Posts Tagged ‘Louis Vuitton’

Louis Vuitton’s Mythic 94.3%

Wednesday, June 4th, 2008

Luxury business experts from around the world gathered in Roppongi’s Grand Hyatt last week for the Financial TimesBusiness of Luxury Summit Tokyo ’08. And what an appropriate setting for discussion about luxury — Tokyo! — the world’s most important site for high-end brand consumption.

But proving this importance requires a catchy numerical figure. So in his opening speech, the FT‘s Lionel Barber told the audience that 94.3% of all Japanese women in their 20s own a piece of Louis Vuitton. This number was then repeated in an article by leading Asian luxury expert Radha Chadha in the FT‘s newspaper supplement about the luxury business: “For example, as many as 94 per cent of Tokyo women in their 20s own a Louis Vuitton piece.” A quick Google search on “94.3 AND Louis Vuitton” will bring up countless news articles from major international newspapers and magazines citing the figure. Even the Japanese fashion newspaper Senken Shimbun repeated the number in its June 2 recap of the FT summit. 94.3% is as good as gospel.

Anyone who has spent a few hours in Tokyo knows that the Japanese deeply love Louis Vuitton. Japan gave the French brand both the capital and the blueprint to become an unprecedented global luxury powerhouse.

That being said, 94.3%!?

Let’s think about what this means. If you collected 100 girls in their 20s at random from all across Japan — from the frozen backwaters of Hokkaido to the beach huts of Okinawa — and put them in the same room, only six of them could claim to possess zero Louis Vuitton items. To be perfectly fair to all the experts who keeps repeating this statistic as unassailable fact, 94.3% is totally and utterly impossible.

So where in the world did this imaginary statistic come from? We decided to track down the original source — a 2003 survey report of Tokyo metropolitan area consumers from the now-extinct Saison Research Group titled “The Image of Foreign Luxury Brands and Actual State of Brand Ownership” 『海外高級ブランドのイメージと所有実態』. And there on the bottom of page 6, we are informed that “94.3%” of girls in their 20s own a product from Louis Vuitton. Above this number, however, we get our first taste that something is amiss with this survey: “109.9%” of women in their 40s own Christian Dior! In this thing we normally call “reality,” ownership rate for any object can never top 100%, but this Saison report is very, very special.

You see, Saison’s researchers decided to simply add up all the percentages for ownership of different item groups (like bags, wallets, scarves, perfume, coats, suits, sweaters, pants, belts, shoes, etc.) for the final ownership rate. So, hypothetically, if 50% of women in their 20s own LV bags, 30% own LV wallets, and 15% own cigarette cases, “95%” would be the final figure of brand ownership. Needless to say, this is an extremely problematic form of statistical analysis. And even the author plainly states: “These numbers are not a strict measure of ownership rates for each brand. For the brands where people own multiple items, the number can surpass 100%.” (厳密には各ブランドの所有率を示すものではない。複数アイテムを保有する人が多いブランドでは100%を越えることもある。)I have no idea why the Saison Research Group ever thought to use this ridiculous measure of brand popularity in percentage form, but I think I know now why they disbanded a year later.

Although Saison printed the caveat along with the numbers, no one apparently paid much attention. The Japanese media happily reported these bogus figures as “strict measures of ownership,” and eventually, the digits made their way into the Western media as well, with no one stopping to ask how 94.3% (or 109.9%!) could be possible for a single brand.


So what would be a more accurate figure for Louis Vuitton ownership?

First of all, there are plenty of fashion subcultures and segments of 20 year-olds that do not place Louis Vuitton in their purchase consideration set. “Street-kei” girls from CUTiE or Zipper are absolutely not LV customers. And girls reading the very popular “girly” magazine Non•no are probably too laid back about fashion to purchase such an extravagant level of luxury handbag or wallet. Certainly, LV is a key brand for the mainstream and enormous CanCam set (the magazine features monthly coverage about the brand), but even the CanCam/JJ faction is merely a large plurality in the market — not a majority.

Moreover, there are relatively good surveys that cover LV brand preference and ownership. The TBS General Preference Survey (TBS総合嗜好調査) asks consumers in Tokyo and the Osaka-Kobe region about established brands. Over the last decade, Louis Vuitton has generally topped the survey’s list of beloved fashion brands for women in their 20s — at around 30%. This year’s rate for LV, however, hit a recent low of 26.7%, with only 19.3% of Tokyo women in the survey saying they like the brand. (Louis Vuitton remains stunningly popular in the famously logo-crazy Kansai region.) Brand Data Bank‘s (national) data tells a similar story: only 15% of surveyed women in their 20s own a LV bag.

The Japanese “conventional wisdom” (echoed here) seems to state that around 40% of women own a LV product, and while this may still be high, it is not even one-half of the FT‘s oft-repeated imaginary figure. Our guess would be 30-40% of women in their 20s own some manner of Louis Vuitton item, with 15-20% owning a LV bag. This is still very, very impressive when viewed in the larger scheme of things, but when 94.3% sets the standard, 15% looks rather humble.

One of the main messages at the FT conference was that the Japanese luxury market has matured and become saturated. Brands can no longer swagger into Tokyo and expect to be profitable without perfectly understanding their customers. Good information is more important than ever. So let’s all take a step into the future and bury the totally dubious 94.3% figure once-and-for-all.

This article originally appeared on the Diamond Agency blog clast.

Rent-a-Bag and the Meaning of “Trend”

Wednesday, December 12th, 2007

The new Japanese company ORB (On-Line Rent-a-Bag) gives women the opportunity to rent luxury handbags from upscale European design houses Louis Vuitton, Hermès, and Chanel for short-term periods. Although its business model is nearly identical to that of American company Bag Borrow or Steal, ORB is perhaps the first above-the-line implementation of “luxury rental” in Japan. Members of ORB’s “Bag Club” pay the not-so-cheap price of ¥29,800 per month for access to a wide selection of high-end products. For such a hefty fee, one could easily afford the monthly credit card payments on a truly spectacular bag. But ORB gives you the never-before-available option of changing luxury horses in midstream. Better yet, a constantly-rotating series of bags from ORB may give your peers the impression that you are a member of the exclusive Japanese upper classes with cash to burn on multiple luxury handbags. (Is the whole “handbag for life” thing suddenly an obvious signifier of the middle class?)

Here’s the deeper question when writing about ORB: Is luxury bag-rental worth identifying as a trend? So far, we only know of one company offering this service, and we have no idea whether the business model will be successful. Furthermore, we should not assume that the service succeeds in satisfying consumer needs simply on the publicized news of its foundation. Sure, it’s a noteworthy idea — somewhat novel, somewhat innovative — but does it pass the threshold to win “trend” designation?

At the end of the year, we are inundated with lists and lists of “The Year’s Hit Products” and “Buzzwords of the Year,” and although the media may not use the word “trend reporting,” they all attempt to give a sense of where popularity congregated over the last 52 weeks. This may seem like an odd time in the course of this blog (and within this particular essay) to start deconstructing the entire trend-spotting industry, but we felt like we needed to take a step back and look at common misdiagnoses of trends — especially in Japan.

(1) Trend Reports Overemphasizing Production/Manufacturing/Innovation: A lot of Japan-oriented trend blogs seem to push “cool” products as “trends” without any evidence that consumers agree. Yes, there are a lot of crazy, zany things that make it to the Japanese marketplace, but not all of these products will see substantial sales or have even been created with consumer research in mind. This is not to say that products specifically created to satisfy pre-existing consumer needs automatically become hits, but there must be some measure of reception to designate any piece of novelty as a “trend.” At best, there is a “production trend” in Japan for companies to make humanoid robots that play instruments; Asimo’s mere existence, however, says nothing about Japanese consumer sentiment towards the possibility of robot cohabitation.

(2) Trend Reports Overemphasizing Media (i.e., the Self-Fulfilling Prophecy): If you want to understand the entire blueprint for the new year (essentially viewing the “spoilers” for the next 365 days of consumer culture), read Dentsu’s forecast for the “Hit Products of 2008” included in their forthcoming “Hit Products of 2007” report. Since the advertising giant has the media budget to secure hits (or at least, create the illusion of success/authority in the media space), their predictions have better odds than the Harlem Globetrotters beating the Washington Generals. For example, just as predicted, Tokyo Midtown was “big” in 2007, but in what possible circumstances could the complex have not been a hit?

Since the Japanese mass media’s central organizational role is to advocate sponsored products from a position of central authority, the media’s definition of trend is always tautological: If the media decides to constantly feature a product, it therefore appears as a “hit” or a “trend” solely from all the exposure. This does not mean, however, that their pronouncement is a lie: The mass plurality of consumers in Japan still buy and participate in mass trends based solely on the amount of media exposure.

But even when consumers don’t take the bait, how can an objective observer really tell? Does the popular advertorial TV show Ohsama no Brunch ever do flashback stories on things that did not turn out to be successful despite its enthusiastic coverage? “Podcasting” was a buzzword in Japan a while back, but when the media dust settled, the “trend” was totally empty.

(3) Trend Reports Ignoring the Importance of Continuity: Xavel’s cell-phone/PC fashion shopping sites fashionwalker.com and girlswalker have been incredibly successful, but the company clearly rode on the coattails of market-leading manufacturers, media institutions, and talent-agencies. The expansion of fashion retail into “new media” has definitely been a real innovation, and objectively, the high levels of mass support have made “keitai shopping” a trend by any measure. The entire Xavel [now Branding] enterprise, however, is still dependent upon the legitimacy of traditional media. Without access to Ebi-chan & Co., it’s unclear if consumers would have ever made the leap into the arms of an unknown retailer. So, yes, Xavel is a real trend, but the company’s innovation has been more dependent upon continuity than innovation.

Our last post on hit novel Koizora makes a similar criticism: what is the difference between the success of a “traditional” novel with a high-expenditure mass market television campaign and a book-form “keitai novel” that receives the exact same promotional treatment? Koizora‘s hit status says more about the constancy of promotional power in Japan than the innovation in content creation.

(4) Trends that Overemphasize the Rogers Model: We no longer live in an unidirectional marketplace where elitist “early adopters” take up products and are then imitated by the less cool “early majority.” These days, popular products often completely skip hipster adopters, and sometimes the early majority intentionally rejects the styles of the well-respected media/art/fashion complex. In Japan, trendy underground culture has become a deserted island; the idea that its Lost-like survivors can somehow transmit their love of RSS, CSS and American Apparel to hordes of Johnny’s Jimusho fans is silly. There are real early adopters — sales clerks at Shibuya 109, for example — but are frequently ignored when they do not share the same taste culture as the actual trend-spotters. So, not only does the classic diffusion model not apply particularly well to the 21st century environment, trend-spotters generally give too much credence to “early adopters” similar to themselves or the Western example but lacking in real opinion leadership.

This article originally appeared on the Diamond Agency blog clast.

This essay is not to say that there isn’t noteworthy reporting on innovations, novelties, and borrowable ideas from the Japanese market, but there is always an error of over-reporting these as “mass trends.” If we return to the initial problem in analyzing the “rent-a-luxury-bag” phenomenon, the best course may be to err on the side of skeptical neutrality. Reporting on new products and services is great fun for blog posts, but overselling novelty as “trend” can create a false sense of market realities.