PARIS - Boosting sales and maintaining the allure. Such is the challenge today for arguably the world's most luxurious brand – Louis Vuitton.
And that task falls to Jordi Constans, the former Danone food company executive, who is the new head of the largest subsidiary of the prestigious French LVMH (Louis Vuitton - Moët Hennessy) luxury goods conglomerate.
First things first, Louis Vuitton needs to get rid of its current image – annoyingly ubiquitous to the point of slightly tacky. Millions of brown canvas bags adorned with the brand’s famous LV monogram have flooded markets all around the globe, becoming so commonplace that a Google search combining "Vuitton" and "ringard" French for "outdated" gives 390,000 results. One French Internet commentator declared utter repulsion of that "counterfeited" brand fit only for the "old bags of Paris’ posh neighborhoods."
A recent consumer survey in China – quoted over and over by Vuitton’s competitors, although it was carried out on a small sample of the population – depicts Vuitton as a brand "lost in mass production." In spite of the fortunes spent on advertising to attract consumers from ever more distant regions (the latest being Kazakhstan), a question merits asking: has the world had enough of Vuitton?
The decision, announced more than a year ago, to work in partnership with a specialist of big-box retailing – unfamiliar with the world of luxury – seemed at the time like a strange move, likely to reinforce the company’s obsession with marketing.
Luxury has its own laws, to which the former Danone executive is beginning to get accustomed. "Beautiful objects," it appears, must find a way of escaping the commercial realm, explains Bruno Remaury, PhD in Social Sciences and author of Luxury: An Essay On Manufacturing Ostentation. "As soon as the object – because of the way it is industrially produced – is treated like a mass-produced item, it must look elsewhere and find a form of prestige which will allow it to escape its industrial status. This is essential with luxury items."
Serge Carreira, a teacher at Paris’ Institute of Political Studies, says the challenge lies in "reconciling the company’s extremely fast development – less than 30 years – and the world of luxury, a world usually associated with the notion of authenticity, rarity, creativity and innovation."
Breathing new life into a traditional brand
Louis Vuitton did its best to gradually diversify into new markets – like jewelry and watch-manufacturing. But Carreira says the "true stroke of genius" of company chiefs Yves Carcelle and Bernard Arnault was "to introduce Louis Vuitton to fashion, where Marc Jacobs brought freshness, creativity, color, modernity."
This breathed new life into a "fundamentally traditional brand with old-school codes," explains Carreira, and Yves Carcelle managed "to counterbalance the widespread circulation of the signature monogram canvas," by finding "new areas of development, including a collection of premium leather goods (with rare leather bags sold for up to 7,000 euros) and a service allowing clients to customize their bags."
Like every luxury brand, Louis Vuitton has also started dabbling in "artistic redemption," by working with Takashi Murakami, Richard Prince or Yayoi Kusama for instance, in an effort to brighten up its collections and give the brand an iconic status.
Following the likes of Cartier, Prada and Hermes, LVMH’s most lucrative branch will also open its own contemporary art foundation in 2014.
Over the past 20 years, the motto of the company has been to go upmarket by controlling everything, from tanneries to shops. The number of store openings has recently seen a slowdown, as the group now prefers to renovate its already existing outlets (more than 460 over the world). In China, where Louis Vuitton has been present since 1992, the brand has chosen to take a break – as if the goal was not to reach more and more customers, but to make sure the wealthiest ones are taken care of.
Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.
SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.
The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.
It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.
Seoul housing prices top London and New York
In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.
According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.
Average home loans are equivalent to 270% of annual income.
One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.
According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.
Playing the stock market
At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.
A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."
In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.
42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s
Game of survival
In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.
But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.
This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.
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