
35
Purvita Chatterjee, “Now, start-ups create market for pre-owned luxury items”, http://
www.thehindubusinessline.com/news/now-startups-create-market-for-preowned-luxury-items/
article8352925.ece, March 14th 2016 (accessed date: August 24th 2016)

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confined to classes. These start-ups came with the idea of bridging aspirations and
affordability. As per Abhay Gupta, Founder of Gurgaon-based Luxury Connect Business
School, there are thousands of luxury aspirants who are value-seekers and bargain-hunters
who have high aspirational levels.
It is challenging to persuade customers about the authenticity of product. The touch and

PY
feel is the major part of luxury and there are chances of selling counterfeit products. These
E-tailers can’t always source the purchase history. To combat the challenge of selling fake
products online, firms such as RealReal held contests where they reward authenticators for
any sign of counterfeit product.36

Growth Prospects

O
Luxury comes with price, but the amount of taxes being levied in India on luxury articles is
exorbitant and is one of the prime reasons for the slow growth of luxury retail in India. In
C
the recent budget proposed by the NDA government, there has been a proposal to impose
tax of 1% on car purchases of more than 10 lakh and luxury goods exceeding 2 lakh. The
luxury industry has not taken well the recommendation of the government and feels that for
the luxury segment to be surviving and flourishing in India, the government needs to lower
down the taxes so that the consumer or the customer is enticed by the offering and makes
T
the purchase.
With the ASSOCHAM report suggesting the Indian luxury market to be crossing
O

$18.3 billion mark with a CAGR of 25%, the future looks good. There are various factors
which come into the scenario when the reason for this increase is looked into, which are the
following:
N

• Brand Awareness in youth

• Increasing Purchasing Power of individuals in Tier 2 and 3 cities.
• Rise of Disposable Income
O

• Influence of the Western Culture

• Penetration of the internet in various regions in India.
D

The Real Estate industry in India is one of the primary reasons for the slow growth of
luxury retail in India untill now. The primary reason for this is the high cost of real estate
market in India. From less than 1 million sqft in 2001, the organized retail sector has grown

36
Singh Rajiv and Baruah Joyshree, “How a bunch of online marketplaces is making luxury products
affordable”, http://economictimes.indiatimes.com/industry/cons-products/fashion-/-cosmetics-/-jewellery/
how-a-bunch-of-online-marketplaces-are-making-luxury-products-affordable/articleshow/50977565.cms,
February 15th 2016 (accessed date: August 25th 2016)

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 Louis Vuitton: Luxury Reigns in India

manifolds. With the upcoming of various luxury malls in India like DLF Emporio &
UB City the trends for luxury retail definitely show a positive trend.
According to leading research companies like AT Kearney and ASSOCHAM, the Retail
Real Estate market is tipped for a growth of 15% y-o-y over the next 3-5 years as compared
to 12%-13% nominal growth according to the International Monetary fund. The Luxury

PY
Retail Real Estate space has also increased its spread from 1% in 2014 to 1.44% in 2015.The
political stability of the country also a plays a vital role for any foreign firm to have an
interest in its growth in that particular country or market. With the outstanding majority
gained by the NDA government in the 2014 Lok Sabha elections, the support and the
confidence displayed by the citizens in the country’s leaders is immense. Also the government

O
has taken various steps to boost the growth of the country by allowing 100% FDI in Retail
in single branded outlets. Steps like these are sure to attract the attention of various foreign
brands like LV thereby increasing the presence of India on the global map also.
C
The penetration of the internet in the Indian market and households has also created a lot of
stir and awareness among various different famous fashion houses of the world. From
2010 to 2016 the percentage of the population using the internet has increased from 7.5%
to 34.8% of the total population of the country. Out of the millions of users in India, 38%
of the population come from the 25-34 age group which is precisely the target group for
T
Luxury Retail Brands. Also the ease of availability of internet is a major factor in increasing
the awareness among people regarding Luxury Brands. In India, the Mobile Internet Users
O

were expected to a reach 371 million by June 2016, as per IAMAI Report.
In the early stages of Luxury Retail in India, the country was not adequately prepared in
terms of supply chain capabilities and also the production capacity. With rapid
N

industrialization and globalization, today, the entire world is within the range of someone’s
palm. Due to Indian PM’s efforts, the ease of doing business ranking of the country which
is currently at a rank of 134 is supposed to be going down. The transportation system of the
country has also improved vastly with the ministry aiming to increase the network of national
O

highways from 96000 kilometres to close to 2 lakh kilometres. Infrastructural challenges

like electricity provisions, development of new kinds of malls with new innovations and
formats are also being looked into closely.
D

The luxury industry has got a very tough task at hand of controlling the number of counterfeit
products in the market. Customers buying luxury goods and shelling out huge prices for
them are basically looking out for exclusivity in their purchases. With so many copies of
the products being available at lower prices, the customer for luxury goods does not get
that sense of exclusivity and pride with the ownership of that product and thus feels cheated.

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Cases in Management

Very recently there has been a judgement of the Delhi High Court which has stopped a
Ludhiana based firm from manufacturing, selling or dealing in goods bearing the trademark
of the French brand LV because the company was dealing in huge amounts of counterfeit
products of the famous brand. LV has sought damages worth above one crore from the firm
and its proprietors. The most important criterion for any Luxury Brand to survive in a

PY
market is to create its point of differentiation, be it through the product or though service
like customer relationship management services or though the shopping experience being
provided by the brand in its particular store.
With the announcement of introduction of GST, the tax structure of the country is supposed
to be getting better, uniform and more transparent. There will be a uniform tax structure

O
throughout the country which will also help in lowering the costs and also reducing the
dependency on middlemen.
As luxury retail stresses a lot on shopping experience, few important and vital strategies
C
for their growth could be identifying their target market and segmenting into the correct
profiles according to disposable income of the segment being targeted, awareness of a
brand in a particular region and also its marketing tactics.
LV has a historical presence in the Indian market from the 1860s where they used to design
T
special trunks for the maharajas. They had again entered the market in 2003 by having
stores in luxury hotels like Taj, Oberoi, etc. With further expansion of LV in India through
various formats like online selling, opening up company owned stores in posh high-end
O

shopping malls, selling of their products at international airports, selling their goods in
multi-branded luxury outlets the company is sure to gain on its market share in high-end
luxury items and increase its presence in the luxury retail market of India.
N

Conclusion
LV has yet to spread its roots in India despite having its presence for more than a decade.
The new customer segment of first generation of wealth creators are well-versed with the
O

idea of luxury and know what they aspire form a brand. Though with increase in HNWI
and the purchasing power of individuals, the concept of exclusivity and quality is gaining
strength, the pace is still low.
D

With rapid increase in the number of online users in India, not only the new customer base
is getting ready for LV but is also posing a challenge to compete with cheap counterfeit
products. India is a market considered to be a late adopter and with a brand like LV carrying
its heritage, style and luxury for the niche market in India, the acquisition of new customer
base, increasing its dimensions and radius is a hefty task. Thus, though the idea of luxury in
instilled in the Indian customers since centuries, the idea of standing out is still only a part

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 Louis Vuitton: Luxury Reigns in India

of the aspiration for most of the customers. Past years have seen quite a few luxury malls
opening its gates for the international brands in India, providing a definite shopping location
for the elite. LV not only has to identify these elite and niche market segments but also has
to be uniform in its offerings of international standards to maintain its brand identity.
Thus, in the near future, we can also expect LV deepening its roots in India by opening

PY
more stores and also making it one of its manufacturing hubs for the Asian market as the
new initiatives like “Make in India” campaign by the present Indian government are really
attracting huge foreign investments and boosting the Indian economy to greater heights.
Also, infrastructure development initiative by LV for developing luxury retail clusters and
luxury malls can in turn add on to the brand identity and penetration among the elite luxury

O
class customers by making the brand accessible exclusively to the niche target market in
India.

Assignment Questions
I.
II.
C
How is the demand affected with regard to price for luxury goods?
What are the factors affecting entry strategies for luxury brand like LV in India?
III. What is the importance of Omni-Channel Retailing and future of digital luxury market
T
in India?
IV. What are the challenges faced by LV/ luxury market in India? Suggest the solutions
O

for combating these challenges.

N
O
D

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Cases in Management

Exhibit I: Personal Luxury Goods: Growth Contribution in Absolute Value,

 billions)
by Region and Top Contributing Market, 2009–2015E (

PY
O
C
Source: D’Arpizio Claudia, et al., “Luxury Goods Worldwide Market Study Fall-Winter 2015: A Time to Act—How Luxury
Brands Can Rebuild to Win”, http://www.bain.com/Images/BAIN_REPORT_Global_Luxury_2015.pdf, December 21st 2015
(accessed date: August 22nd 2016)
T
O
N
O
D

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 Louis Vuitton: Luxury Reigns in India

Exhibit II: Ranking Luxury Brands Based on Their Perceived Value, Price Point
and Market Segment

PY
O
C
T
O
N
O
D

Source: Emil Anton, “HOW LOUIS VUITTON LOST ITS LUXURY STATUS”, http://www.alux.com/louis-vuitton-luxury-
status/, August 20th 2016

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Cases in Management

Exhibit III: Luxury Brands: Competitive Landscape

Brands Louis Vuitton Hermes Gucci

Strength Heritage, Timelessness, Craftsmanship, Craftsmanship, Quality,

Craftsmanship, Quality, Precision, Timelessness Absolute “Made in

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Creativity Italy”

Distribution in India 3 stores 2 stores 4 Stores

• DLF Emporio, Delhi • DLF Emporio, Delhi • Phoenix mall,
Mumbai
• UB city, Banglore • Horman Circle Road,
Mumbai • Gallaria, Nariman
• The Taj Mahal point
palace, Mumbai

O
• Oberoi, Gurgaon
• DLF Emporio, Delhi

Entered in India Entered into the country Entered in India with Gucci entered in 2007
C
in 2003 through luxury
hotels by opening its
first store in Delhi’s
Oberoi hotel.
51:49 joint venture with
Neelam Khanna and
Ashok Khanna who
owns range of hotels
at the oberoi.Gucci
direct entry in the
indian retail market
announced in decenmer
2009. They established
a JV with Reena and
T
Ashok Wadhwa with
51% stake in new
company.
O

Target Audience Affluent individuals High Net Worth Middle and Upper class
seeking heritage, luxury, individuals individual seeking
exclusivity and quality. quality, and status.

Products offerings Leather goods, Specialised in scarf and Luxurious accessories

N

handbags, trunks, shoes, Birkin bags for men, women and

watches, jewellery and children. Pet essentials
accessories are also part of
offerings.Specialise in
handbags.
O

Compiled by the authors

D

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