Why Louis Vuitton is copying Chanel's business model

05 August 2016

The Chinese economy has cooled down and multiple terrorist attacks took place this year. You might not think of these as factors that influence the luxury market, but they most certainly do. The luxury sector is at its weakest since 2009, so many labels are taking matters into their own hands and start to look for new territory to sell their products. One of the most famous fashion houses of all, Louis Vuitton, is now re-enterering the beauty market, after it launched its very last perfume seventy years ago.

Perfume over designer bags 
The sales growth of designer bags has now dropped to an annual 2%, so it's no wonder that Louis Vuitton is seizing an opportunity with perfume. Cosmetics have an annual growth rate of 3% to 4%, and will probably hold this level until 2020. Eventhough the market is crowded and their previous attempt in 1940 wasn't very successful, Louis Vuitton has decided to give it another go. For their new perfume they've partnered up with the recently finished scent lab of  LVMH, the bigges conglomerate of luxury brands and head of Louis Vuitton.

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The Chanel business model 
The house of Louis Vuitton does have its own master perfumer: Jacques Cavallier-Belltrud. The perfume guru will create an 'exotic', 'rare' and 'floral' scent for the brand's first fragrances that will be launched in September. Because Louis Vuitton controls the whole process from flower to bottle, it's pretty reasonable that Louis Vuitton will pitch their perfume at a higher price. The French fashion house will probably highlight their exclusivity and in this way they'll replicate the business model of Chanel. Chanel's magic recipe consist of a very strong brand image which results in a brand experience that transcends th fashion market. 

A leather note 
Because of its businessmodel Louis Vuitton will be launching more exclusive collections, to build a connection with their younger shoppers who might be interested in buying a handbag or scarf in the future as they become older and wealthier. Perfumes with a note of leather are on their way too, so you can match your perfume with you handbag.