THE ULTIMATE CONTRADICTION:

LOUIS VUITTON VENDING MACHINE

CARLOS JORGE FRIDAY, JULY 16, 2010 PARSONS SIS 2010 DESIGN AND MANAGEMENT BUSINESS MODEL

SUMMARY
Louis Vuitton is one of the most powerful brands in the world, owning more than 200 stores worldwide. Their bags, which they are most known for, are timeless and coveted by costumers all over the world. Buying a Louis Vuitton bag means going to a store and dealing with sales people, who can be rude and condescending. When you pair the ultra luxurious fashion brand with something as contradictory as a vending machine, you might just get success. Louis Vuitton could provide this service for costumers to buy their products in an unprejudiced environment and really examining the product as much as they want. At the same time, the company will have the security of their products in mind. A reason to adapt this idea would be to have these high-end vending machines in location where there is a substantial amount of clientele, but not enough for them to actually open a store. Compared to opening a full store, the cost of these vending machines would be much lower for the company.

THE LOUIS VUITTON STORE IN DOMINICAN REPUBLIC

RESEARCH
ON THE BRAND OF LOUIS VUITTON French fashion house founded in 1854, originally as a traveling goods company. Their products range from luxury trunks and leather goods, to ready-to-wear, shoes, watches, jewellery, accessories, sunglasses, and even books. They currently sell their products three different ways: on their boutiques, high-end department stores, and on their website. The artistic director is Marc Jacobs and Yves Carcelle is the brands president. In 1987 Louis Vuitton merged with Moet Chandon and Hennesy into LVMH. ON LUXURY VENDING MACHINES U*Tique is a luxury vending machine that sells beauty products by Lancome, Dior Parfums, Lancaster, and ZIRH. This machine can only be found at Fred Segal, a department store in Los Angeles. Other ventures into luxury vending machines include these kiosks in airports (like from perfume Coty and Rosetta Stone.

THE ULTIMATE CONTRADICTION: LOUIS VUITTON VENDING MACHINE - CARLOS JORGE

DATA

Louis Vuitton currently has a prot of about 150 million dollars a year solely on two of their major stores in the United States. These two stores are the one in Los Angeles Rodeo Drive and the other one being the One East store in New York City. The company comes out with seasonal products four times a year (Pre-spring, Spring-Summer, Pre-Fall, and Fall-Winter). Only certain stores carry the actual fashion collections, mostly ones in New York, Paris, Los Angeles, and London. Building a small-to-average sized boutique costs about 5 million dollars. I asked some people from my dorm who have shopped at Vuitton during the past few weeks about the costumer service. 3 out of 5 responded that they felt intimidated by the salespeople and were not comfortable shopping at the store. Because they were teenagers and were probably not dressed in designer clothes head-totoe, the salespeople probably assumed that they were not going to buy anything.
THE ULTIMATE CONTRADICTION: LOUIS VUITTON VENDING MACHINE - CARLOS JORGE

CLIENTS
For this service the primary persona would be Meghan, a 30-year-old heiress to the Cond Nast magazine empire. She lives in an apartment bordering the Meat Packing District.

PRIMARY

She is an avid fashionista and can be seen seated front-row at fashion shows; she is also known for her particular style, constantly getting photographed by The Sartorialist and Tommy Ton. She is a very good Vuitton costumer but she doesnt have a boutique close to her home.

A negative persona would be Gladys, a 76-year-old woman who lives in the Upper West

NEGATIVE

Side in a single-room apartment with 7 cats. Her husband died 3 years ago and she is living off his pension. She knits and goes to a Yoga for Elders class every Tuesdays and Thursdays.

SECONDARY

Other clients might include young (16-25 years old) people that are fans of the brand but feel intimidated when they go into the actual store.

THE ULTIMATE CONTRADICTION: LOUIS VUITTON VENDING MACHINE - CARLOS JORGE

INNOVATION

The Louis Vuitton vending machines would be as luxurious as their bags, perfectly crafted. These vending machines would be placed in strategic locations were there is a substantial Vuitton clientele, but not as abundant for them to open a store. Places in New York could include Tribeca, the Meatpacking District, and Wall Street. The vending machines would have a selection of the labels classic and most iconic bags, an array of mens bags, small leather goods, and some products from the seasonal collection. It could also include a selection of sunglasses, jewelry, and charms. The vending machine itself would be very much like the storefront at an actual store. The window will display all of the merchandise and next to it there would be a touch screen were costumers can get more in-depth information on the products and the actual prices. Costumers can also sample the bags. For protection of the sample bags, they would have security nets sewn inside of them and if costumers step ten feet away from the vending machine, a stationary security guard (who is there 24/7) will take measures. If the costumer does buy something then they would just insert their credit card and the transaction would be complete. Their purchase would be dispensed on a box (with the reciept inside) and they would also get a shopping bag to take their items home. If the costumer would want to return an item then they would have to go to an actual Louis Vuitton store and go through the process there.
Touch screen to order the products

Items available

TOUCH

TO ORDER

Sample bags

Get y ou along r bag in a bo with a bag. shopp x ing

THE ULTIMATE CONTRADICTION: LOUIS VUITTON VENDING MACHINE - CARLOS JORGE

INNOVATIONcontinued
The interior of every sample bag has a security net sewn into it. If the person sampling the bag moves 10 feet away from the vending machine station with the bag in hand, an alarm will go off. Security guards are on surveillance 24/7 of the vending machine.

SAMPLE BAG The business mission is to deliver high-end luxury goods in the fastest way possible to consumers. Another purpose of the service is to battle counterfeited items. If people had these easy to access vending machine then maybe some (not much because counterfeited items are much more cheaper) would just buy the real thing. This strategy would differentiate from other luxury brands because most of them want to remain really exclusive or they are afraid of putting their merchandise in an actual vending machine, which is usually associated with sodas and junk food. The company can be sure that this strategy would work because their products are just so popular and coveted that people will want to buy them, and they wont really care if it is coming out of a vending machine or not. The LVMH company, which is the owner of Louis Vuitton, is also owner of about 30 different brands like Sephora and Dior. The actual experience of purchasing a Vuitton product will be somewhat better in the vending machine. Even though they dont have such a wide selection of product like the store does, costumers can actually shop without sales people being rude to them. A lot of costumers complain that sales people at many stores, often boutiques or high-end department stores, can be condescending and assume that you are not going to buy anything. This can be really off-putting for many costumers, and they might want to the opportunity to shop freely without being judged or stared at.
THE ULTIMATE CONTRADICTION: LOUIS VUITTON VENDING MACHINE - CARLOS JORGE

REASONS
Avoid costumer disappointment with salespeople Make it easier to buy the products for costumers who are not close to a Louis Vuitton boutique Eliminate sell of counterfeited goods - Counterfeit sellers probably wont want to sell their fake products when there is a Louis Vuitton close to them. The fact that a luxury brand as popular and important as Louis Vuitton creates something as contradictory as a vending machine will likely create a lot of hype and buzz for the company. People will probably want to buy from the machine just to try it out and experience it. This will generate a lot of income for the company.

THE ULTIMATE CONTRADICTION: LOUIS VUITTON VENDING MACHINE - CARLOS JORGE

FINANCIAL PLAN
(Construction of Machine and purchase of selling area) (Value of Merchandise in the Machine)

INITIAL INVESTMENT $800,000

INVESTMENT IN MERCHANDISE $1,100,000

The machine would probably stock about 7 or 8 of the same items. It would be meant to be restocked when there are only two items left. This would be a xed cost because the vending machine will be guarded by actual security 24/7.

INITIAL INVESTMENT IN SECURITY $125,000

(Value of security and alarm system)

TOTAL AMOUNT OF INVESTMENT $2,025,000

$400,000

$425,000

$345,000

$515,000

$375,000

$480,000

$2,000 $2,025,000
INITIAL INVESTMENT SECURITY AND CLEANING

$2,000

$2,000

$2,000

$2,000

INITIAL INVESTMENT IS FINALLY MADE AGAIN

THE ULTIMATE CONTRADICTION: LOUIS VUITTON VENDING MACHINE - CARLOS JORGE

THE FOUR ACTIONS FRAMEWORKS

REDUCE
condescending salespeople time of purchasing the product

ELIMINATE
extreme exclusivity sell of counterfeited goods

RAISE
availability of luxury goods

A new value curve

sales of classic items

CREATE
vending machines for luxury products

The Strategy of Louis Vuitton

HIGH LOW

Marketing Price Quality Accessibility Ease of selection Costumer interaction

CURRENT VUITTON STORES

VUITTON VENDING MACHINE

REFERENCES:
Supplies, Gracious. "Louis Vuitton - History of Louis Vuitton - Designer-Fashion-Trends.com." Fashion - Designer Fashion Trends Designer-Fashion-Trends.com. Web. 16 July 2010. <http://www.designer-fashion-trends.com/louis-vuitton.htm>. "U*Tique, Luxury Vending Machines Never Looked This Good - StyleList." Fashion, Style & Beauty on StyleList. Web. 16 July 2010. <http://www.stylelist.com/2009/04/01/u-tique-luxury-vending-machines-never-looked-this-cool/>. McConnon, By Aili. "The Va Va Vooming of Vending Machines." BusinessWeek - Business News, Stock Market & Financial Advice. 22 Jan. 2008. Web. 16 July 2010. <http://www.businessweek.com/bwdaily/dnash/content/jan2008/db20080121_133869.htm>.