Analysis Of Success Of The Luxury Goods Brands Worldwide

According to a Market Report published this year by Statista, a German online portal for statistics; which makes data collected by market and opinion research institutes and data derived from the economic sector and official statistics available in English, French, German and Spanish, luxury goods markets have enjoyed a remarkable upsurge during the last decade with growth rates exceeding mass consumer goods markets by a wide margin.

However, the industry has had to face headwinds in some segments since 2015 that are attributable to weakening demand from emerging countries and the U.S. To unlock future growth, brands must embrace their materially satisfied customers’ desire for novel experiences. Key players include the multi-segment and multi-label companies LVMH (Moët Hennessy Louis Vuitton), Kering and Richemont as well as specialized companies such as Gucci, Prada, L'Oréal Luxe, Estée Lauder, Swatch or Rolex.

It is no secret that luxury goods make up a large portion of the goods in our society and are accessible anywhere around the world. Whether it be clothing, handbags, jewelry, or shoes, owning luxury items is considered a real luxury. Today, high-end luxury brands are in high demand and are distributed globally. We compare the contrast of three (3) high-end luxury brands; Louis Vuitton, Gucci, and Prada to see how similar (or different) each brand is in comparison of each other based on their demographic, annual revenue, best-selling product, and any possible projects that are under way.

In 1854, Louis Vuitton left his apprenticeship after 17 years to open a trunk-shop in Paris, France (Vuitton). Originally, the company began making and selling custom made boxes and trunks. Today, Louis Vuitton (named after the creator) is one of the world’s highly valued luxury brand (Louis). Some of Louis Vuitton’s most popular products include handbags, trunks, shoes, watches, perfumes, jewelry, and accessories. The Louis Vuitton brand is worth approximately 33.6 billion dollars with a profit margin net worth of 30 percent.

Guccio Gucci was the son of an Italian leather-maker, and spent most of his childhood traveling Europe, while working in high-end hotels and restaurants. After years of observing luxury fashion, Gucci returned to Florence in his forties. Not long after, he founded the first Gucci store in 1921 (The Great). Today, there are 540 Gucci stores around the world that provide luxury items such as leather goods, shoes, apparel, watches, jewelry, perfume, and home décor.” (Gucci Stores).

In 1913, the brand Prada was founded by Mario Prada. Mario Prada opened the first store in the prestigious Galleria Vittorio Emanuele II in Milan, where he sold bags, trunks and travel accessories (History). Today, the brand Prada has 659 owned and franchised stores worldwide and a global staff of approximately 12,000 employees (Duncan). Each of these brands were built and maintained by everyday craftsmen who practiced under other talented craftsmen and used their experience and knowledge to create luxury brands unlike any other.

Luxury brands are growing immensely every year. According to an article released by CNBC in 2018, both, Louis Vuitton and Gucci were amongst the fastest-growing brands in the world, with an overall growth of 42 percent in 2017 (Handley).

In 2018, Louis Vuitton recorded a revenue of 46.8 billion, a 10 percent increase compared to previous years and their sales revenue of 42.6 billion in 2017 (Record). Gucci revenue has almost doubled in the past 10 years, rising from 147 billion Euros in 2009 to an estimated 260 billion Euros in 2018 (Duncan, Prada). Prada right behind Louis Vuitton and Gucci, with six (6) percent revenue increase in 2018, compared to 2017, where revenue totaled 3.14 million. Prada saw a seven (7) percent growth in its own retail which resulted in an increase in customers purchasing directly from their retail stores.

Each luxury brand has a trademark logo, Louis Vuitton, products are adorned with the logo LV, the Louis Vuitton acronym (Louis). Gucci has proudly displayed its double-G logo, working to make the emblem a symbol for high-end quality and a proud stamp of the company’s approval. The history of the Prada logo started in 1919, when the company was proclaimed the official supplier to the royal family in Italy. Subsequently, the brand received the right to include elements of the House of Savoy’s heraldry in its logotype.

One reason for the three (3) luxury brands continued success is due to their familiarity and knowledge of their market demographics. Louis Vuitton’s products appeal to customers typically in the 20 - 45 age group (Marketing). The Louis Vuitton brand has done well with sales and reputation for six (6) consecutive years. This may be largely due to their strategic use of celebrity endorsers such as Angelina Jolie, Michael Phelps, and recently Jaden Smith. Having a young celebrity such as Jaden Smith (Will Smith’s son) as a face for Louis Vuitton is intentional as they hope it will draw in the millennial generation.

In 2018, 62 percent of Gucci’s sales were from millennials (Mau). This generation consists of people in age group 20 - early 30s. Gucci recently created an Instagram (social media) account as they saw a market to promote their cosmetic line. Prada sales have declined with reports that sales have been the lowest in the past five (5) years (Kelly). This is partially due to opening too many brick-and-mortar stores as oppose to utilizing ecommerce platform. Prada is quickly realizing that they need to shift their focus towards the millennial generation if they want to continue thriving.

Luxury goods are products meant to be purchased as a splurge or with craftsmanship in mind. Many middle and lower class groups would find it difficult to afford a luxury item. However, various income groups improvise and find means to afford the luxury goods. With, approximately 31 percent of consumers who earn between two and three thousand dollars monthly, owning a Gucci product. This proportion rises to 50 percent of Americans who earn between eight and nine thousand dollars monthly. In fact, a 2018 survey found that a little less than a third of all Americans owned a Gucci luxury good or accessory (Duncan, Gucci).

The Washington Post reported, as Louis Vuitton, Gucci and Prada try to boost sales, their challenge is not as simple as stealing business away from other retailers. Experts say that high-end consumers are also increasingly diverting their dollars to experiences, such as a lavish island vacation or an extravagant dinner at Michelin-star restaurant, rather than on goods. Against that backdrop, Louis Vuitton has added to its Rodeo Drive outpost a special oasis just for important clients — a rooftop area where guests can sun themselves and enjoy Champagne. Gucci has a similar space in Los Angeles, and Prada has one in Las Vegas.