PARIS, France — At last week’s Louis Vuitton show, all eyes were on Kate Moss, as she walked down the runway in a long-sleeved embroidered tulle dress and a choppy short black wig. But while the Croydon-born supermodel was certainly attention-grabbing, a more interesting surprise was tucked into the show notes that awaited each guest. There, hidden between celebrations of the house’s savoir faire and high quality materials was this sentence, penned by Vuitton’s creative director Marc Jacobs: “The house’s Monogram and Damier canvas are nowhere to be seen on the catwalk.”
Especially in light of last season's Vuitton showing, inspired by the label's signature two-tone checkerboard known as Damier, the disownment of two of the brand’s most recognisable visual signifiers seemed like an about-face. But rather than being a seasonal whim on Jacobs’ part, the shift reflects a new strategy outlined earlier this year by the designer’s boss, Bernard Arnault, chairman and chief executive of LVMH, the luxury conglomerate which owns Louis Vuitton.
After the fashion and leather goods company, which accounts for more than half of LVMH’s profits, reported, for the second quarter in a row, its slowest growth in revenue since 2009, Arnault said, on an earnings call in January, that the brand would open fewer stores, focus on more luxurious materials and reduce the visibility of its monogrammed products.
“Of course it would be easier for Louis Vuitton to boost its revenue; all it would take would be to launch ten new products with the monogram product, but down the road it’s not a good strategy,” he said.
But what does it mean when the world’s largest luxury brand shifts its focus away from the very trademarks on which its success has been built? Clearly, Louis Vuitton has detected that some of its customers are tiring of the brand’s increasingly ubiquitous ‘LV’ monogram and its equally familiar Damier, begging a question with wide-ranging ramifications for the sector.
Has luxury logo fatigue reached a tipping point?
As LVMH generates 28 percent of its sales in Asia (excluding Japan), according to the group’s annual results, it’s not surprising that Vuitton’s strategic reorientation is inextricably linked to shifting consumption habits in China.
To be clear, the logo-loving Chinese consumer hasn’t disappeared and still accounts for a significant portion of revenue. According to Bain & Company’s ‘Luxury Goods Worldwide Market Study,’ published in cooperation with Italian luxury goods trade association Altagamma, “Consumers in China remain focused on conspicuous logos. Fifty-five percent of consumers outside of Beijing and Shanghai say they will buy more products showing logos.” Similarly, a recent survey by the Hurun Report identified Vuitton as the top preferred brand when it comes to gifting by wealthy Chinese men.
But the rise of a more discerning consumer, who eschews blatant brand signifiers, is putting new pressure on brands like Louis Vuitton to adapt their communications strategies and product assortments. “Chinese shoppers in Beijing and Shanghai are now truly global luxury consumers. They are shifting away from typical emerging market preference for logos and other visible signs of luxury spending, and shifting to a global mindset of uniqueness, high-quality and understatement in luxury items,” according to the Bain study.
“Luxury in China is now about being ‘in the know’ versus being ‘in the show’,” said Bruno Lannes, a Bain partner in Greater China and lead author of the Chinese edition of the study. “Changes in what Chinese shoppers want are now a central issue for the global luxury sector’s largest brands.”
Of course, logo fatigue is not new. Nor is it unique to China. The phenomenon swept over Japan, Europe and the US long before emerging in less developed markets. In the 1990s, the ‘LV’ monogram was highly popular in American and European cities, but slowly drifted away (often relegated to the provinces) as more savvy and demanding consumers sought out less obvious brand signifiers like iconic shapes or signature design treatments — Chanel’s quilting, for example — that only a select, like-minded minority would recognise.
By 2001, logo fatigue was pervasive enough in the West to power the rise of ‘stealth luxury’ brands like Bottega Veneta, which, over the last decade, grew from a small, family-run enterprise to a global powerhouse driving over $1 billion-plus sales.
But in the last few years, even companies like Gucci, which continued to rely heavily on logo-ed products well into the 2000s, have changed direction. In 2010, François-Henri Pinault, chairman and chief executive of PPR, which owns Gucci, told WWD: “Our groups are moving toward fewer logos, more discreet luxury. It’s a question of adapting our ranges very rapidly to this new perception of luxury, a luxury which is more subtle, more sophisticated which is what we are doing.”
Conventional wisdom, however, said that conspicuous logos would remain desirable in emerging markets like China. But in a country where luxury brands have expanded their retail presence aggressively — Vuitton is available even in provincial cities like Guangxi and Hefei — logo fatigue is starting to take hold sooner than expected. Indeed, it’s taken Chinese consumers only a few years to approach the level of maturation that took more than a decade to emerge in Japan.
It goes without saying that being seen as commonplace is poison for any luxury brand, thus Arnault’s plans to limit Vuitton’s store openings and focus its communications on high-value, logo-free leather goods that signal their specialness more discreetly, through shape and materials.
But as Vuitton shifts course, the challenge will be striking the right balance between exclusivity and popularity to remain profitable.
Disclosure: LVMH is part of a consortium of investors which has a minority stake in The Business of Fashion.