Louis Vuitton has 20 Billion Reasons to Celebrate

Apparently there are twenty billion reasons that testify to Louis Vuitton being the number one luxury retailer in the world.

Louis Vuitton, 2022

Yes, twenty billion as in twenty billion euros! Every year LVMH, the luxury conglomerate that owns Louis Vuitton, releases a yearly sales report. They also release quarterly reports which slowly showed us what would eventually turned into a mind blowing milestone. 

Let that sink in. We, as in everyone in the world, are coming out from a pandemic from which the majority of us haven’t recovered economically. On top of that an apparent recession is waving at us this new year. So how did people manage to feed the luxury industry in such a huge magnitude? With sales levels surpassing pre-pandemic sales.

In an attempt to understand why people spend money on luxury goods Kearney, a global management consulting firm, took matters into their own hands and after researching they came to the conclusion that people wanted a reward. A reward system in the form of leather goods, jewelry or trendy handbags. 

So, in conclusion, despite economic situations a reward system will triumph above all. 

A story that tells itself, restrictions were lifted and international travel helped Louis Vuitton’s organic growing revenue. Accounting for a large percentage of LVMH’s billions. Other brands also made 2022 the year of sales record, with Celine reaching the 2 billion milestone, LVMH newest acquisition, Tiffany & Co., also had a record year. 

Louis Vuitton, 2022

Let’s rewind. So who exactly is practicing the reward system? Asia. With China being the greatest game changer in the luxury market. Some even name their spending pattern as “revenge spending”, referencing the lockdowns imposed by their government sporadically since the pandemic. There is also the more obvious factor that loyal customers to a luxury brand weren’t really that affected by the pandemic and could continue with business as usual. No economic rainstorm puts a stop to looking stylish. 

Clearly Asia is taking the lead and most likely will continue to do so this 2023. LVMH’s official website marks Asia as their biggest revenue source making up 30% of total sales. To what LVMH’s CEO, Bernard Arnault, said that he is not worried about the Curiel of luxury. A statement that holds a lot of truth as the luxury market has adapted perfectly to each new generation of consumers. 

The most recent shift is the introduction of streetwear marketed as high-end luxury fashion. Think Balenciaga, Off-White, Gucci and obviously Louis Vuitton. There was a time when buying a hoodie for $500 wasn’t even something imaginable, now people make hour-long lines to get their hands on these polyester, logo engraved sweatshirts. 

Photo: Louis Vuitton via Vogue Singapore

It truly is fascinating to see the change in luxury dynamics. A game people blindly participate in, a very interesting human behavior. It’s fascinating to study consumer patterns and learn where people are spending their money. More importantly why. 

Once again the answer has to do with the reward system, luxury money spending is driven by desire. So people desire to either feel good, treat themselves or aspire to belong to a certain lifestyle represented by each luxury brand. A cycle that starts with a want/desire satisfied by a luxury purchase ending with a happy customer with a few bucks less. 

This desirability was described by Arnault as the incentive that is keeping luxury moving forward, no matter how big or small a brand is if there is a collective awareness of desirability said brand will never suffer. 

Desirability doesn’t just show up and be all “hey! I’m here!” There are different factors; sense of exclusivity, sense of belonging to a certain lifestyle, status gain, respectability, want for craftsmanship and quality and so forth. Louis Vuitton has established itself as one of the most recognizable brands in the world and their in-house team has always helped grow their desirability, more often the rise of creative directors as influential figures. Virgil Abloh, may he rest in peace, helped put LV on the streetwear radar bringing in a new generation. His passing brought even more desirable to his high-end, creative designs especially various sneaker collaborations. 

Louis Vuitton, 2022

It is a well known fact that luxury companies earn the most profit from beauty products and accessories such as wallets or bags and Louis Vuitton x Nike New York pop up store is a perfect example. The special event features 47 pairs of Air Force 1 shoes designed by Abloh under the name Dream Now. Earlier in 2021, 200 pairs of the Monogram style were auctioned at Sotheby’s raising $25 million proceeds which benefit Abloh’s Fashion Scholarship Fund for Black Students. (Robinson, Forbes)

Social media is also another culprit in the rise of luxury fever as more and more young people are introduced to wealth through video and photography content. Urging them to subscribe and embrace  luxury as the only way of living.

Louis Vuitton’s record breaking revenue is a massive indicator about how people are doing both economically and spiritually, it also lets us know what people are desperately wanting. Giving LVMH 20 billion reasons to smile.