By  on March 16, 2010

Yves Carcelle, chairman and chief executive officer of Louis Vuitton, who just feted the brand’s new flagship in Kobe, Japan, took some time to extol some of his characteristic optimism about the growing demand for luxury goods in markets both mature and developing — economic crisis notwithstanding.

“The desire for luxury is stronger every year,” he surmised. “For people it is a way of expressing, treating themselves. If they are concerned [about their futures] maybe they postpone, maybe they decrease their spending a little bit but their desire is intact.”

Although he declined to quantify a forecast for the current year, he was happy to reiterate that Vuitton, unlike nearly all its peers, posted double-digit sales growth in 2009. LVMH Moët Hennessy Louis Vuitton does not break down sales by brand, but 2009 sales of the fashion and leather goods division rose 5 percent to 6.3 billion euros.

Carcelle said Vuitton has plenty of projects in the pipeline. This year, it plans to enter three new countries by opening stores in the Dominican Republic, Poland and Lebanon. It’s also eagerly eyeing potential new sites in China and preparing to open a pair of boutiques in Shanghai to coincide with the start of the World Expo.

The executive also mentioned the brand has a major revamp of its Internet site in the works but he demurred on specifics. “Surprise, surprise!” he quipped.

Here, Carcelle talks with WWD about Japan, developing markets and the Expo.


WWD: LVMH’s sales in Japan decreased 19 percent in 2009. Do you think the market has hit bottom?

Yves Carcelle: My feeling is that today the currency seems to have stabilized at sort of a nice level and it’s difficult to forecast, but I have the feeling the luxury market has hit bottom and will slowly — not like it was in the Eighties — but slowly grow again.


WWD: Are you considering closing any of your 57 stores in Japan?


Y.C.: No. If you look at the ratio of sales, compared to the number of stores, I think the number of stores is quite perfect to cover Japan. But if at one point we have to close one to open another one to be in a better location, we will do it.


WWD: Vuitton was planning to open a 10-story flagship in Ginza at one point but later scrapped the idea, and the move generated headlines. Do you think people put too much emphasis on that, interpreting it as a sign of retreat?

Y.C.: Honestly, there was probably misinterpretation, but I don’t care. The real thing is…we didn’t want to compromise on the architecture of the project because Ginza is so important. If you do something, do it well. We’re not in a hurry. Someday, some opportunity will happen and in the meantime, as I said, we have projects all over Japan.


WWD: Vuitton recently opened a store in Las Vegas, which seems to be performing well. Do you think the U.S. market is recovering?


Y.C.: One of the reasons why we are performing so well in the U.S. is because we are the only luxury company that controls 100 percent of its distribution. We have no licenses, no franchises, no distributors, no wholesalers. We are the only one like that. It’s enabled us during the crisis in the U.S. to continue to control our prices where all the [other] brands were discounted heavily by the department stores 70 to 80 percent. We had immaculate merchandising.


WWD: What has the reaction to the Mongolia store been?


Y.C.: I’m absolutely convinced that with the mining reserves of Mongolia, it will be — no joke — the gold mine of the future. It’s an economy quite close to what happened in the Gulf: 2.7 million people sitting on the biggest reserves of radium, gold, copper, coal, all the precious metals. The GNP is supposed to increase by 30 percent every year in the next five years in Mongolia. Arriving before the others is putting your foot in the door at the moment where you know the market is going to increase quite quickly.


WWD: Which other new markets are you interested in right now? How do you view India, Brazil, Russia?

Y.C.: [In the next month] we will open a new store in Brasilia so you know we are investing — that’s the answer for Brazil. We’ve been in Brazil for more than 20 years. We have several stores in São Paolo, one store in Rio. We’ve invested significantly in the Russian market in the last few months because we doubled the size [of our two stores in Moscow]. We are in Saint Petersburg. We opened recently in Ekaterinburg. We are [intensely] looking for a location in Sochi. We just opened our fifth store in India.


WWD: Can you tell us more about Vuitton’s plans to open two stores in Shanghai ahead of the World Expo?


Y.C.: Since 1995, when we opened the first store in Shanghai, we’ve had only one store in a city of 20 million people. But we never found, over the last 15 years, a second location that was suitable. And it happens that, probably due also to the Universal Exhibition, there are a lot of investors in Shanghai and they created for us two opportunities that arrived at the same time, one on the Shanghai side and one in Pudong. We thought, well if they arrive at the same time then why not open them just two days before the Universal Exhibition?


WWD: What other initiatives are you pursuing for the Expo?


Y.C.: We are part of the Universal Exhibition. The [LVMH group] is one of the main sponsors of the French pavilion and Louis Vuitton is going to represent the group. I don’t know if you have seen drawings of the French pavilion. It’s a bit like the Guggenheim. You arrive with an escalator and you turn around and Louis Vuitton occupies the end of the promenade. It will be a very interesting, interactive digital animation so people will sort of cross the magical world of Vuitton before they go out of the French pavilion. You know this exhibition, by the numbers, will be something absolutely incredible. I was there months ago and I visited the works in progress of the French pavilion. The Chinese authorities are expecting between 70 million to 100 million visitors.


WWD: How is the Chinese market for luxury goods evolving?

Y.C.: We are the market leader. We opened our first store in 1992, 18 years ago, and we have permanently invested in the market. There are brands that declare that they will open many more stores than us. We don’t care. We have 30 stores and we are going to continue regularly [to open more] but again without any compromise. If you look for instance…at Chongqing. The whole area of Chongqing is 32 million people. We don’t have a store in Chongqing because we never found a location that is suitable for us. Maybe that will happen in the next few months. We are not absolutely willing to rush to open [in China] but we enjoy a significant growth there.


WWD: Obviously the importance of social networking and Web-based initiatives is increasing exponentially for luxury goods players. Do you have any new projects in this regard on the horizon?

Y.C.: If you look at Facebook for instance, we are the luxury brand that has the biggest number of friends by far. Close to a million people in the world have declared themselves friends of Louis Vuitton. We use Twitter. We are actually working very strongly on revamping completely the platform of our Web site so in the next few months the Web site will become even more interesting and interactive. We think that it’s a brand new area that opens to luxury and it’s like any new technology. It can be poorly done or it can be a fantastic way of developing a whole universe around who you are.

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