February 6, 2008
Yves Carcelle

Ipek Cem recently met with Yves Carcelle, Chairman and C.E.O. of Louis Vuitton to find out the strategy behind this globally successful brand. The topics explored included globalization, branding, fighting counterfeit products and the company's continuing collaboration with Marc Jacobs.

Ipek Cem: My guest, today, is Mr Yves Carcelle, Chairman and CEO of Louis Vuitton. Welcome to Global Leaders.

 

Yves Carcelle: Thank you very much.

 

Ipek Cem: You have visited Istanbul many times, I gather. How many times have you been here, and what kind of a difference do you see in terms of both your business and in terms of how Turkey has grown?

 

Yves Carcelle: I mean there were two phases in my life. I came first here as a visitor, a back-packer coming to visit the city. But really for Louis Vuitton, my first trip was in '95. In fact I spent the Bank Holiday here with my wife, four days, and after four days I was totally convinced that Turkey was ready for luxury market. And incidentally, at the end of the four days I had selected the store that would become our first store in Nişantaşı, in the same street, but much smaller than where we are today. And yes, the market was different, because no real luxury brand was installed at that time in Istanbul, but I felt, already, 12 years ago, that people here were eager with fashion. And I think since then we have seen quite a sophistication of the customers, definitely. An increase in the budget spiral that made many more people able today to buy luxury goods, and of course many other brands that joined us on the market.

 

Ipek Cem: You talk about the "luxury market", and last year actually there was actually a "luxury" conference in Istanbul, and I had the chance to listen to many industry players. I’m seeing as if the luxury market keeps expanding. Is there no end to how much this market can expand? Globally, I’m talking...

 

Yves Carcelle: You know if you look at the history, I mean, everything started like Louis Vuitton, by the way, in the middle of the 19th Century, and for decades luxury was limited to very few European elite. What happened in the second half of the 20th Century is that more and more countries had access to buying power, to aspirations to a better life, and I think it is quite logical that more and more people in the world... whether it is in developed countries, or emerging markets... want to have the pleasure, to share the emotion of luxury products. So, honestly, I don’t see a limit to the expansion. The whole problem that we all have, and Louis Vuitton as the leader of the industry – we are the biggest and the most profitable brand in this industry – is to manage what I call the "paradox of luxury". How can you grow year after year, and give the satisfaction to many more customers, in many more countries, and at the same time keep this sort of exclusivity of luxury? And managing this paradox is one of the keys for permanent success because you cannot take the risk to dilute your image, or dilute your service. And one of the ways we achieve it at Louis Vuitton is the fact that we sell our products only in our own stores, and if you consider that today we have only 390 stores in the world – in the whole world – it’s very small considering, the sales figures that we represent. After all, it’s only three points of sale in all Turkey. And controlling our distribution enables us to provide the same service and guarantee that when you enter a Louis Vuitton store you will be served by Louis Vuitton staff that we have been training for years. So, I mean on one hand you have to be very careful of the way you treat that, but on the other hand I sincerely feel that although there might be ups and downs due to geopolitical situations, financial crises, health situations, like with the Sars epidemic in Asia a few years ago. I think the appeal for luxury will continue to grow which is a good thing for us.

 

Ipek Cem: Louis Vuitton, itself, started and grew with, you know, when travel grew, whether it was on ships, whether it was on planes. And now we see private planes, we see, you know, world wide travel, constantly going up, for business or for pleasure. Now when we look at your product mix it’s... it’s a huge variety of different products, accessories, leather goods. How are you keeping this tradition of travel and then expanding it at the same time without diluting the brand?

 

Yves Carcelle: It’s a very interesting question. Yes, our history is linked with travel. In fact Louis Vuitton was born in 1821 and left his village; moved to Paris; learned the art of packing; and in 1854 invented the first Trianon trunks - opened his store in Paris, and his workshop in the suburbs. And the whole adventure started like that. What is interesting is in 1867, he participated to the first universal exhibition, and had already this idea that he could conquest the world... which we did a little bit later. In fact in the history of Louis Vuitton from the origin 1854 to 1977 we concentrated our activity on travel and leather goods, but we were already – 10 years ago – the significant leader of this sector, and we know that our customers would like to have more Louis Vuitton products. After all we enter in a period where lifestyle counts and we knew by all the studies that people were ready to wear, one day, Louis Vuitton shoes, or ready-to-wear, or carry Louis Vuitton watches. So ’97 was a key turning point in our history where we recruited Marc Jacobs as an Artistic Director. Launched our first ready-to-wear collection in '98, then shoes, watches, jewellery, and sun-glasses, but if you look at it, it’s still a limited range of products. We still have no perfume, we have no house product, we are you know quite concentrated. And to answer your question, the way we do it, we launch products only if we consider we have the know-how. For instance, we started shoes. We have our own factory in Italy, by the way I bought last year 34,000 square metres of additional land to expand the factory. We launched watches in 2002, but all our watches are made in our own factory in La Chaux de Fonds, in Switzerland. We started sunglasses and we didn’t do a licence, like all the rest of the luxury industry, but we have started a few months ago, our own workshop in the east part of France, to proto-type all our sunglasses. So one of the ways of expanding the territory of the brand without diluting is to acquire the know-how of the new territories where you are. I do not see Louis Vuitton putting his name on a product that we would, you know, just purchase off, or semi-licence our name. It’s absolutely not our philosophy. The second way of expanding without diluting the image is keeping the spirit of luxury by special orders. You know the magic of Louis Vuitton is we can completely keep our internal values: the craftsmanship; the way we are manufacturing the trunks, and the hard-side luggage like in the 19th Century. If one day you have the chance to visit our workshop in Asnieres, close to Paris, that you know Louis Vuitton founded himself you will see that we still nail the trunks with the same way we were doing in the 19th Century. And there you can put any kind of special order. If you dream to travel with one of your cherished object, come to us, we will design the trunk, or the suitcase, for it.

 

Ipek Cem: I hear that you do about 450 special orders a year, and a lot of your innovations throughout, actually, have come from this special order business, throughout history. When you are about to launch a new product line, whether it’s sunglasses or it’s watches, how is the incubation period? What are the steps? What time has to pass for you to say, "This is it. We are doing it, and this is the manner with which we are doing it"?

 

Yves Carcelle: If we take... if we take those two examples, sunglasses or watches, I think between the moment where we said, "Yes. We are ready to penetrate this market", and the moment where the first watch, or the first sunglass was on the market was around three years.

 

Ipek Cem: Yes.

 

Yves Carcelle: Because, as I said, we needed to acquire the know-how, so recruit people who were knowledgeable about that. Also train those people to the company culture and the spirit of Louis Vuitton. Then make sure that we have the workshop that will be able to  at least design, and then later on, manufacture. And design and test, and make sure the quality of these new products is consistent in terms of quality with what we have been doing for more than 150 years. So honestly if we were jumping in these new areas with a shorter period, I think that would be taking a lot of risk.

 

Ipek Cem: When we look at the world today there are many cities on the rise, and I know that some of your stores you categorise as "global stores", and maybe flagship stores. What are the some of your very well performing cities, flagship stores, around the world?

 

Yves Carcelle: Well, first, I am happy that finally Istanbul can be one of the global store cities. In fact, we wanted to bring the ready to wear since some time, but as you know you need space, and you need the perfect location. So it took us more time than I expected, but finally we are there in Istanbul. I mean, clearly you have what we call the very international cities: Paris, London, Milan, New York, Tokyo, Hong Kong. I mean clearly as cities which have been forever on the map of travel and retail, at the same time. But we see so many emerging cities all around the world. Of course in Asia, China is quite incredible. We have been the first one to open in China in '92. We have today 18 stores – we will have 25 by the end of the year, and of course we are very strong in Beijing and Shanghai. But just to give you an example: this year we are going to open in Sheyang, Sanya, Changchun, Suzhou, Qindao, Tianjin, Wuhan, so, I mean, cities that suddenly, because they have a Louis Vuitton store become also on the international map. We opened last year in Ho Chi Minh City in Vietnam. We have been in Vietnam for more than 10 years. Suddenly we see Vietnam exploding. We just opened in St Petersburg after two stores in Moscow, and it looks like, it’s booming. We opened in Kiev, two years ago, in Ukraine, and we see a big potential. So what is fascinating is you see that this demand, we were mentioning that at the beginning of the interview, of luxury goods is really blossoming, or mushrooming all over the world, and cities appear as great places for luxury shopping that probably five years ago, 10 years ago no one could imagine.

 

Ipek Cem: Since the collaboration with Marc Jacobs and then afterwards with many different artists an designers, I observe... kind of a... I don’t want to say lightening up... a witty, or a fun part to the brand that perhaps I didn’t observe before. Do you intend to continue this kind of surprise element whether it’s with the cherries or it’s with the graffiti?

 

Yves Carcelle: Yes. You know, I think it’s... I mean the products are serious, by the quality you put in it, by the exceptional creativity behind. But luxury doesn’t need to be boring. We live... we live in a world where people are exposed to media stimuli all over the world. And I think that surprising people has always been part of the genes, or the DNA of Louis Vuitton. And it’s clear that since Marc joined 11 years ago, we have reinforced this partnership with other creative people. We feel so strong in our own values, our own vocabulary, we must remember that monogram canvas was created by Louis Vuitton’s son in 1886, and the Damier canvas was created in 1888, and they are still the same, and I can bet you that in 150 years they will be exactly the same, and everybody respects that. So because we have those eternal values and this iconic vocabulary of Louis Vuitton, we feel comfortable to let other people play with their creativity. You were mentioning graffiti. It’s interesting because I remember Marc came to my office one day, and he said "Yves, I am always fascinated by the history of the company, since the origins, since the first trunks. People had the habit to paint their initials on the trunks. And I think it’s a fantastic tradition. I like this idea, and would like to reinterpret it in the modern world. And one of the ways of writing today is the graffiti." You must remember that it was a few years ago. "Why not inviting the prince of graffiti, Stephen Sprouse - who unfortunately died since then - to work with us?" And I remember when we launched this Louis Vuitton, monogram bags with graffiti painted on it, some people asked, "Were not your colleagues at Louis Vuitton shocked?", and I said, "Not at all", because it didn’t came out of the blue. It came from Marc respecting our tradition, by reinventing the tradition, and I think that’s where it’s very strong.

We then collaborated with Takashi Murakami, and the amazing thing that was recreating a new monogram. If Georges invented the monogram in two colours, Takashi, you know, 100 years later reinvented the monogram in 33 colours, and that was a brand new vision of the brand, to a point that it’s now part of our internal vocabulary. And to the point that you might have read that a few months ago Takashi Murakami started a big exhibition in the Museum of Modern Art, of Los Angeles. And Paul Schimmel, who is the curator of the exhibition, contacted us and say, "You guys have brought art into the store. Could we do the contrary, and bring the store into the art?", and we said, "Yes", which was a very, you know, innovative experience. And if you go to Los Angeles, there is a few more weeks to this exhibition, you will see that in the middle of the installation of Murakami, there is a Louis Vuitton temporary store which has been redesigned by Murakami, and where we have put the new collaboration with him. So it is really this sort of the permanent cross-fertilisation between Louis Vuitton, Marc Jacobs, other artists, designers, architects, and I strongly believe that this attitude, this very positive attitude of Louis Vuitton towards creativity, and even outside creativity, reinforced by our strong roots that is today pushing the limits a little bit of luxury. After all, our customers are also interested in art, in contemporary art, in architecture, in lifestyle, in design. And your world is not cut into boxes. You want to participate your own lifestyle.

 

Ipek Cem: When you look at the 21st Century, is there a kind of an impetus to some of these artistic innovations. There have there been variations on the theme of the monogram and the like. Clearly they are very innovative, but is there kind of a push to come up with a new image, like the monogram for Louis Vuitton?

 

Yves Carcelle: You know I think the magic that really for us, for Louis Vuitton, is this unique ability to respect our values, and be permanently very creative, and the two mixes very well. You know in this store you see the last collection that Marc Jacobs designed for the Spring-Summer, and our antique trunk that symbolises our roots. And the two mix and match. So... so I think that in the 21st Century of course this tendency will go on. People want creativity, and luxury has to bring permanent creativity, otherwise you become boring. You know quality and past is not enough. But without the past.... Without the history... without the huge respect of your roots, you dilute your image.

 

Ipek Cem: In terms of your product line, what are some of your enduring superstars, as products, that you say "year after year, they perform"?

 

Yves Carcelle: Well you know, I always think about the Keepall. Keepall was really the first travel bag. Designed by Louis Vuitton in 1924, and since 1924, more than 80 years ago, the shape has not changed. It has been reinterpreted and still exists in the original monogram canvas; has been reinterpreted in other materials; was relaunched a few months ago as a waterproof one with – totally waterproof, you can dive with it and know not a drop of water will penetrate it. So, I mean, it’s one of the biggest symbols, same bag, same shape, since more than 80 years. And that’s all about Vuitton.

 

Ipek Cem: You spend a lot of time as Louis Vuitton in quality control. You mention is the production stage, in the distribution, and in the retail aspect of it. But you are also one of the most envied and copied brands, and I know that you take a very strong stance against that as well. This is not just common to your brand, this happens to many brands, and many industries. Do you feel there is more international legal and governmental willingness to work on this topic?

 

Yves Carcelle: Yes. It is true that being the leader of the industry we are the most exposed, and also our monogram is quite visible and recognisable, so you might see it more than it really exists. But our attitude on that is zero tolerance and we will always do whatever we can to avoid, you know, counterfeit. Now, I strongly believe that since few years, let’s say last five years, most of the governments of the world have realised they were underestimating the problem. What’s the point? It’s a small thing, and after all if people cannot afford real luxury... I think today most governments realise that it’s a parallel economy, underground economy that is very often linked to criminal organisation. That sometimes is using child labour and definitely not the labour condition of the real industry. That all that escapes taxes, duties, everything. And I feel that – when I discuss with governments all over the world – that they are more and more conscious. Now sometime it takes a little bit of time top translate that willingness into the laws in all the countries, and then when the law passed to convert it into action for the police or the justice. But my feeling is that generally speaking, people understand more that it is a serious matter, that there is no creation without respect of intellectual property. And you cannot on one hand say "Oh it is horrible to – you know – to imagine child labour in the low cost country", and at the same time buy the counterfeit. One has to be reasonable.

 

Ipek Cem: Yes. When we think of a luxury brand, and especially when we think of Louis Vuitton, the advertisements come to mind. And I noticed over the years, especially in the past several years, the use of known-models, or known-personalities comes to mind your campaign with Uma Thurman, Scarlett Johansson, or Jennifer Lopez, and most recently more catchy than that with Catherine Deneuve, Gorbachev, and the Agassi’s. So this new campaign with Catherine Deneuve, and Gorbachev, and Andre Agassi really caught my attention. It seemed to set a different tone. Is there kind of a directional change, or is it linked to the products they were representing?

 

Yves Carcelle: I think, you know if you look at our life, as I said, we have our eternal values, we have the fashion aspect of Louis Vuitton. For years, in the 80s, 90s, we were conveying the spirit of travel, which as you mentioned is the origin of the brand. And build a solid base which has been the worldwide image of Louis Vuitton. With the arrival of Marc with the first ready-to-wear collection, we thought it was important to convey this fashion aspect. At the beginning, people were quite sceptical. After all this old company doing trunks since 150 years, what do they want to say to the fashion industry? Today I think the fashion week in Paris would not exist as strongly if Vuitton was not part of it. And the show that Marc launches on the runway every season is one of the key elements of the fashion week. So we need to have this fashion campaign where Marc is the Artistic Director, that expresses his point of view on the season. And the choice of actresses, or models, or beautiful people in this fashion campaign is really the choice of Marc, really related to the spirit of the company. I remember you were mentioning Jennifer Lopez. Again we met, and he say, "You know, Yves, I think that we have a fantastic energy this season. I didn’t find the same energy in any of the shows of the season. So I want to select a woman that has this, that symbolises this energy. And suggest Jennifer Lopez". And I must say, usually I don’t attend the shooting, but that shooting was in Paris, and I remember I was sitting next to Ben Affleck, that was the boyfriend at the time, and Jennifer was preparing herself, and suddenly she gets out of the fitting room and starts walking, you know, in the studio. And she had this sort of physical energy. I was captured, you know, myself by the energy which translated in the campaign when she was holding the bag like that. And you know that was Marc’s intention to transmit that. When the collection became very sophisticated we arrived to the conclusion, on his suggestion, that Uma Thurman was the perfect ambassador of this spirit of sophistication of the collection. And when the collection became very girly, Scarlett Johansson was the expression of that. So, you know, it’s not the choice of this person or that in the mind of Marc Jacobs – and I think he is one of the greatest artistic directors in the world today, if not the greatest – really for him choosing a person is adding something more to his fashion point of view. Now the new campaign, and these campaigns will continue so I cannot tell you the for after the next show, in March what it will be, but for the last one, because the collaboration was Richard Prince, and we had the 12 nurses dressed as nurses on the show. He wanted the campaign, and the campaign you will see in the next few days will be with those nurses and the supermodels – and by the way Eva Herzigova will be with us today, and she is one of the 12, and I am so happy. She has been part of our campaign, she comes back, you know, because she will express what Marc wanted to express. On the other hand, we wanted to restore these values of travel. But travel has changed over the years. It is not only the physical travel over the years. The ultimate travel is the travel of your life. What do you do with your life? And exceptional people are icons, whether it is in the movie industry, like Catherine or in the sport, like you know Steffi, and Andre, and finally to be able to capture through the camera of Annie Liebovitz, Mikhail Gorbachev in front of the Berlin wall with his Keepall bag, is probably - according to what we’ve heard since several months - probably one of the most emotional advertising pictures that has been done in the last few years. We are proud of that, because I think this advertising carries emotion.

 

Ipek Cem: How does a company convince somebody like Gorbachev to appear in an advertisement, even though there is story telling in it, and it’s done artistically?

 

Yves Carcelle: Because, you know, when people have reached this iconic level, they are ready to work not for themselves, but for the cause that they want to defend. And we have been a pioneer in protection of the environment. We published our carbon balance four years ago. We have taken strong measures in changing our shipping, organising selective garbage, making sure that everything we build from stores to warehouses to factories are environmentally friendly. And all those people give the money of the shooting not to themselves but to either climate project, which is the Al Gore Programme, or to the Green Cross project of Mikhail Gorbachev. So we convince them by sharing the same vision.

 

Ipek Cem: Their cause. The luxury business right now... it used to be viewed as a strong family business, attention to detail, and then now we see multi-national companies; compilation of many different brands, original owners leaving the company, maybe the designer leaving the company, and you are part of... you are the flagship company of the LVMH which is...

 

Yves Carcelle: The biggest group.

 

Ipek Cem: ...the biggest luxury group. How does that play into the success of Louis Vuitton, or what are the challenges with working with a group like that?

 

Yves Carcelle: Well, you know, I think we have the best of two worlds. On one hand, the fact we are big group, that we are listed, is sort of commitment to permanently improve our results. So it is a challenge for the management. On the other hand we are lucky enough to have a main shareholder, Bernard Arnault, who will join us this afternoon for this opening, and who is himself an entrepreneur and totally respects the vision of entrepreneur and also has a long-term vision. So we have, on one hand, the pressure of stock exchange, but on the other hand somebody that understands that if the production of the brand requires a long-term vision, we can have this long-term vision. I was lucky enough to have been running this company for nearly 18 years now, and you know that gives you this... this vision, and I run it as if it was my own family business. In fact we still have three members of the Vuitton family working in the company. And I can tell you the same attention to details characterises the company as it was in 1854. And I think the founder would be probably proud of us if he was seeing how we have respected his vision of the brand.

 

Ipek Cem: On that note I want to thank you very much for this interview.

 

Yves Carcelle: Thank you very much for inviting me.

 

Ipek Cem: Best of luck for your ventures.

 

Yves Carcelle: OK. Thank you, Ipek.

 

This transcript was typed from a transcription unit recording and not copied from an original script. Because of the possibility of mis-hearing and the difficulty, in some cases, of identifying individual speakers, NTV networks and Ipek Cem cannot vouch for its accuracy.