Next price increase?

[Lv-nowwhat]

Woooooooooooow not again.

[LVpug]

Originally Posted by canipus

No I don't work for LVMH and no I won't disclose sources - sorry. I am an International strategic marketing consultant (thirty years) for fortune 50 corporations and previously an advisor to the Foreign Trade Committee for tariffs and imports on Asian imports for the European parliament in Brussels. The LVMH pricing strategy isn't just about profits. It is also a regulator valve to ease pressure on production. With mass produced products you simply ramp production up and down - no problem - bring in more machines - speed up slow down the machines. With LV the products have a high amount of human labour and you can't ramp SKILLED human labour up and down without impacting quality of workmanship. There is a much higher level of inertia. If you raise prices in the EMEA region to slow demand you take pressure of labour intensive resources that are already stretched meeting demands in other regions. If you try and make people work faster quality suffers (heard about the quality problems in other threads - ring a bell?). You have to use price as a manufacturing valve BUT there is no point raising prices on product lines that are already manufactured and form part of your inventory. That WILL increase profits of course, but the game plan is to slow production on items to be manufactured - not on items that have been manufactured. LV have to raise prices to a point where the product is just affordable to a market size that they can handle. The problem is the psychology of Asians who are insane about having to own Louis Vuitton. They will bankrupt themselves and everyone around them in order to own the brand. A more moderate western frame of mind will simply move to other brands, as you correctly point out. Once that happens a degree of equilibrium will return and demand will grow at a slower controlled pace. In short, Asia has created a multitude of problems (not just counterfeit copies). The other strategy is simply not to supply the Asian markets or at least curtail it. That strategy failed as Asian purchasers simply travelled to Europe to purchase the product by the ton in local markets and then carried it back and resold it. Hence the "you can't purchase more than two of any product line" ruling. Raising prices is the only option - unless of course you learnt something in your economics class that LVMH have missed, in which case I strongly advise you contact them. I have it on good authority that they will pay mega bucks to allow you to showcase a solution.

Thanks for your input but, personally I do not think the asian market is to blame. There must be other mechanisms that could be put into place. A 40% increase in 24 months seems rather high...are you sure that your source is reliable??

[ilovehandbags03]

Chanel is having a price increase this Nov. My SA told me last month..not sure the exact date but she said Nov...

and double for LV price increase! boooo!

Originally Posted by Lec8504

lets just be thankful that it's not Chanel price increase status...

[canipus]

Originally Posted by LVpug

personally I do not think the asian market is to blame. A 40% increase in 24 months seems rather high...??

Well if you don't think the Asian market is to blame what do you think is the problem?

Re 40% if you take a single LV price increase of 6% the selling price has multiplied by a factor of 1.06. If you have 3 increases a year (i.e. 6 increases over a 24 month period), then you have a compounded factor increase in the selling price of 1.06 raised to the power of 6 or 1.06^6 in mathematical notation = 1.41.
So if a purse sells for $100 today it will sell for 100 x 1.41 = $141 in 24 months time. That is a 41 per cent increase in the selling price over a 24 month time frame using a compound six step increase of just 6%.
I've just purchased an LV purse from eLuxury that has increased 15% in 9 months.
So why do you think 40% over 24 months seems unrealistic?

[catherela]

^ i have to say that i have to agree about the asian market~ i've seen firsthand how ridiculous it can get.

[ismelulu]

From my observation, LV price increased in every 3 months in UK. Jan 2008, April 2008 and July 2008. So, price might increase in Oct or Nov 2008. :(

[aeonat]

Sad..... I think they are doing it delibrately to make us buy more NOW rather than wait for later....

[Rae323]

You would think that LV would slow down with the price increases..... the economy sucks........ but then again it doesn't stop us from buying :)

[LVpug]

Canipus.......the asian market may be one variable but, I do not think the that it is the sole reason for the increases...they would have increases regardless because there is such an overall demand and buyers are willing to pay more and more regardless of the asian market....cheers...who are your sources???

[mumar_k]

4 times a year is too much

[aillae]

Thank god for me, I'm only going to be buying accessories now. I won't even bother buying a bag since I can't afford the one I'm dying to have. And with all these price increases there's no way in heck I'll be able to get it.

I just hope the price increases won't affect the SLG's too much though.

[LVpug]

Hope they do increase prices by 40-50%...that will get me to stop buying...

[cindy05]

Me too!

Originally Posted by LVpug

Hope they do increase prices by 40-50%...that will get me to stop buying...

[bannYlein]

Originally Posted by ismelulu

From my observation, LV price increased in every 3 months in UK. Jan 2008, April 2008 and July 2008. So, price might increase in Oct or Nov 2008. :(

Oh no...
I hate it..but I am very happy with all I have now.

[precious-gucci]

I cant afford LVs with the constant price increases. It's such a big turn off!