LOUISVUITTONMALLETIER.ATRULY GLOBAL RETAILER

Association of Economic Geographers

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Association ofEconomicGeographers

LOUISVUITTONMALLETIER.ATRULY GLOBAL RETAILER

Risto LAULAJAINEN

Abstract

The worldwide spatial expansion ef a French luxury luggage company is deseribed. It is a

rare case among global retailer$ because expansion was achieved by eschewing franchising and

relying exclusively on owned stores and rnajority-owned joint venture$. The expansion was

conducted simu!taneously lwithin three regions of centinental size: Westem Europe, the

western Paclfic Rirn and the Americas. Withln the regions, an outward diffusion, broadly

coincident with decreasing per capita private consumption, can be seen.

Key words globalization, Louis Vuitton, luxury, retaiL spatial.

I Setting

The convergence of consumer preferen-

ces, the liberalization of trade and financial

flows, and the vastly irnproved information

technology during the past 15-20 years

have catalyzed the international expansion

of retail chains (Salmon and Tordjman 1989,

pp,3-4; Treadgold 1990, p.4). Most have

made their entries into countries that, if

not adjacent, are culturally and geograph-

ically close (Treadgold 199e, pp.7-9). This

concerns the basic geographical question

ef where to go. A few have succeeded in

carving out a global mandate (Treadgold1988, p. 10). But even they seern to have a

locational bias that reflects a preference

for cultural and geographical proximity

(Body Shop 1990; Laulajainen 1991b; Laura

Ashley 1990;Stefanel 1991;Southland 1989).

Typically, global companies have special-

ized in a well-defined product line, for ex-

ample McDonalds in fast food, Southland

in convenience stores, Stefanel in knitwear,

Body Shop in generic cosmetics, Laura

Ashley in home furnishings, IKEA in do-it-

yourself furniture, and Toys "R"

Us in toys.

It is usually held that only culturally neu-

tral merchandise is able to win a worldwide

mandate. However, McDonalds' hamburgers

and IKEA's Swedish furniture demonstrate

that cultural values can be exported. It is

equally noteworthy that even culturally

neutral merchandise such as consumer elec-

tronics, or commonly-used domestic appli-

ances, do not yet have a worldwide retailer.

The profit margins rnay be too narrow to

permit empire building.

Another convention holds that globar

retailers segment customers globally (Sal-mon and Tordjman 1989, p. 5). In practice,

segmentation may work best when the

price of the merehandise restricts its use

to the highest income brackets. Within the

mass market, age (fast food, do-it-yourself

furniture) and farnily life cycle (conve-

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nience, toys) offer guidelines (Martenson1988, p.21, pp.31-32). The ill-defined area

of life styles appears to be the force behind

generic cosmetics, knitwear and home

furnishings.

It is ttnderstood that companies start look-

ing abroad when their domestic markets

show signs of saturation, raising the ques-

tion of why international expansion happens

(e. g. Hollander 1970, pp. 109-111; Kacker

1985, pp, 61-68). Entrepreneurialfmanagerial

ambition naturally contributes, It is chal-

Ienging to test a well-tried concept abroad.

As experience accumulates, the process

gains a momentum of its own, and the in-

tervals between subsequent entries tend to

beceme shorter. The question of evhen en-

tries take place in relation to each other

then arises. If the target is the broad mass

market, scale economies recommend market

saturation before a new country is entered,

Exclusive and image products carrying

high profit margins are less constrained by

the need to saturate (Waldman 1978, pp.58-61),

The administrative feasibility of wide-

fiung operations calis for a standardized

product assortrnent and store layout. Stan-

dardization, when combined with specializa-

tion, easily leads to centralized merchan-

dizing, inventory control, and pricing. Im-

plementation succeeds best when the stores

are owned and growth takes place organ-

ically, involving the question of how to it.

Expansion by acquisition cOnfronts the

company with alien corporate cultures,

incompatible distribution systems, edd store

sizes, etc. Such challenges may be faced

at home. On the other side of the grobe

they may be suicidal.

Some of the positive aspects of acquisi-

ee38# ca2e 1992

tions, such as the speed of implementation

and the exploitation of local skilrs, can also

be achieved through joint ventures and

franchising. These two modes are custom-

arily kept apart in academic writing but,

depending on the size of stakes and con-

tractual agreements, they can be quite close

to each other operationally and are not

necessarily inferior to owned stores (Belus- si 1987, p, 11, p. 34, p. 46). Treadgold (1988,

p.10) values franchising so highly as an

entry vehicle that he uses it as a criterion

when differentiating between a "multination-

al" and "global"

presence. Intentionally or

not, he easily conveys the idea that a true

global presence is possible only through

franchising. The apparent reason is that

the financial commitment is modest, and

geod use can be made of the franchisee's

familiarity with local conditions. The in-

herent weaknesses of the strategy are that

control may prove diMcult and much will

depend on the franchisee's energy, com-

mercial skill and financial resources. The

result may be uneven market penetratton.

This study demonstrates that a worldwide

thrust, and probably a more balanced one

than otherwise, can be achieved through

owned stores and majority-owned joint ven-

tures ("IIbw.P"). The example selected is

the worldwide expansion of a French luxu-

ry luggage company Louis Vititton Malletier

(LVM). It is one of the very few retailing

chains which have a truly global spread and

depth and which are not basically franchis-

ing operations. Indeed, Gucci. the Italian

leather and diversified gift company, ap-

pears to be the only serious alternative. Its

suitability as an example is downgraded

by the fact that their worldwide expansion

was largely based on franchising and that

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LOUIS VUITTON MALLETIER-A

their retrenchment to about 60 owned stores

is of recent date (Jereski 1990; McKnight

1987, pp, 254-255; van der Post 1990).

The focal period i$ 1977-1989, when the

founding family's last management team

raised LVM to its current global status.

The case should be seen as a link ina

research chain, proceeding from tightly-

controlled internationalization in neighbor-

ing countries to increasingly worldwide

TRULY GLOBAL RETAILER (145)

TABLE 1 Louis Vuitton Malletier-openings

before 1977

StoreWorkshop

Workshop

StoreStoreStoreStoreStoreStereStore

ParisParisParisLondonNew

York

NiceBostonChieagoBornbayTokyo'

18541854*18601885*1898*1908

??*

??*

??*1969*

operations with potentially loosening control

(Laulajainen 199ia; 1991b).

LVM's exclusive merchandise and excep-

tional profitability have allowed several

entries to be made in rapid succession

("VVhenP"). The exclusive image largely

dictates store locations in world-class me-

tropolises and most prestigious resorts

("maere.P" ; Hollander 1970, pp. 15-20). This

still leaves open the identity of the host

country, i. e. possible cultural bias, and the

exact question of how far down the size

and status ladder to go. As the consumers

are highly mobile, the conventional idea of

the country as a diStinct market is strongly

diluted. It follows that the concept of

market saturation becomes still more fluid

than otherwise (" Wh y?" ; Laulajainen 1991 a ;

1991b). In short, there are few hard rules

to follow and this report is, consequently,

fairly exprorative in character.

ll The company

The roots of the company go back to the

mid 19th century when improved comrnuni-

cations made tourism enjoyable. Louis Vtzit-

ton, the founcler, exploited the new fashion

by opening business in luggage and travel

accessories (Anonymous 1980 ; Maubert 1982,

57

Nbte;' closed by 1977.

Sourtes: Anonymeus (1980), pp,4-5; (1985), pp 11-12; (about 1989), pp.IL

p. 75 ; Table 1). He had made his reputation

at the imperial court of Napoleon III and

now focused on the luxury end of the mar-

ket. International demand prompted the

opening ef branches abroad and on the

French Riviera. The world wars impover-

ished and destroyed much of the old clien-

tele. To some extent they could be replaced

by the nouveaux-rich from the world of

film, music and sports. Even so, the busi-

ness was modest when the grandson's two

sons-in-law, both successful industrialists,

took over in 1977. The elder one, Henri

Racamier was 65 years of age when he

assumed the position of Chief Executive

Oracer (CEO) and came to personify the

company until early 1990.

The change of management happened at

a time when the Western World was head-

ing for a decade of general prosperity.

The career woman, eager to show her new

status, was about to emerge in large num-

bers. The Japanese economy was in the

early stages of its great export success, and

the upscale consumer faced the whole

gamut ef Eurepean luxuries. LVM was well

equipped to benefit from these trends, its

modest position notwithstanding. Its prod-

uct line was of utmost quality, relying on

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handicraft manufacture. Its long history

gave it a vast reputation, symbolized by the

logo, a flower-cum-initials emblem and in-

trocluced in 1896. By an unforeseen stroke

of luck the logo finds response in Japaneseheraldics (Abonneau 1986). The environ-

mental and corporate basics were conse-

quently in place. But they alone do not

make things happen. A human touch is

also needed. This was given by the new

rnanagement team, and Racamier in partic-

ular.

Two handicaps had prevented LVM from

developing its full potential earlier. The

first was a grossly insuthcient production/capacity, manifested by the sixfold higher

price which unauthorized shops charged for

Vuitton bags in Japan and California (Mau-bert 1982, p.75). The disparity in price

attracted counterfeiters, who siphoned off

revenue and damaged the LVM irnage by

inferior products. The problem was grad-

ually brought under control by epening new

workshops, almost exclusively in France

for the sake of quality control. When

appropriate, modern technology was intro-

duced, allowing considerable cost savings

(Grasset 1989, p. 6, p, 10).

The other problem was the low gross

margin at which most sales were made

(Fig. 1). The obvious remedy was to forego

wholesaling and focus on retailing, by fran-

chising or opening own stores. Franchising

was tried, particularly in the U.S.A. but

soon abandoned (Bernier 1986, p. 87; Cohen-

Chabaud et Le Corroller 1989, p. 125 ; LV I987,

p. 5). The desired control over prices, the

invoicing currency (franc), and inventory

levels at the stores could not be achieved.

Thereafter owned stores and majority-

owned joint ventures were launched. In the

ca38ts ca2e 1992

SOURCES OUTLETS

-."

S FCT

SUeCONTRACTEO

SB,9M, WHOLESALING

D $n,6

M.

to pcT

llllll= Y i 50PCT

STORE$ $ 1.4 M.

an GROSS MARGIM

FIGURE 1 Louis Vuitton Malletier-sources,

outlets and margins 1977

iVbte : The seemingly exact dollar ameunts are approximations.

Sources: Bernier (1986), p.ee, p.S7;Pardi (1984); Rawsthorn (1989),

latter, the partner initially has a 49 percent

stake, which is gradually reduced te 20-30

percent when the operation has stabilized

(Pardi 1984, p.81; Sacau 1990; Savin 1985,

p. 60). The more distant and alien the mar-

ket, the larger is the probability that stores

are joint ventures. In Anglo-America and

Japan, leased departments and- corners

(desks) are usual at upscale department

stores.

Image building was radically upgraded

and received a budget of four to five

percent ef sales revenue, a percentage

equivalent to R&D expenses in leading

mechanical engineering companies (Bernier

1986, p. 87 ; LV 1986, p.29 ; LVMH 1987, p.

22). This activity, combined with control

over the distribution channel, created an

enviable cash flow, instrumental in LVM's

rapid expansion. Operations were central-

ized. The order lead-time was cut from eight

weeks to four, with two weeks in sight

(Loizeau 1989). Inventory control is throu-

gh point-of-sales equipment. Differences in

retail price refiect only transportation cost

and customs duties, a way to prevent

parallel distribution channels (Table 2).

At major exchange rate shifts the prices

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LOUIS VUITTONMALLETIER-A

TABLE 2 Louis Vuitton Malletier-relative

retail prices FebTuary 1988

TRULY GLOBAL RETAILER

STORES, ･NO.

(147)

ParisEuropeU.

S. A.Japan

100115135145

IDO

Sonrve: Baudalaire (198S), p. 65,

are adjusted accordingly. Store interiors are

identical and sizes approximate 100 square

rneters, excluding the two stores in Paris.

Prestigious central sites are crucial, of

course. As the Vuitton units are often

patronized for their own sake (destinationstores), they can be s}ightly off the beaten

track. This happens, for example, when the

cemmercial hub has lost status with the

coming of fast food outlets, cinemas and

the like. The policy of leasing rather than

Qwning real estate allows the necessary

flexibility. It also frees capital for expansion

and rationalization. Indeed, long-term debt

has been less than 15 percent of equity (LV1988, p. 40, p. 57). Although the stores are

not large, the need to find a "right"

ad-

dress may delay the opening up to five

years in extreme case$ (Bernier 1986, p.

89). This introduces a random element inte

the observed locational history and sug-

gests caution in lnterpretatron.

Store numbers and locations equal sites

in importance. The aggregate viewpoint is

given here. Details will follow in the next

section. The Vuitton business, as all luxury

retailing, is largely based on image. Lux-

ury too widely available loses image and

ceases to be luxury. This makes its nu-

merical measurement hazardous. Perfums

Dior, for example, almest trebled its U. S.

sales in three years after slashing the

number of outlets to ene third (Baudelaire1988, p.63). Racamier subscribed to the

50

FIGURE 2 Louis Vuitton Malletier-store

numbers (cumulative) at year-

ends 1975-1989

Legend.' F=France: E=Rest of Europe & Middle-East;

J=Japan: P=Rest fof the wester] Pacific Rim; A= Americas, IVbtes: Leased departments are considered stores. There

is no temporal information about corpers.

Seurcee LVM (!990).

OLD STORESSALEStSTORE PROFITM. FFR {l98S) PCT

3e

20

10

eD

fio

LO

2e

1960 8S 90

FIGURE 3 Louis Vuitton Malletier-sales

and profits 1981-1989

IVbtet Old stores are at least two years ord. The sales figtires

are approximate beeause of theii cearse geographicai break- down, which ebstructs the defiation to the 19ss priees, and the Iack of infermation about the number of franchises and cerners in North America. Soecrces: Anonymous (19B5)

, p. 17 ; JMC (1990) : International

Financial Statistics (l9S4;1990):LV (19S7);LV (l986; 1988);LVMH (1987:1989);I:VM (1990),

same philosophy: fewer outlets and higher

margins. The global ceiling was put at 80,

to be achieved in 1986 (Anonymous 1985,

p.13). That forecast did not rnaterialize.

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(148) ffesteve\ffieq

At yearend 1989 the count had risen to 120,

excluding corners (Fig. 2). The rnarket

demand had proved too strong. No formal

signs of saturation had appeared, Average

sales per store in real prices 1986-1989 had

increased rather than declined, at least

when expressed in francs (Fig.3). The

increase could not be explained by the

older stores reaching full potential

(maturing), since their percentage shrunk

rather than grew. Aftertax profit out of

total sales revenue had remained practically

unchanged. These reassuring signals rnust,

however, be juxtaposed with recent, unfa-

vorable criticism of excessive store num-

bers in Tokyo and the U.S. A. (Bass 1990,

p. 70 ; Toy and Rothman L99e, p. 51).

M Spatial expansion

The discussion begins with a data over-

view, continues with a description of the

yearend 1989 situation with emphasis on

market saturation, proceeds with a look at

the sequence in which various countries

were entered, and ends with an account of

the cities and towns where stores are

located.

1. Data

The basic data consist of the addresses

and opening dates of the stores, kindly

supplied by the cornpany. This data set,

combined with articles in the trade pre$s,

is suthcient for outlining the historical

past. Details about individual countries and

steres were obtained through telephone

interviews. No information asked for was

refused, although some financial detail was

considered discretionary and is withheld

ig

es38g ee2£ - 1992

here.

As the store clata occupy a central role,

some elaboration is appropriate. Stores and

leased departments are considered equiva-

Ient. The corners, numbering 23 at year-

end 1989, lack information about the

opening date and are included only in the

yearend 1989 cross-sectional figures as half-

store equivalents (Table3; Figs. 4,5 and

8). There are hardly any data about closed

units. As the cornpany has been on a

rampant expansion spree since 1977, the

possibility that unrecorded closures would

seriously bias the overall picture is mini-

maL The most likely source of error is

that a franchise has been converted into

another type of unit, or that a store has

been relocated within the same city. In

these cases the opening date refers to the

new status'or site. As explained above,

franchises primarily affected North America

and only for a short time.

2. GIobal presence

LVM's store numbers in the Western

World appear well balanced when seen

against the national figures of private con-

sumption, with some conspicuous anomalies

(Fig. 4). Italy, the U.K., Netherlands and

Scandinavia have fewer stores than their

wealth would suggest, while Switzerland

has many more. The explanation offered is

to some extent conjectural. Italy belongs

to the countries where counterfeiting is

widespread, and this has preempted much

sales potential (Anonymous 1985, p. 14; LV

i987, p.7; Maubert 1982, p.76). The prac-

tice is far frorn being trivial, as the num-

ber of litigations, 500-600 worldwide with

legal expenses of one to two percent of

sales revenue, indicates (LV 1986, p.30;

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i

l

LOUIS VUITTON MALLETIER-ATRULY GLOBAL RETAILER

± STORE

FIGURE 4 Louis Vuitton Malletier-relative saturation by country at yearend 1989

Nbte:Corners (21 in the U,S,A. and 2 in Canada) are each censidered one half of a store.

Sources: Asia Yearbook (1990) ; International Financial Stati"tics {1990) ; LVM {1990) ; Robinson (1990) : VtTelf (1990).

e'

t

B."E "

lt\l.g!-ldigts･-,-.,

/ L

o- ,.oee V ･KM

(149)

ts

ge-u

LVMH 1989, p. 22). British wealth peaks m

the southeastern corner of the country,

obviating a countrywide store network.

Dutch and Scandinavian societies, finally,

are remarkably egalitarian. Income distribu-

tions are rnore even than in most countries

and conspicuous consumption is easily frow-

ned upon. Switzerland, in contrast, benefits

from its numerous tourist resorts and af-

fluent retirement community.

The negative European anomalies are

contrasted by the numerous positive ones

in the western Pacific Rim. The islands of

Guam and Saipan, as well as Hong Kong,

rely exclusively or primarily en the touri$t

trathc, much of it from Japan. Elsewhere,i.e. in Indonesia, Malaysia, Singapore,

Thailancl ancl Taiwan, teurist traMc also

contributes, although possibly less. Bermu-

da and the Virgin Islands are replicas of

Guam and Saipan, while in Kuwait the

local elite had more relative weight.

Countries with balance of payment

dithculties or antagonistic to Western-type

Iuxury consumption appear as market

gaps. Brazil, Mexico and India belong to

the first group. The single store in Brazil

became pessible only after LVM had estab-

lished a werkshop there, to balance the

fiow$ of foreign exchange (Cohen-Chabaudet Le Corroller 1989, p, 125). By early 1990,

a store had also been opened in Mexico.

Socialism and Islamic Fundamentalism are

the major ideologies in the second group.

The resistance is far from being monolithic,

however, China was on LVM's agenda, be-

cause of its mounting tourist trafic, up to

the disturbances in June 1989.

The cartographic overview and impres-

sions given of the market saturation of

individual countries can be sharpened by

consolidating available numerical informa-

tion into tabular form (Table 3), The ba$ic

message is the pronounced difference in

sales revenue per store between Europe

(excluding France) and Anglo-America on

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( 150 ) ffwtemp\rpvaee38ggg2e 1992

TABLE 3Louis Vuitton Malletier-themajor markets

Western Europe Pacific Rirn

Japan RestAnglo-Anierica

First store, excluding France

Store number, December 1989Ptivate consumption 1988, $per capita

Private consumption, $billion per store

People, million per store

Sales, $million per store

･1977

38

g,ooe

84.3

9.414.011.8

'

1978

2213,

300

74. 2

5,6

9.3

1979

211,20022.418.712,

1

1980

48.512, 900

72.6

5.6

L7

Notes: Store numbers iu Angle-ATneTica include corners, 23 in ali, Each corner is considered ene hatf of a store. Sales per store are based oti the number of stotes at yearend 1988 and 1989, divided by 2. The regional breakdewn of sales doee nct neoessarily coincide in･detai

with the geographical regions used elsewhere, Sales per store ln Eurepe are France/the Rest. The stores in tParis are censiderably

larger than elsewhere. When the French stores are weighted by sales area, the sales per store figure might be of the order $8-9 milliqn,Sonnes: Asia Yearbook (1990) ; lnternational Financial Statistics C199D) ; LV}vff{ (1989), p. 22 ; LVW <1990)- I / '

1･the1ne hand, and the Pacific Rim on the

other. The difference depends, to some ex-

tent, on the higher prices in the Rim, con-

ditioned by transportation costs, customs

duties and high Japanese rents (Table 2).A more fundamental explanation is the prom-

inence of the Japanese customer. Her

purchases are estimated at 50-70 percent of

the global total (Rawsthorn 1989; Toy and

Rothman 1990, p.50). Even in Paris the

Japanese are the largest single customer

group, ranking, according to one survey, the

Vuitton shops as the no. 3 sightseeing tar-

get, after the Eiffel Tour and the Arc de

Triomphe (Abonneau l986). Of course, the

high sales figures in France, and Paris in

particular, mu$t also be seen against

healthy domestic demand and the lively tour-

ist traMc from all over the world. A genuine

Vuitton bag simply looks best when it is

bought in the capital of supreme good taste.

linguistic kinship. Aberrations may oc'cur

when entries are made through franchis'

ing, but this is not the case here. In Iuxu-

ries, the pull of world-class metropelises is

likely to modify the simple cultural thesis.

Discounting the random element in finding

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3. Entry sequence

The first row in Table 3 gives the con-

temporary years of entry into the regions,

a central topic of internationalization

studies. Conventional wisdom, particularly

in everyday retailing, holds that the sequence

follows cultural closeness, Le. habits and

197s

'

80 e5 90 O S 10 15-

YEAR 1,OOO $I CAPITA

19SB

FIGURE 5 LouisVuittenMalletier-presence

by country 1975-1989

Legend: Entry and exlt in the same year is indicated by across.

The same applies to an entry in the last year of the stlldy,

IVbtes: Australla and Kuwait are consolidate dwith the geegraph- ically closest region. Stere numbers, at yearend 1989. Corners (21 in the U,S,A and 2 in Canftda) are each considered ene

half of a stere.Sottrces: Asia Yearbook (1990) ; International Financlal Statistics (1990>;LVM 1990).

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LOUIS

attractive sites, LVM's store openings were

virtually simultaneous. This fact is impor-

tant as it discredits some of the cultural

thesis. Still more, the first openings were

no isolated events but part of a sustained

strategy (Fig. 2)I The balanced gyowth

gave protection against whimsical changes

in consumer taste and currency fluctuations.

The other question concerns the validity

of cultural closeness within the major

regions, the Americas, the Pacific Rim and

Europe (Fig. 5). Within each region, coun-

tries are ranked according to the year of

entry. The ranking is hypothesized to fol-

low cultural closeness, measured by geo-

graphical adjacency. The prosperity of

VUITTON MALLETIER-A TRULY GLOBAL RETAILER (151)

the countries is used as a supplementary

hypethesis. For this purpose, the national

private consumption per capita is used.

The Americas are so dominatecl by the

U.S. A., i. e. are simple in structure, and so

deficient of numerical data (Bermuda and

the Virgin Islands) that their value as

evidence is lirnited. The Pacific Rim fares

better in the sense that the more distant

a country is from Japan and the less af-

fiuent its average consumer, the later it is

likely to be entered. This generalization

does not apply too well to Hong Kong,

Guam and Singapore, but elsewhere it is

reasonably valid. The validity of the com-

bined hypotheses appears best in Europe.

FIGURE 6 Louis Vuitton Malletier-store locations in Europe at yearend 1989

Sottrces : Demographic Yearbook (198B) ; HandToll C1990) ; LVM (1990).

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Association ofEconomicGeographers

(ls2) aszathmp\4W

Germany, Switzerland, the U.K. Belgium,

Italy and Spain are all adjacent to France

and rank roughly in this order in per capita

consumption. Austria, Portugal, Denmark

and Greece belong to the second tier, and

there the rank by consumption is less dis-

tinct.

Prosperity notwithstanding, the early en-

try into Germany may surprise, considering

LVM's historical orientation towards Eng-

land and the British Empire (Table 1).

eg38ts eg2e i992

The centuries-old cennection between north-

ern Franee and western Germany, with

its modern continuation the EEC, offers a

background. Munich, the first city entered,

is also renowned for its prosperity. At the

individual level, Racamier had sold his steel

busine$s to the German Thyssen Grottp

before becoming CEO, and he is also an

enthusiastic visitor at the Music Festivals

in Bayreuth and Salzburg, Austria (Bernier 1986, p. 85;Graham 1990).

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----l

LJe

trt

C.']f)x

-2U<"

-77,.X

N

oS oy

ts"

MILL[CN

INHABITANTS

----- IE

---- 8

---- a

----- 2

1

O 2oooL

KM

FIGURE 7 Louis Vuitton Malletier-store Iocations in the western

Pacific Rim at yearend 1989

Seu,ves: Demographic Yearbook Q988) ; LVM (199e).

-64-




LOUIS VUITTON

4. Location by city

Reference has repeatedly been made to

the importance of tourist trathc. To fi11 out

the picture, store locations are given by

city or town (Figs. 6 to 8). Each location

is classified either as administrative city or

tourist resort. The underlying idea of the

administrative status is a local stock of

acauent customers. Whether IQcals in an ad-

ministrative city make up 25 or 50 percent

of the customers is not known but the

mark is certainly above 5 or 10 percent

which would be the case of tourist resorts.

Several locations can unambiguously be

classified as tourist resorts. Guam, Saipan,

Bermuda, and the Virgin Islands have been

rnentioned abpve. Other typical resorts are

Cheju Island in Korea, Surfers Paradise and

Cairns in Australia, Crans-sur-Sierre, St.

Moritz and Lugano in Switzerlancl, Deauvil-

MALLETIER-ATRULY GLOBAL RETAILER (153)

le and Nice in France, Sylt Island in Ger-

many, and Las Vegas in the U.S.A. Most

of the appropriate stores are important in

their own right. Seme function as show

rooms for off-season purchases in major

cities. Monaco, Cannes in France, Bari,

Venice and Florence in Italy, Lausanne in

Switzerland, Salzburg in Austria, and Hon-

olulu in Hawaii cannot have too inany

administrative functions either. Hong Kong,

Singapore, Miami, and Bangkok are already

subject to debate.

The French provincial cities of Lyon, Bor-

deaux, Toulouse and Strasbourg are classi-

fied as administrative centers, although

tourism was helpful for the openings.

They represent the lower end of the ad-

ministrative city scale. Werld-class cities

such as New York, Tokyo, London and

Paris occupy the opposite end. Paris is a

[

s.

i!'g) o

c?siop

MILUON

]NHABjTANTS10s31O,5

o

Malletier-store

LOUIS VUITTON MALLETiER DECEMBER 19e9

FIGURE8 Louis Vuitton

Sot;n:es : County and City Data Boolt locations in Anglo-America at yeareni

(19S3);LVM (1990).

-65-

1989

l

i

]

.. -1




(154) ffesbeeeee4!va

special case, however, because of its status

as the global fashion and luxury center.

Tokyo, for example, lacks this status, and

this is reflected in the number, size and

sites of its units. They number seven, are

of standard size (60-100 square meters) and

are majority-owned joint ventures. Two

stores are located within the CBD, two

units are at exclusive hotels and three are

leased departments at upscale, although .

not exclusive, department stores at railroadjunctions of the circle line and three west-

ward-radiating commuter lines. These three

units are clearly for the local clientele.

The configuration contrhsts sharply with

Paris. There are only two, if fairly large

(up to 500 square meters), owned stores, a

stone's throw from the Champs Elysees,

ideally situated for tourists and local

customers alike. It is interesting to note

that London resembles Paris, while New

York resernbles Toky6. '

The detailed.figures support the claim

that certain markets are probably saturated

from the luxury point of view. In Tokyo,

New York, Hong Kong, and Miami for ex-

ample, there are simply too many units.

Among individual countries, France, tourist

traMc notwithstanding, and Japan seem to

have reached the mark. Illuminating is the

Japanese entry sequence, broadly following

the size of ur'ban population and ending in

1988 with entr.y. into Hamamatsu, a city of

abogt O.5 million inhabitants and hardly a

major tourist destination (Flg. 9). It is

dithcult to perceive entries into still smal-

ler cities Iacking tourist .trarac, Only in

the

'U. S. A. do numerous major agglomera-

tions lack a store, Philadelphia, Cleveland,

Pittsburgh, St. Louis, Denver and Seattle,

for example (Fig. 8), Even that is subject

ca38#ag2e 1992

[NHABITANTS

Ni

gL

.,sp

I151

10L1

I1

I1-

f

LOU15 VUITTON ENTRIES IN

fs

MALLETIERJAPAN

s,tistS4 19So

FIGURE 9 Louis

ranking

Nbte: T' okyo and Yokohama have been cernbined. Soecrcest Demographic YeaTbook

to qualification.

units have been

St. Louis. More

pear in the

consumer prefereneesfrom those on

and in the

hubs. Perhaps

in Columbus,

1980s.

198s t990

Vuitton Mal!etier-entry

in Japan

(19S8);LVM {1990).

Since yearend 1989 some

6pened, for example, in

importantly, most gaps ap-

American heartland, where

and valuations differ

the more cosmopolitan coasts

international transportat'ion

symptomatically, the corner

OH was closed in the late

IV Discussion

The claim was made that franchising is

not a necessary condition for worldwide

retailing. Equally important are a cultural-

ly neutral, or at least acceptab!e, product

line, a well-defined customer segment, and

66

NII-Electronic




LOUIS VUITTON

stringent operational control, best achieved

by owned stores and majority-owned jointventures ("Hbw.P"). The claim has been

substantiated by describing the spatial ex-

pansion of Louis Vuitton Malletier, a French

luxury luggage company 1977--1989.

The most conspicuous feature in LVM's

global expansion may have been the force

of the initial trigger ("WZiy.P"). A sixfold

raise in the retail price in a parallel dis-

tribution channel, even for a product of

uncertain origin, attested to ravenous de-

mand. A tenfold difference between whole-

sale and retail margins was a strong reason

for getting close to the,customer.

Sequential, country-specific market satu-

ration played no apparent role as an expan-

sion trigger, in sharp contrast to retailing

in rnore mundane products. This unconven-

tional fact was largely due to the great

mobility of the customers, often tourists.

The core managerial problem was prefera-

bly the preservation of the image, which

ceuld be destroyed if the merchandize was

made too easily available through a dense

store netwerk in non-prestigious locations

and sites.

Noteworthy was the short time period,

1977-1980, during which the first foreign

stores were opened in all the major re-

gions : Western Europe, the western Pacific

Rim, and Anglo-America ("VWlaen,P"). Consid-

ering the importance attached to the very

best of sites, the patient wait for them, and

the potential inaccuracy of the American

data, due to the abolition ef franchises, it

is reasonable to claim that the openings

were practically simultaneous. This con-

trasts sharply with the familiar process

of proceeding from geographically and cul-

turally close countries to more distant and

MALLETIER-ATRULY GLOBAL RETAILER (155)

alien ones ("P71laere?"). The explanation for

the atypical behavior is that the product

line and its logo were well-known worldwide

within the prosperous customer segment

targeted by the company. The foundations

had been laid for a century ancl included

two current, high-profile stores in France.

Once entry had been made into a region,

the ensuing expansion was more likely to

follow the famiiiar pattern. Particularly in

Europe, but also in the Pacific Rim, an

outward diffusion from France and Japancan be visualized. The regional entry rank-

ings also broadly coincided with declining

per capita consumption figures.

LVM's balanced presence in the Western

World is in marked contrast to many other

chains which are habitually quoted as glob-

al retailers. For example, Body Shop, Laura

Ashley, Stefanel and Southland, which all

rely on franchising, are largely dependent

on the effort and resources of their national

franchisees. Although the nameplate pres-

ence may be worldwide, actual market pen-

etration can differ widely. When the entry

vehicle is owned stores or joint ventures,

as is the case of IKEA and Toys "R"

Us,

for example, globalization is still under

way. Therefore, these two companies have

the potential to refute Treadgold's hypoth-

esis in the way LVM has done.

LVM's long and ttnique history makes

the company less than a perfect case for

scientific argument. A sample of younger

firms, also exercising full control of their

stores and preferably targeting the broad

mass market is cal!ed for. While we are

waiting fer their emergence, the model

provided by Louis Vuitton Malletier will

serve as a temporary frame of reference.

'67 -

NII-Electronic




(156) ptestsif#aiW

Acknowledgements ･

Messieurs J. Lafont, F. Belat, and S. Mejean

at Louis Vuitton kindly d61ivered the store

dafa and agreed to be interviewed by phone.Profe$sor Alain Metton, Universite de Paris,

Val de Marne advlsed about French libraries,

Their help was invaluable. Professor Bart J.Epstein, Kent State University, Ohio, Dr. Leigh

Sparks, University of Stirling, Scotland, Pro-

fessor Howard A. Stafford, University of Cin-

cinnati, Ohio and the anonymous Reviewers

centributed many thoughtful ideas. The Tore

Browaldh Research Foundation financed the

.study. Ms. Diana Mattsson-Werner drew the

figures,

(Accepted February 29, 1992)

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（158 ）経済地理学年報第38巻第 2号 1992

模での空間的拡張が記述される．この拡張は，フランチャイズ・システムを避けて，もっぱら自

己店舗か過半数を所有するジョイント・ヴェンチャーに依拠して行われており，小売業務の世界

的展開としては希なケー

スである。この拡張は，西ヨーロッ

パ，太平洋西縁地域およびアメリカ

という大陸規模の 3 地域で同時に行われた．それぞれの地域内部では，

一人あたり民間消費支出

額の減少とおおよそ照応する形での，外縁部へ向かっての店舗の普及がみられる．

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