It’s luxury brands’ growing dilemma: how to sell more and remain exclusive. World-renowned handbag maker Louis Vuitton seems to have found an answer. The company has created a purchasing experience for customers that psychologist, consultant, and author Peter Collett calls “fantasian.” “The surrounding is as important as the product,” Collett said. Mixing art and luxury to “create a little bubble” leads clients to feel special, he said.
That’s exactly the effect that LVMH, Louis Vuitton’s Paris-based parent company, is hoping for and more. Louis Vuitton’s most valued customers now have exclusive access to a luxury apartment above its New Bond Street Store in London as well as a jetty in Singapore.
The architect behind this temple to luxury VIP space, Peter Marino, said the plan for the VIP apartment was hatched in response to a growing trend in luxury stores in China. “The feedback from the brands who created them in China was a revelation. They make as much profit from these areas as they do out of all the selling floors,” said Marino. So he put the idea to Louis Vuitton. Marino said it’s an experiment since he has never done this for a brand in the West before.
The New Bond Street apartment features three lounging areas adorned with artwork such as Basquiat’s Napoleonic Stereotype Circa 44 and pieces by Gilbert & George. The apartment allows Louis Vuitton to host dinner parties and create private suites for viewing products. This kind of space is “where you go and do private shopping and don’t have to mix with the riffraff,” said Peter Mace, a partner in charge of London retail leasing at broker Cushman & Wakefield Inc.
Vuitton opened its first flagship store in Southeast Asia at Singapore’s Marina Bay Sands shopping complex in September. The glass and steel pavilion, “the maison of the traveler with a nautical spirit,” has a jetty for clients who want to shop by yacht.
The creation of luxury bubbles for top clients may be pricey – Mace estimates Vuitton’s London flat set the company back more than $50 million – but the investment seems to pay off. Vuitton generated 28 percent of LVMH’s revenue last year and 57 percent of earnings before interests and taxes, HSBC estimates. LVMH also reported a 13 percent increase in fashion and leather goods sales in the first 9 months of 2011.
Currently, Vuitton lays claim to one of the industry’s highest averages of sales per store, generating about $17.4 million per location, beating out Gucci’s average by over 50 percent. Vuitton’s figure can be expected to increase: the company plans to slow new store openings and invest more to spruce up some of the 459 shops it already owns. With an art gallery and a yacht at their customers’ disposal, one can only imagine what’s next for Louis Vuitton’s VIPs – perhaps a safari for the season’s hottest accessories.