louisvuittonmalletier.atruly global retailer
TRANSCRIPT
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LOUISVUITTONMALLETIER.ATRULY GLOBAL RETAILER
Risto LAULAJAINEN
Abstract
The worldwide spatial expansion ef a French luxury luggage company is deseribed. It is a
rare case among global retailer$ because expansion was achieved by eschewing franchising and
relying exclusively on owned stores and rnajority-owned joint venture$. The expansion was
conducted simu!taneously lwithin three regions of centinental size: Westem Europe, the
western Paclfic Rirn and the Americas. Withln the regions, an outward diffusion, broadly
coincident with decreasing per capita private consumption, can be seen.
Key words globalization, Louis Vuitton, luxury, retaiL spatial.
I Setting
The convergence of consumer preferen-
ces, the liberalization of trade and financial
flows, and the vastly irnproved information
technology during the past 15-20 years
have catalyzed the international expansion
of retail chains (Salmon and Tordjman 1989,
pp,3-4; Treadgold 1990, p.4). Most have
made their entries into countries that, if
not adjacent, are culturally and geograph-
ically close (Treadgold 199e, pp.7-9). This
concerns the basic geographical question
ef where to go. A few have succeeded in
carving out a global mandate (Treadgold1988, p. 10). But even they seern to have a
locational bias that reflects a preference
for cultural and geographical proximity
(Body Shop 1990; Laulajainen 1991b; Laura
Ashley 1990;Stefanel 1991;Southland 1989).
Typically, global companies have special-
ized in a well-defined product line, for ex-
ample McDonalds in fast food, Southland
in convenience stores, Stefanel in knitwear,
Body Shop in generic cosmetics, Laura
Ashley in home furnishings, IKEA in do-it-
yourself furniture, and Toys "R"
Us in toys.
It is usually held that only culturally neu-
tral merchandise is able to win a worldwide
mandate. However, McDonalds' hamburgers
and IKEA's Swedish furniture demonstrate
that cultural values can be exported. It is
equally noteworthy that even culturally
neutral merchandise such as consumer elec-
tronics, or commonly-used domestic appli-
ances, do not yet have a worldwide retailer.
The profit margins rnay be too narrow to
permit empire building.
Another convention holds that globar
retailers segment customers globally (Sal-mon and Tordjman 1989, p. 5). In practice,
segmentation may work best when the
price of the merehandise restricts its use
to the highest income brackets. Within the
mass market, age (fast food, do-it-yourself
furniture) and farnily life cycle (conve-
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nience, toys) offer guidelines (Martenson1988, p.21, pp.31-32). The ill-defined area
of life styles appears to be the force behind
generic cosmetics, knitwear and home
furnishings.
It is ttnderstood that companies start look-
ing abroad when their domestic markets
show signs of saturation, raising the ques-
tion of why international expansion happens
(e. g. Hollander 1970, pp. 109-111; Kacker
1985, pp, 61-68). Entrepreneurialfmanagerial
ambition naturally contributes, It is chal-
Ienging to test a well-tried concept abroad.
As experience accumulates, the process
gains a momentum of its own, and the in-
tervals between subsequent entries tend to
beceme shorter. The question of evhen en-
tries take place in relation to each other
then arises. If the target is the broad mass
market, scale economies recommend market
saturation before a new country is entered,
Exclusive and image products carrying
high profit margins are less constrained by
the need to saturate (Waldman 1978, pp.58-61),
The administrative feasibility of wide-
fiung operations calis for a standardized
product assortrnent and store layout. Stan-
dardization, when combined with specializa-
tion, easily leads to centralized merchan-
dizing, inventory control, and pricing. Im-
plementation succeeds best when the stores
are owned and growth takes place organ-
ically, involving the question of how to it.
Expansion by acquisition cOnfronts the
company with alien corporate cultures,
incompatible distribution systems, edd store
sizes, etc. Such challenges may be faced
at home. On the other side of the grobe
they may be suicidal.
Some of the positive aspects of acquisi-
ee38# ca2e 1992
tions, such as the speed of implementation
and the exploitation of local skilrs, can also
be achieved through joint ventures and
franchising. These two modes are custom-
arily kept apart in academic writing but,
depending on the size of stakes and con-
tractual agreements, they can be quite close
to each other operationally and are not
necessarily inferior to owned stores (Belus- si 1987, p, 11, p. 34, p. 46). Treadgold (1988,
p.10) values franchising so highly as an
entry vehicle that he uses it as a criterion
when differentiating between a "multination-
al" and "global"
presence. Intentionally or
not, he easily conveys the idea that a true
global presence is possible only through
franchising. The apparent reason is that
the financial commitment is modest, and
geod use can be made of the franchisee's
familiarity with local conditions. The in-
herent weaknesses of the strategy are that
control may prove diMcult and much will
depend on the franchisee's energy, com-
mercial skill and financial resources. The
result may be uneven market penetratton.
This study demonstrates that a worldwide
thrust, and probably a more balanced one
than otherwise, can be achieved through
owned stores and majority-owned joint ven-
tures ("IIbw.P"). The example selected is
the worldwide expansion of a French luxu-
ry luggage company Louis Vititton Malletier
(LVM). It is one of the very few retailing
chains which have a truly global spread and
depth and which are not basically franchis-
ing operations. Indeed, Gucci. the Italian
leather and diversified gift company, ap-
pears to be the only serious alternative. Its
suitability as an example is downgraded
by the fact that their worldwide expansion
was largely based on franchising and that
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LOUIS VUITTON MALLETIER-A
their retrenchment to about 60 owned stores
is of recent date (Jereski 1990; McKnight
1987, pp, 254-255; van der Post 1990).
The focal period i$ 1977-1989, when the
founding family's last management team
raised LVM to its current global status.
The case should be seen as a link ina
research chain, proceeding from tightly-
controlled internationalization in neighbor-
ing countries to increasingly worldwide
TRULY GLOBAL RETAILER (145)
TABLE 1 Louis Vuitton Malletier-openings
before 1977
StoreWorkshop
Workshop
StoreStoreStoreStoreStoreStereStore
ParisParisParisLondonNew
York
NiceBostonChieagoBornbayTokyo'
18541854*18601885*1898*1908
??*
??*
??*1969*
operations with potentially loosening control
(Laulajainen 199ia; 1991b).
LVM's exclusive merchandise and excep-
tional profitability have allowed several
entries to be made in rapid succession
("VVhenP"). The exclusive image largely
dictates store locations in world-class me-
tropolises and most prestigious resorts
("maere.P" ; Hollander 1970, pp. 15-20). This
still leaves open the identity of the host
country, i. e. possible cultural bias, and the
exact question of how far down the size
and status ladder to go. As the consumers
are highly mobile, the conventional idea of
the country as a diStinct market is strongly
diluted. It follows that the concept of
market saturation becomes still more fluid
than otherwise (" Wh y?" ; Laulajainen 1991 a ;
1991b). In short, there are few hard rules
to follow and this report is, consequently,
fairly exprorative in character.
ll The company
The roots of the company go back to the
mid 19th century when improved comrnuni-
cations made tourism enjoyable. Louis Vtzit-
ton, the founcler, exploited the new fashion
by opening business in luggage and travel
accessories (Anonymous 1980 ; Maubert 1982,
57
Nbte;' closed by 1977.
Sourtes: Anonymeus (1980), pp,4-5; (1985), pp 11-12; (about 1989), pp.IL
p. 75 ; Table 1). He had made his reputation
at the imperial court of Napoleon III and
now focused on the luxury end of the mar-
ket. International demand prompted the
opening ef branches abroad and on the
French Riviera. The world wars impover-
ished and destroyed much of the old clien-
tele. To some extent they could be replaced
by the nouveaux-rich from the world of
film, music and sports. Even so, the busi-
ness was modest when the grandson's two
sons-in-law, both successful industrialists,
took over in 1977. The elder one, Henri
Racamier was 65 years of age when he
assumed the position of Chief Executive
Oracer (CEO) and came to personify the
company until early 1990.
The change of management happened at
a time when the Western World was head-
ing for a decade of general prosperity.
The career woman, eager to show her new
status, was about to emerge in large num-
bers. The Japanese economy was in the
early stages of its great export success, and
the upscale consumer faced the whole
gamut ef Eurepean luxuries. LVM was well
equipped to benefit from these trends, its
modest position notwithstanding. Its prod-
uct line was of utmost quality, relying on
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handicraft manufacture. Its long history
gave it a vast reputation, symbolized by the
logo, a flower-cum-initials emblem and in-
trocluced in 1896. By an unforeseen stroke
of luck the logo finds response in Japaneseheraldics (Abonneau 1986). The environ-
mental and corporate basics were conse-
quently in place. But they alone do not
make things happen. A human touch is
also needed. This was given by the new
rnanagement team, and Racamier in partic-
ular.
Two handicaps had prevented LVM from
developing its full potential earlier. The
first was a grossly insuthcient production/capacity, manifested by the sixfold higher
price which unauthorized shops charged for
Vuitton bags in Japan and California (Mau-bert 1982, p.75). The disparity in price
attracted counterfeiters, who siphoned off
revenue and damaged the LVM irnage by
inferior products. The problem was grad-
ually brought under control by epening new
workshops, almost exclusively in France
for the sake of quality control. When
appropriate, modern technology was intro-
duced, allowing considerable cost savings
(Grasset 1989, p. 6, p, 10).
The other problem was the low gross
margin at which most sales were made
(Fig. 1). The obvious remedy was to forego
wholesaling and focus on retailing, by fran-
chising or opening own stores. Franchising
was tried, particularly in the U.S.A. but
soon abandoned (Bernier 1986, p. 87; Cohen-
Chabaud et Le Corroller 1989, p. 125 ; LV I987,
p. 5). The desired control over prices, the
invoicing currency (franc), and inventory
levels at the stores could not be achieved.
Thereafter owned stores and majority-
owned joint ventures were launched. In the
ca38ts ca2e 1992
SOURCES OUTLETS
-."
S FCT
SUeCONTRACTEO
SB,9M, WHOLESALING
D $n,6
M.
to pcT
llllll= Y i 50PCT
STORE$ $ 1.4 M.
an GROSS MARGIM
FIGURE 1 Louis Vuitton Malletier-sources,
outlets and margins 1977
iVbte : The seemingly exact dollar ameunts are approximations.
Sources: Bernier (1986), p.ee, p.S7;Pardi (1984); Rawsthorn (1989),
latter, the partner initially has a 49 percent
stake, which is gradually reduced te 20-30
percent when the operation has stabilized
(Pardi 1984, p.81; Sacau 1990; Savin 1985,
p. 60). The more distant and alien the mar-
ket, the larger is the probability that stores
are joint ventures. In Anglo-America and
Japan, leased departments and- corners
(desks) are usual at upscale department
stores.
Image building was radically upgraded
and received a budget of four to five
percent ef sales revenue, a percentage
equivalent to R&D expenses in leading
mechanical engineering companies (Bernier
1986, p. 87 ; LV 1986, p.29 ; LVMH 1987, p.
22). This activity, combined with control
over the distribution channel, created an
enviable cash flow, instrumental in LVM's
rapid expansion. Operations were central-
ized. The order lead-time was cut from eight
weeks to four, with two weeks in sight
(Loizeau 1989). Inventory control is throu-
gh point-of-sales equipment. Differences in
retail price refiect only transportation cost
and customs duties, a way to prevent
parallel distribution channels (Table 2).
At major exchange rate shifts the prices
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LOUIS VUITTONMALLETIER-A
TABLE 2 Louis Vuitton Malletier-relative
retail prices FebTuary 1988
TRULY GLOBAL RETAILER
STORES, ・NO.
(147)
ParisEuropeU.
S. A.Japan
100115135145
IDO
Sonrve: Baudalaire (198S), p. 65,
are adjusted accordingly. Store interiors are
identical and sizes approximate 100 square
rneters, excluding the two stores in Paris.
Prestigious central sites are crucial, of
course. As the Vuitton units are often
patronized for their own sake (destinationstores), they can be s}ightly off the beaten
track. This happens, for example, when the
cemmercial hub has lost status with the
coming of fast food outlets, cinemas and
the like. The policy of leasing rather than
Qwning real estate allows the necessary
flexibility. It also frees capital for expansion
and rationalization. Indeed, long-term debt
has been less than 15 percent of equity (LV1988, p. 40, p. 57). Although the stores are
not large, the need to find a "right"
ad-
dress may delay the opening up to five
years in extreme case$ (Bernier 1986, p.
89). This introduces a random element inte
the observed locational history and sug-
gests caution in lnterpretatron.
Store numbers and locations equal sites
in importance. The aggregate viewpoint is
given here. Details will follow in the next
section. The Vuitton business, as all luxury
retailing, is largely based on image. Lux-
ury too widely available loses image and
ceases to be luxury. This makes its nu-
merical measurement hazardous. Perfums
Dior, for example, almest trebled its U. S.
sales in three years after slashing the
number of outlets to ene third (Baudelaire1988, p.63). Racamier subscribed to the
50
FIGURE 2 Louis Vuitton Malletier-store
numbers (cumulative) at year-
ends 1975-1989
Legend.' F=France: E=Rest of Europe & Middle-East;
J=Japan: P=Rest fof the wester] Pacific Rim; A= Americas, IVbtes: Leased departments are considered stores. There
is no temporal information about corpers.
Seurcee LVM (!990).
OLD STORESSALEStSTORE PROFITM. FFR {l98S) PCT
3e
20
10
eD
fio
LO
2e
1960 8S 90
FIGURE 3 Louis Vuitton Malletier-sales
and profits 1981-1989
IVbtet Old stores are at least two years ord. The sales figtires
are approximate beeause of theii cearse geographicai break- down, which ebstructs the defiation to the 19ss priees, and the Iack of infermation about the number of franchises and cerners in North America. Soecrces: Anonymous (19B5)
, p. 17 ; JMC (1990) : International
Financial Statistics (l9S4;1990):LV (19S7);LV (l986; 1988);LVMH (1987:1989);I:VM (1990),
same philosophy: fewer outlets and higher
margins. The global ceiling was put at 80,
to be achieved in 1986 (Anonymous 1985,
p.13). That forecast did not rnaterialize.
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At yearend 1989 the count had risen to 120,
excluding corners (Fig. 2). The rnarket
demand had proved too strong. No formal
signs of saturation had appeared, Average
sales per store in real prices 1986-1989 had
increased rather than declined, at least
when expressed in francs (Fig.3). The
increase could not be explained by the
older stores reaching full potential
(maturing), since their percentage shrunk
rather than grew. Aftertax profit out of
total sales revenue had remained practically
unchanged. These reassuring signals rnust,
however, be juxtaposed with recent, unfa-
vorable criticism of excessive store num-
bers in Tokyo and the U.S. A. (Bass 1990,
p. 70 ; Toy and Rothman L99e, p. 51).
M Spatial expansion
The discussion begins with a data over-
view, continues with a description of the
yearend 1989 situation with emphasis on
market saturation, proceeds with a look at
the sequence in which various countries
were entered, and ends with an account of
the cities and towns where stores are
located.
1. Data
The basic data consist of the addresses
and opening dates of the stores, kindly
supplied by the cornpany. This data set,
combined with articles in the trade pre$s,
is suthcient for outlining the historical
past. Details about individual countries and
steres were obtained through telephone
interviews. No information asked for was
refused, although some financial detail was
considered discretionary and is withheld
ig
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here.
As the store clata occupy a central role,
some elaboration is appropriate. Stores and
leased departments are considered equiva-
Ient. The corners, numbering 23 at year-
end 1989, lack information about the
opening date and are included only in the
yearend 1989 cross-sectional figures as half-
store equivalents (Table3; Figs. 4,5 and
8). There are hardly any data about closed
units. As the cornpany has been on a
rampant expansion spree since 1977, the
possibility that unrecorded closures would
seriously bias the overall picture is mini-
maL The most likely source of error is
that a franchise has been converted into
another type of unit, or that a store has
been relocated within the same city. In
these cases the opening date refers to the
new status'or site. As explained above,
franchises primarily affected North America
and only for a short time.
2. GIobal presence
LVM's store numbers in the Western
World appear well balanced when seen
against the national figures of private con-
sumption, with some conspicuous anomalies
(Fig. 4). Italy, the U.K., Netherlands and
Scandinavia have fewer stores than their
wealth would suggest, while Switzerland
has many more. The explanation offered is
to some extent conjectural. Italy belongs
to the countries where counterfeiting is
widespread, and this has preempted much
sales potential (Anonymous 1985, p. 14; LV
i987, p.7; Maubert 1982, p.76). The prac-
tice is far frorn being trivial, as the num-
ber of litigations, 500-600 worldwide with
legal expenses of one to two percent of
sales revenue, indicates (LV 1986, p.30;
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i
l
LOUIS VUITTON MALLETIER-ATRULY GLOBAL RETAILER
± STORE
FIGURE 4 Louis Vuitton Malletier-relative saturation by country at yearend 1989
Nbte:Corners (21 in the U,S,A. and 2 in Canada) are each censidered one half of a store.
Sources: Asia Yearbook (1990) ; International Financial Stati"tics {1990) ; LVM {1990) ; Robinson (1990) : VtTelf (1990).
e'
t
B."E "
lt\l.g!-ldigts・-,-.,
/ L
o- ,.oee V ・KM
(149)
ts
ge-u
LVMH 1989, p. 22). British wealth peaks m
the southeastern corner of the country,
obviating a countrywide store network.
Dutch and Scandinavian societies, finally,
are remarkably egalitarian. Income distribu-
tions are rnore even than in most countries
and conspicuous consumption is easily frow-
ned upon. Switzerland, in contrast, benefits
from its numerous tourist resorts and af-
fluent retirement community.
The negative European anomalies are
contrasted by the numerous positive ones
in the western Pacific Rim. The islands of
Guam and Saipan, as well as Hong Kong,
rely exclusively or primarily en the touri$t
trathc, much of it from Japan. Elsewhere,i.e. in Indonesia, Malaysia, Singapore,
Thailancl ancl Taiwan, teurist traMc also
contributes, although possibly less. Bermu-
da and the Virgin Islands are replicas of
Guam and Saipan, while in Kuwait the
local elite had more relative weight.
Countries with balance of payment
dithculties or antagonistic to Western-type
Iuxury consumption appear as market
gaps. Brazil, Mexico and India belong to
the first group. The single store in Brazil
became pessible only after LVM had estab-
lished a werkshop there, to balance the
fiow$ of foreign exchange (Cohen-Chabaudet Le Corroller 1989, p, 125). By early 1990,
a store had also been opened in Mexico.
Socialism and Islamic Fundamentalism are
the major ideologies in the second group.
The resistance is far from being monolithic,
however, China was on LVM's agenda, be-
cause of its mounting tourist trafic, up to
the disturbances in June 1989.
The cartographic overview and impres-
sions given of the market saturation of
individual countries can be sharpened by
consolidating available numerical informa-
tion into tabular form (Table 3), The ba$ic
message is the pronounced difference in
sales revenue per store between Europe
(excluding France) and Anglo-America on
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TABLE 3Louis Vuitton Malletier-themajor markets
Western Europe Pacific Rirn
Japan RestAnglo-Anierica
First store, excluding France
Store number, December 1989Ptivate consumption 1988, $per capita
Private consumption, $billion per store
People, million per store
Sales, $million per store
・1977
38
g,ooe
84.3
9.414.011.8
'
1978
2213,
300
74. 2
5,6
9.3
1979
211,20022.418.712,
1
1980
48.512, 900
72.6
5.6
L7
Notes: Store numbers iu Angle-ATneTica include corners, 23 in ali, Each corner is considered ene hatf of a store. Sales per store are based oti the number of stotes at yearend 1988 and 1989, divided by 2. The regional breakdewn of sales doee nct neoessarily coincide in・detai
with the geographical regions used elsewhere, Sales per store ln Eurepe are France/the Rest. The stores in tParis are censiderably
larger than elsewhere. When the French stores are weighted by sales area, the sales per store figure might be of the order $8-9 milliqn,Sonnes: Asia Yearbook (1990) ; lnternational Financial Statistics C199D) ; LV}vff{ (1989), p. 22 ; LVW <1990)- I / '
1・the1ne hand, and the Pacific Rim on the
other. The difference depends, to some ex-
tent, on the higher prices in the Rim, con-
ditioned by transportation costs, customs
duties and high Japanese rents (Table 2).A more fundamental explanation is the prom-
inence of the Japanese customer. Her
purchases are estimated at 50-70 percent of
the global total (Rawsthorn 1989; Toy and
Rothman 1990, p.50). Even in Paris the
Japanese are the largest single customer
group, ranking, according to one survey, the
Vuitton shops as the no. 3 sightseeing tar-
get, after the Eiffel Tour and the Arc de
Triomphe (Abonneau l986). Of course, the
high sales figures in France, and Paris in
particular, mu$t also be seen against
healthy domestic demand and the lively tour-
ist traMc from all over the world. A genuine
Vuitton bag simply looks best when it is
bought in the capital of supreme good taste.
linguistic kinship. Aberrations may oc'cur
when entries are made through franchis'
ing, but this is not the case here. In Iuxu-
ries, the pull of world-class metropelises is
likely to modify the simple cultural thesis.
Discounting the random element in finding
nMERICASBRAZ[L8ERMUDAViftGIN
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CANnDAU,$,A.V'EsTERN
rzACrFIE RI"
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INDONESIASA:PANAUSTRALTATHATLANbMALtws[AKOREATAJWANSINGnPeREGUAMHONG
KONSJAPANEURnpEsuLt"IDD/E
Eltsl
x
t1st1`t'1sz!
GREECEDENMARKponTuSALSEAtNAUSTRMITALYKUL,JAf7etiLGguMU,K.SWJTIERLANO
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1xTT2?sT12ET10
mN.n,H,nanmlN,A.[zm=}tEm!1mN,n.u]]M!::II-
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=1mtzx]Uli:Zi[IZZI:!MtllEanitzmt!mzzzz=]
[UI:=[ZMan
3. Entry sequence
The first row in Table 3 gives the con-
temporary years of entry into the regions,
a central topic of internationalization
studies. Conventional wisdom, particularly
in everyday retailing, holds that the sequence
follows cultural closeness, Le. habits and
197s
'
80 e5 90 O S 10 15-
YEAR 1,OOO $I CAPITA
19SB
FIGURE 5 LouisVuittenMalletier-presence
by country 1975-1989
Legend: Entry and exlt in the same year is indicated by across.
The same applies to an entry in the last year of the stlldy,
IVbtes: Australla and Kuwait are consolidate dwith the geegraph- ically closest region. Stere numbers, at yearend 1989. Corners (21 in the U,S,A and 2 in Canftda) are each considered ene
half of a stere.Sottrces: Asia Yearbook (1990) ; International Financlal Statistics (1990>;LVM 1990).
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LOUIS
attractive sites, LVM's store openings were
virtually simultaneous. This fact is impor-
tant as it discredits some of the cultural
thesis. Still more, the first openings were
no isolated events but part of a sustained
strategy (Fig. 2)I The balanced gyowth
gave protection against whimsical changes
in consumer taste and currency fluctuations.
The other question concerns the validity
of cultural closeness within the major
regions, the Americas, the Pacific Rim and
Europe (Fig. 5). Within each region, coun-
tries are ranked according to the year of
entry. The ranking is hypothesized to fol-
low cultural closeness, measured by geo-
graphical adjacency. The prosperity of
VUITTON MALLETIER-A TRULY GLOBAL RETAILER (151)
the countries is used as a supplementary
hypethesis. For this purpose, the national
private consumption per capita is used.
The Americas are so dominatecl by the
U.S. A., i. e. are simple in structure, and so
deficient of numerical data (Bermuda and
the Virgin Islands) that their value as
evidence is lirnited. The Pacific Rim fares
better in the sense that the more distant
a country is from Japan and the less af-
fiuent its average consumer, the later it is
likely to be entered. This generalization
does not apply too well to Hong Kong,
Guam and Singapore, but elsewhere it is
reasonably valid. The validity of the com-
bined hypotheses appears best in Europe.
FIGURE 6 Louis Vuitton Malletier-store locations in Europe at yearend 1989
Sottrces : Demographic Yearbook (198B) ; HandToll C1990) ; LVM (1990).
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Germany, Switzerland, the U.K. Belgium,
Italy and Spain are all adjacent to France
and rank roughly in this order in per capita
consumption. Austria, Portugal, Denmark
and Greece belong to the second tier, and
there the rank by consumption is less dis-
tinct.
Prosperity notwithstanding, the early en-
try into Germany may surprise, considering
LVM's historical orientation towards Eng-
land and the British Empire (Table 1).
eg38ts eg2e i992
The centuries-old cennection between north-
ern Franee and western Germany, with
its modern continuation the EEC, offers a
background. Munich, the first city entered,
is also renowned for its prosperity. At the
individual level, Racamier had sold his steel
busine$s to the German Thyssen Grottp
before becoming CEO, and he is also an
enthusiastic visitor at the Music Festivals
in Bayreuth and Salzburg, Austria (Bernier 1986, p. 85;Graham 1990).
.klgK
IS/lilX
/ "
ov
LOUIS VU[TTON MALLET[ER
DECEMBER 19S9
Y AOMINISTRATIVE CiTY
t RE50RT a TOURIST TCWN
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'
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-77,.X
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MILL[CN
INHABITANTS
----- IE
---- 8
---- a
----- 2
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O 2oooL
KM
FIGURE 7 Louis Vuitton Malletier-store Iocations in the western
Pacific Rim at yearend 1989
Seu,ves: Demographic Yearbook Q988) ; LVM (199e).
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LOUIS VUITTON
4. Location by city
Reference has repeatedly been made to
the importance of tourist trathc. To fi11 out
the picture, store locations are given by
city or town (Figs. 6 to 8). Each location
is classified either as administrative city or
tourist resort. The underlying idea of the
administrative status is a local stock of
acauent customers. Whether IQcals in an ad-
ministrative city make up 25 or 50 percent
of the customers is not known but the
mark is certainly above 5 or 10 percent
which would be the case of tourist resorts.
Several locations can unambiguously be
classified as tourist resorts. Guam, Saipan,
Bermuda, and the Virgin Islands have been
rnentioned abpve. Other typical resorts are
Cheju Island in Korea, Surfers Paradise and
Cairns in Australia, Crans-sur-Sierre, St.
Moritz and Lugano in Switzerlancl, Deauvil-
MALLETIER-ATRULY GLOBAL RETAILER (153)
le and Nice in France, Sylt Island in Ger-
many, and Las Vegas in the U.S.A. Most
of the appropriate stores are important in
their own right. Seme function as show
rooms for off-season purchases in major
cities. Monaco, Cannes in France, Bari,
Venice and Florence in Italy, Lausanne in
Switzerland, Salzburg in Austria, and Hon-
olulu in Hawaii cannot have too inany
administrative functions either. Hong Kong,
Singapore, Miami, and Bangkok are already
subject to debate.
The French provincial cities of Lyon, Bor-
deaux, Toulouse and Strasbourg are classi-
fied as administrative centers, although
tourism was helpful for the openings.
They represent the lower end of the ad-
ministrative city scale. Werld-class cities
such as New York, Tokyo, London and
Paris occupy the opposite end. Paris is a
[
s.
i!'g) o
c?siop
MILUON
]NHABjTANTS10s31O,5
o
Malletier-store
LOUIS VUITTON MALLETiER DECEMBER 19e9
FIGURE8 Louis Vuitton
Sot;n:es : County and City Data Boolt locations in Anglo-America at yeareni
(19S3);LVM (1990).
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1989
l
i
]
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(154) ffesbeeeee4!va
special case, however, because of its status
as the global fashion and luxury center.
Tokyo, for example, lacks this status, and
this is reflected in the number, size and
sites of its units. They number seven, are
of standard size (60-100 square meters) and
are majority-owned joint ventures. Two
stores are located within the CBD, two
units are at exclusive hotels and three are
leased departments at upscale, although .
not exclusive, department stores at railroadjunctions of the circle line and three west-
ward-radiating commuter lines. These three
units are clearly for the local clientele.
The configuration contrhsts sharply with
Paris. There are only two, if fairly large
(up to 500 square meters), owned stores, a
stone's throw from the Champs Elysees,
ideally situated for tourists and local
customers alike. It is interesting to note
that London resembles Paris, while New
York resernbles Toky6. '
The detailed.figures support the claim
that certain markets are probably saturated
from the luxury point of view. In Tokyo,
New York, Hong Kong, and Miami for ex-
ample, there are simply too many units.
Among individual countries, France, tourist
traMc notwithstanding, and Japan seem to
have reached the mark. Illuminating is the
Japanese entry sequence, broadly following
the size of ur'ban population and ending in
1988 with entr.y. into Hamamatsu, a city of
abogt O.5 million inhabitants and hardly a
major tourist destination (Flg. 9). It is
dithcult to perceive entries into still smal-
ler cities Iacking tourist .trarac, Only in
the
'U. S. A. do numerous major agglomera-
tions lack a store, Philadelphia, Cleveland,
Pittsburgh, St. Louis, Denver and Seattle,
for example (Fig. 8), Even that is subject
ca38#ag2e 1992
[NHABITANTS
Ni
gL
.,sp
I151
10L1
I1
I1-
f
LOU15 VUITTON ENTRIES IN
fs
MALLETIERJAPAN
s,tistS4 19So
FIGURE 9 Louis
ranking
Nbte: T' okyo and Yokohama have been cernbined. Soecrcest Demographic YeaTbook
to qualification.
units have been
St. Louis. More
pear in the
consumer prefereneesfrom those on
and in the
hubs. Perhaps
in Columbus,
1980s.
198s t990
Vuitton Mal!etier-entry
in Japan
(19S8);LVM {1990).
Since yearend 1989 some
6pened, for example, in
importantly, most gaps ap-
American heartland, where
and valuations differ
the more cosmopolitan coasts
international transportat'ion
symptomatically, the corner
OH was closed in the late
IV Discussion
The claim was made that franchising is
not a necessary condition for worldwide
retailing. Equally important are a cultural-
ly neutral, or at least acceptab!e, product
line, a well-defined customer segment, and
66
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LOUIS VUITTON
stringent operational control, best achieved
by owned stores and majority-owned jointventures ("Hbw.P"). The claim has been
substantiated by describing the spatial ex-
pansion of Louis Vuitton Malletier, a French
luxury luggage company 1977--1989.
The most conspicuous feature in LVM's
global expansion may have been the force
of the initial trigger ("WZiy.P"). A sixfold
raise in the retail price in a parallel dis-
tribution channel, even for a product of
uncertain origin, attested to ravenous de-
mand. A tenfold difference between whole-
sale and retail margins was a strong reason
for getting close to the,customer.
Sequential, country-specific market satu-
ration played no apparent role as an expan-
sion trigger, in sharp contrast to retailing
in rnore mundane products. This unconven-
tional fact was largely due to the great
mobility of the customers, often tourists.
The core managerial problem was prefera-
bly the preservation of the image, which
ceuld be destroyed if the merchandize was
made too easily available through a dense
store netwerk in non-prestigious locations
and sites.
Noteworthy was the short time period,
1977-1980, during which the first foreign
stores were opened in all the major re-
gions : Western Europe, the western Pacific
Rim, and Anglo-America ("VWlaen,P"). Consid-
ering the importance attached to the very
best of sites, the patient wait for them, and
the potential inaccuracy of the American
data, due to the abolition ef franchises, it
is reasonable to claim that the openings
were practically simultaneous. This con-
trasts sharply with the familiar process
of proceeding from geographically and cul-
turally close countries to more distant and
MALLETIER-ATRULY GLOBAL RETAILER (155)
alien ones ("P71laere?"). The explanation for
the atypical behavior is that the product
line and its logo were well-known worldwide
within the prosperous customer segment
targeted by the company. The foundations
had been laid for a century ancl included
two current, high-profile stores in France.
Once entry had been made into a region,
the ensuing expansion was more likely to
follow the famiiiar pattern. Particularly in
Europe, but also in the Pacific Rim, an
outward diffusion from France and Japancan be visualized. The regional entry rank-
ings also broadly coincided with declining
per capita consumption figures.
LVM's balanced presence in the Western
World is in marked contrast to many other
chains which are habitually quoted as glob-
al retailers. For example, Body Shop, Laura
Ashley, Stefanel and Southland, which all
rely on franchising, are largely dependent
on the effort and resources of their national
franchisees. Although the nameplate pres-
ence may be worldwide, actual market pen-
etration can differ widely. When the entry
vehicle is owned stores or joint ventures,
as is the case of IKEA and Toys "R"
Us,
for example, globalization is still under
way. Therefore, these two companies have
the potential to refute Treadgold's hypoth-
esis in the way LVM has done.
LVM's long and ttnique history makes
the company less than a perfect case for
scientific argument. A sample of younger
firms, also exercising full control of their
stores and preferably targeting the broad
mass market is cal!ed for. While we are
waiting fer their emergence, the model
provided by Louis Vuitton Malletier will
serve as a temporary frame of reference.
'67 -
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(156) ptestsif#aiW
Acknowledgements ・
Messieurs J. Lafont, F. Belat, and S. Mejean
at Louis Vuitton kindly d61ivered the store
dafa and agreed to be interviewed by phone.Profe$sor Alain Metton, Universite de Paris,
Val de Marne advlsed about French libraries,
Their help was invaluable. Professor Bart J.Epstein, Kent State University, Ohio, Dr. Leigh
Sparks, University of Stirling, Scotland, Pro-
fessor Howard A. Stafford, University of Cin-
cinnati, Ohio and the anonymous Reviewers
centributed many thoughtful ideas. The Tore
Browaldh Research Foundation financed the
.study. Ms. Diana Mattsson-Werner drew the
figures,
(Accepted February 29, 1992)
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JVt・ti(F)i-,JstU*gO*ige9ts*Ree-
tsas}lkSLi℃ Vtk, ljStsigmp,- -- ・Y
tr --uaOeqiath ・
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VXF・70iled*tz
vaifti*X, JVd , er if F )./O・ursttsst
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(158 ) 経済地理学年報 第38巻 第 2号 1992
模で の 空 間的拡張が記述 され る .こ の 拡張は ,フ ラ ン チ ャ イ ズ ・シ ス テ ム を避 け て , もっ ぱ ら自
己店舗か過半数を所有する ジ ョ イ ン ト ・ヴ ェ ン チ ャーに依拠 して行われてお り, 小売業務の 世界
的展開と しては希な ケー
ス であ る 。 この拡張は , 西 ヨ ーロッ
パ, 太平洋西縁地域お よび ア メ リカ
とい う大 陸規模の 3 地域で 同時に行われた.それぞれの 地域 内部で は ,
一人あ た り民 間消費支 出
額の 減少 とおお よそ照応す る形での , 外縁部 へ 向か っ ての店舗の 普及がみ られる.
一 70 一
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