By Manoj Nair, Associate Editor Gulf
Dubai: Louis Vuitton, the luxury specialist, is taking a different approach in the Middle East, avoiding promotions and experimenting with different retail formats to engage shoppers.
The good thing about being around for 150 years and more is a brand can learn a few things about taking a downturn or few in its stride. The luxury label Louis Vuitton can definitely confirm that. “The recession has been really tough on some brands, but Louis Vuitton has been around for a long, long time,” said Damien Vernet, the luxury marquee’s general manager for the Middle East and Africa.
“While people become more conscious about what they buy, especially in luxury, they go back to the values that have been around for a long time. That’s when they see the real value of a brand.
“Buyers realise that never going on sale has made our brand stronger; it was never discredited. People were going crazy with discounts, especially at the big department stores in the US, by 70, 80 per cent. The buyer never knew what the real value was any more.
“One big advantage we have is being in control from production to distribution. The whole network is controlled by us; we can control the prices and never run the risk of a wholesaler or franchisee all of a sudden dumping some stock in the market.
“The Louis Vuitton bag that you buy today will still be with you in ten years, so much so it’s almost seen as an investment. This meant we were relatively spared during the recession.”
All of which comes in handy for the label as the doors opened to its second “Global Store” in Dubai at the Mall of the Emirates last week. It represents a major makeover for the brand’s existing store at the mall. (The first Global Store in the emirate is at the Dubai Mall.)
“We took the decision to open the second Global Store at the height of the crisis confident of the existing level of business and of the future,” said Vernet.
“In the region, especially in Dubai, the severe correction had much more of an impact on real estate and finance. Retail, at least as far as we are concerned, was not that affected, in fact it has had a more favourable impact in the mid- to long-term as it made Dubai more competitive again. A big component of the business that we do in Dubai is to tourists.”
More Global Stores beckon. “There’s a strong justification to have one in practically every market of the region,” Vernet added.
“It would logical to have in Abu Dhabi, but the big question is finding the right location. Our store in Marina Mall is too small given the level of business we do and the potential. We are basically looking at all the projects [in Abu Dhabi] and identifying which one would be the destination for luxury.
“One thing that emerged from the downturn is we now know who the strong players are [among the mall operators] and people who are losing out.”
The brand presently operates a chain of nine stores in the Gulf, one in Lebanon and four in India. “We are getting close to what is the point of inflection in luxury consumption in India,” said Vernet.
Its range of leather goods make up the majority of sales in the region. But in markets such as sales of accessories are coming on nicely. “We are making a concerted push into fashion,” said Vernet.
“Our prices reflect the brand value and, of course, depending on where you are the logistical costs, some times the cost of operation and the import duty.
“Here, the biggest variation has to do with the exchange rate —we are slightly more expensive than in Europe depending on the dollar-euro. Compared with the same time last year, it’s running in our favour, but we maintain a consistent level on pricing.”