Louis Vuitton SWOT & PESTLE Analysis

Strength

1. Strong brand with global presence: It is one of the most well-known fashion boutiques in the world with more than 160 years of history. The brand is easily recognizable because of its logo and monogram canvas on most of its products. The Louis Vuitton brand and the LV monogram feature amongst the globe’s most valuable brands. The Company is acclaimed as world's most valuable luxury brand – maintaining its No. 1 position for consecutive years since 2006 to 2018. LV has a strong brand image and has its identity in the world’s leading financial hubs such as China, Japan and Hong Kong, which have high concentrations of high net worth individuals. It also has an international high profile clientele base including a cultivated celebrity following comprising of famous musicians, actors and models like such as Jennifer Lopez, Keith Richards, Madonna, Sean Connery, Michelle Williams, Matthias Schoenaerts, Jennifer Connelly, Hayden Christensen, Angelina Jolie, Gisele Bündchen and most recently David Bowie, to name a few. Due to the popularity of the Brand's products and its strong performance, total number of stores of the LVMH Group worldwide almost doubled from 2314 in 2008 to 4374 in 2017. The Company operates in some 70 countries across the globe selling over 70 brands as of 2018.

2. Superior craftsmanship: They individually hand craft products which uses exquisite materials and also make custom tailored products for its few elite customers. Attention to finer details along with their “no discounts or promotions” and “immediate disposal of defective products” policies give them an edge over their contemporary competitors. The Group makes significant investments in production to ameliorate the quality of finished products and ascertain that they are the most perfect expression of the terroirs from which they originate. In order to meet the growing demand of their products in all our business groups and untiringly enhance production processes, Louis Vuitton Maisons have increased their production capacities. Post the launch of a manufacturing facility in Auvergne, central France, Louis Vuitton has scheduled to open several more production facilities in France in 2018. Bvlgari has built itself a state-of-the-art manufacturing facility in Valenza, Italy. The inaugural of the Pont Neuf bottling plant, near Cognac, in October 2017 bears testimony to both Hennessy’s expansion potential and its confidence in the potential of the cognac vineyards.

Weakness

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Opportunity

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Threat

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Political

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Economic

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Social

1. Shifting of consumer preferences towards experiential spending: There is a slow but steady trend of consumers shifting their spending habits from materialistic goods toward traveling and dining out which are more experience related and give greater pleasure. For instance, in United States in 2016, for the first time Americans spent more money in restaurants and bars than at grocery stores. High end consumers are also not wanting to show wealth quite so conspicuously by investing in expensive labels in this age of social media and are there is increasing tendency to spend on experiences such as lavish vacations and dinners at starred restaurants. These shifting trends are worrying indicators for luxury fashion brands like Louis Vuitton.

2. Demographic segmentation impacting luxury market’s growth: The lion’s share of Louis Vuitton customers are those that have an elite taste and high propensity to purchase luxury items. The Company usually targets women in the age group of 18-54 who have high disposable incomes. Louis Vuitton targets jet setters, trendsetters, and those who pursue prestige. Psychographic segmentation research of the LVMH Group consumer’s states that approximately 46% of LV customers are Self-indulger, 33% are quality seeker and 21% are status seekers. Consumers born between 1981 and 1997, also popular as Millennials, have vouched for Gucci and Louis Vuitton to be their best luxury brands. A research study by UBS, Millennials feel better about their future earnings than older consumers and are more likely to spend on luxury goods. According to UBS, the age group ranging between 18 to 35 years, contributed 85 percent to the growth in the luxury market in 2018 and will fuel 45 percent of total high-end spending by 2025. Chinese millennials, a major driving force behind sales growth, apportion about 20 percent of their earnings to buying luxury products. The report also mentions that the youth in Italy and the US have higher spending budgets compared to their elderly.

3. Geographical and societal influences: For Louis Vuitton, the target market is people pursuing prestige and higher societal status. Asian counties in specific, are enriched in their indigenous cultures where people have a great passion for pursuing prestige and societal status. Also regional influences drive sales for this brand. For example, in countries like China, Japan and India, people love to show their wealth with the display of luxury products they own. There is a general trend of spending on pricey items to exhibit affluence and wealth and this influences decisions on purchase of pricey items. This, high concentration of HNI (High Network individuals) in these regions which form the price insensitive customer base, works in favor of luxury brands like LV which have seen strong sales from these regions. Asia (excluding Japan) contributed 22% of the Group’s revenue and India in particular saw 50% jump in sales in fiscal 2017.

Technological

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Legal

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Environmental

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