WARSAW – There is a smell of perfume in the air and salespeople dash between white leather armchairs and handbags worth thousands of euros.
Welcome to the first Polish Louis Vuitton store, which opened in Warsaw earlier this month. I am here to meet Robert Eggs, president of the French luxury brand for Northern Europe.
The 47-year-old, who made the switch to luxury handbags after selling coffee for 17 years at Nestle, visited Poland six times before finding the perfect location for Luis Vuitton’s 270-square-meter store.
Before settling on the upscale Vitkac department store, in one of Warsaw’s busiest shopping districts, the French luxury-goods maker analyzed pedestrian traffic in different corners of the city, observed shopping habits, and visited the stores of its competitors. “In retail you need to experience everything by yourself," Eggs explains. "Observation is the best method, but it takes time.”
The brand also polled Polish customers in Louis Vuitton stores in Munich, Berlin, London and Paris about the planned location of the future Warsaw store and got great reactions. “That was the final confirmation for us,” says Eggs.
Louis Vuitton is the flagship brand of French conglomerate LVMH, which also owns such luxury brands as Bulgari, Givenchy and Dom Perignon. According to the Sanford Bernstein sell-side research firm, Vuitton handbags generate a half of the operating income of the LVMH, and a revenue of 7.4 billion euros per year. That's seven times more than Poles spend per year on luxury goods in total (excluding cars), according to KPMG.
Nevertheless, the Polish luxury market enjoyed a 50% growth during 2000-2010, increasing much faster than the global luxury market, which is currently worth 210 billion euros.
"The Polish market recorded a solid rise, but that is not the only element we take into account," Eggs says. "Demand and potential are also important to us, and the latter is quite big in Poland. About 30% of luxury labels still aren’t available here."
No discounts, no sales
Eggs is not keen on talking about prices, although he reveals that the cheapest thing in the Warsaw shop is a calendar refill – 149 zlotys (35 euros). The lowest price for a bag is 2,100 zlotys (492 euros), while the most expensive piece from the exotic series – made of python, ostrich or crocodile leather – goes for more than 85,000 zlotys (19,920 euros).
When I ask how many of those bags they hope to sell, he answers: “2,700 BMW cars were sold last year in Poland. That’s quite a lot considering the price of these cars is 50,000 euros.”
“Fifty thousand euros for a car is not the same as 20,000 for a handbag,” I point out.
“Ask women. Many would prefer the bag,” he answers.
“A buyer often behaves irrationally, so there is no way to tell who will buy what in the Warsaw store,” explains Eggs. "I visited our shop in the south of Italy once. There was a young boy, at most 16 years old, who came to buy a leather belt for his mother. The few hundred euros he paid were mostly in change – he had been saving the money for two years. When you witness that kind of situation you understand that the age, the education or the income aren’t the most important factors for our brand,” he says.
The label is strong enough to have a very simple sale strategy: no sales, no discounts and no outlets. Products are available only in the Luis Vuitton stores. Though I could swear I saw a Luis Vuitton shop in the British luxury brands outlet in Bicester Village, near Oxford.
“That is not possible,” Eggs says.
“But I was there a couple of months ago and saw it with my own eyes,” I insist.
“We are not there,” he says.
Sneering, I check the website of the outlet and realize I need to wipe the smile off my face: There are Burberry, Fendi, Furla, Kate Spade and Prada stores but no trace of Luis Vuitton.
Louis Vuitton doesn’t bargain, and the label insists that its employees know why. Salespeople are invited to participate in workshops held in the firm’s six French sites, so that they can witness how much heart is put into the creation process.
“Are you not going to stay for the press conference?” asks Eggs. “That’s a shame because you'll miss out on a flute of an excellent champagne.”
As I head toward the exit, a man in a suit and a short haircut suddenly stops me. “Open the bag, please,” he orders. I cannot believe it. I still have the words about the brand’s prestige ringing in my ears. The security guard has to repeat: “Open the bag, please.”
Do they intend to treat their high-net-worth customers this way, or is this just a special bonus for special clients and the press at the opening day? "There are many people inside the shop today — finishing touches are still being carried out — that is why everybody is searched," says Magdalena Bulera-Payne, Louis Vuitton’s public relations consultant. "I have been undergoing this procedure myself for a couple of days, but be assured, it will not become a habit and our clients will not be searched like this.”