Why is Louis Vuitton so expensive? | CNBC Explains

Why is Louis Vuitton so expensive? | CNBC Explains

Louis Vuitton has held the title for world’s most
valuable luxury brand for more than a decade. Its limited edition handbags
can cost upwards of $55,000, that’s 175 times the average cost of
a new handbag in the United States. So how does this French fashion house
get away with charging so much? Louis Vuitton’s beginnings can
be traced all the way to 1837. France was in the midst of
an economic expansion, and that growth was attracting hundreds
of thousands of people to the city of Paris. A 16-year-old Louis Vuitton
was one of them. He traveled 292 miles by foot to the French
capital to work as a trunk maker’s apprentice. At the same time, steam-
powered trains and ships were making travel more accessible,
and the industry was booming. Vuitton capitalized on this
when he opened his first store. In 1858, he debuted
his new trunk design. It was rectangular, unlike its dome-shaped
predecessors, making it easy to stack. The cotton canvas fabric was lightweight,
durable and waterproof, ideal for travel. Many call this design the
birth of the modern suitcase. In 1896, his son Georges Vuitton created
the iconic Louis Vuitton monogram, a floral pattern with an interlocking L and V, in
honor of his late father, who passed away in 1892. From French royalty in the 1800s
to celebrities in modern times, owning Louis Vuitton has a long history
of being seen as a status symbol. I do really enjoy the Louis Vuitton
x Supreme collaboration. I’m so grateful to be able to wear Louis
Vuitton and work so closely with the brand. Now you can find the famous
monogram on everything, handbags, clothing, shoes,
jewelry, even a toilet. The brand is worth a
whopping $47 billion. One reason Louis Vuitton products are so
expensive is the high manufacturing cost. For example, the luxury brand produces
its handbags here in France and shies away from outsourcing
manufacturing to cheaper locations. Its collections are handmade
by experienced craftspeople in Europe and the United States
using expensive materials. Despite advances in technology,
the company says the most advanced machinery touching
its products is the humble sewing machine. But even the highest quality goods can lose value
if there are too many of them on the market. That’s why Louis Vuitton suspends production
of a product once it hits its sales target. Often when brands produce too much of a product,
they offload the extras by holding sales or selling them at
discount shopping outlets. By controlling its supply, Louis Vuitton has
managed to avoid both of those things. In fact, it claims to be the only brand
in the world that never holds sales. And while this helps the fashion house maintain its
value, it also makes it a prime target for counterfeits. Louis Vuitton is the most counterfeited
luxury brand in the world. In 2018, its products made up over half of
the fake luxury products found on the market. Experts are saying there are many counterfeits on the
market because the brand’s classic style has virtually been the same for the last 150 years, giving those on the
black market time to create near-perfect imitations. The counterfeiting of goods from luxury
brands has become so widespread that e-commerce giants like Amazon and
Alibaba have started cracking down. For example, Alibaba seized almost half a
billion dollars in counterfeit goods in 2018. Although Louis Vuitton had its
humble beginnings here in France, its developed marketing strategies to
attract a large following in other countries. These strategies have been especially effective in
China, one of Louis Vuitton’s most crucial markets. The brand had its eye on this
market as far back as 1992, when it became the first foreign luxury brand
to open a physical store in the country. China was still seen as an
emerging economy at the time. Bernard Arnault, the man at the helm of
Louis Vuitton’s parent company LVMH, even said there were more bicycles
than cars at the time of the launch. With China’s ascension as
an economic superpower, its growing middle class and high
net worth individuals have grown. That’s made the country a lucrative
market for luxury brands. Chinese consumers at home and abroad
spent $115 billion on luxury items in 2018. That’s one-third of
the global spend, with each luxury-consuming household spending
an average of almost $12,000 per year. By 2025, Chinese consumers will account
for 40% of total global spending. All of this demand is driving up price. In China,
goods from luxury brands such as Louis Vuitton are 21% more expensive
than the global average. That means the average Chinese consumer is
paying an extra $420 dollars for a $2,000 handbag. That adds up. So much so that some
wealthy buyers have started hiring agents to purchase
luxury brands for them overseas. Luxury goods go for 22% less than the
global average in France and Italy. The same $2,000 handbag would
end up costing a Chinese buyer $860 less in France than if
they’d bought it at home. Despite being more
than 150 years old, the brand is now focused on finding ways
to appeal to younger, affluent audiences. It’s brought on board influencers like Sophie
Turner, Chloë Grace Moretz and Kris Wu. And while the actors appear in traditional Louis
Vuitton ads, they also post photos of themselves wearing the designer on their
Instagram or WeChat accounts. Kris Wu has been the face of another
strategic move, its streetwear collection. The streetwear culture, popularized by
designers such as Virgil Abloh and Kanye West, was seeping into the luxury industry, and
appealing to younger people around the world. Louis Vuitton wanted to capitalize on this
and in 2018, it announced perhaps the most influential streetwear designer, Virgil Abloh,
as its creative director for menswear. The company borrowed a distribution and pricing
strategy from streetwear culture, the drop model, meaning it releases a limited number
of items over a short time period. For example, this pop-up space in London launched
Abloh’s debut collection as Artistic Director. The collection was only
available for a week. Because there were so
few items and a time limit, consumers flocked to the shop, where
hoodies were selling for as high as $2,395. These strategies and of course the hefty prices
have helped Louis Vuitton to hold on to its title as the world’s most
valuable luxury brand. But as younger consumers begin
to make up more purchases, it’s going to need to keep evolving
to hold on to its seat at the top. Thank you so much for watching
my video on Louis Vuitton. How much would you spend on a handbag?
Let me know in the comments below.

100 thoughts on “Why is Louis Vuitton so expensive? | CNBC Explains

  1. Its expensive simply because not that there shit is high end, trust me it isn't, its expensive because they don't want brownies having it, said that they now using brownies on there advertising, not to mention the brownie chatting her shit

  2. It is just a bag now. (According to this video.) But most likely people wanted to skin "Louis Vuitton" alive and kill him. Counterfeit? is some bullshit excuse in keeping a brand or product overpriced and keeping the manufacturers to continue producing the same boring products. It is a really old brand. What year is it and are you going to introduce some new designs? But people aren't supposed to know?

  3. Louis Vuitton is expensive (not as expensive as Hermes or Chanel tho), but I do not think it's worth it. You cannot auction Louis Vuitton items 😅 +It's prices dont go up unlike Hermes'.

    Lastly, LV is one of the luxury brands that is massively being imitated hahaha :/

    so yep, if you want "investment bags"… Hermes all the way!

  4. $55,000 dollars? I can get it made in China for $1.27, it will last 4 days before it falls apart but hey it will give me enough time to post a few pictures of it on social media to portray my imaginary lifestyle.

  5. Id buy somethin expensive bc it lasts longer but I wont pay so much for the brand. Give me somethin good quality buy not overpriced.

  6. Because people with money will actually pay for a brand. If a turd had a brand name attached to it, then some dumb rich idiot somewhere would buy it.
    I was once worth 2.2 million. Spent a little time around some rich people.
    It was the most idiotic time in my life. Being around people out of touch with the masses and had delusional views about themselves and the world.

    Now I understand the phrase it is easier for a camel to enter the eye of a needle than a rich person to enter the Kingdom of God.

    Glad I got away from that culture. Now I live among the working class and help those who help themselves.

  7. You pay for uniqueness, quality, wow ness, investment value, one of a kind of your handbag or product. If you cannot afford this get your one at AmaZon or another cheap shop who sell Chinese specials. I on the other hand prefer to pay for quality.

  8. Well this applies to ALL luxury brands, not just LV alone. You can practically apply the title to all other high fashion brands: "Why is Chanel so expensive?" "Why is Hermes so expensive?" "Why is Versace so expensive?" "Why is Dolce & Gabbana so expensive" and so on.

  9. I’ll start making my own hand bags. They will be even more exclusive. I will get my buddy to make 10 per year. 1 million bucks a piece. Please respond if you would like one.

  10. You just told people how poor they are, and how rich they will become if they are communist as China. You beauties work for the… you know who. I just can hope people see through your manipulation.

  11. its basically us people who make it expensive, if nobody bought it for that price then it would be cheap just like other brands

  12. These people have lost their mind to charge that kind of money 💰 for a handbag 👜 👞 clothing it bad enough we pay 1.000$ for a phone 📱

  13. My days for tricking on Americans hoes are over. Never again I would ever shop at any of these luxury stores again. I now travel to Dominican republic and Columbia and the girls are happy with $100 gifts lol

  14. I bet like 70% of thier sales are from average people making less then 80k per year lol. Poor people stay people with dumb ass purchases and try to look rich

  15. isn't it more like $5,500 not $55,000?? still too much but i'm thinking about the day i accompanied a friend shopping.. who was lucky enough to have
    a trust fund c/o a friend of her deceased father. she was into LV, Hermes, etc.. and if memory serves the LV bags were at least starting at the 4-figure dollar price range.. in any case, anyone paying $55,000 for what amounts to a purse is low on brain cells, millionaire or billionaire!🙄

  16. I love LV! ☺️ I would love to work with Louis Vuitton on a project like Nicki Minaj did with Fendi recently and how Pharrell Williams did with Chanel.

  17. It’s ironic when you think about the “celebs” and other very public, ego driven personalities attracted to a brand like this. From my experience it’s only the extremely insecure person who has a need to identify and own/wear these products … little do they realize just how manipulated they’ve been … that’s advertising at its finest low … sad.

  18. I've seen prettier bags for cheaper. Seriously. Having your logo stamped everywhere shows your lack of originality. I'd rather ask an artist to custom make me a gay as fuck, pastel, rainbow, retro bag for 100$ than buy mass produced, unoriginal, shit for ridiculous amounts of money. I could even buy an entire, over the top, fursuit with a louder personality than one of those bags.

  19. The vintage LV quality is FAR superior than the current production pieces. Buy preloved! I am by no means extremely wealthy and I have two vintage LV bags. One is 19 years old and the other is 29. The canvas is thicker and the bags themselves are simply built better pre 2005. I paid $300-350 per bag and even had the leather replaced on one of them by LV. Don’t waste your money on new LV bags!

  20. The reason LV products cost more than any other product that is made of similar or even superior material is they understand the psychology of the sick human condition.

    YOU are willing to pay a higher price for their products because you think it will increase your (perceived) social status somehow. That’s a fact.

    LV understands the insecurities of individuals who equate their sense of self-worth with perceived social standing, and takes them to the cleaners for it.

    Incidentally, wearing these over-priced designer products has become tacky, worthy of ridicule, and even a sign of blatant stupidity in most advanced societies.

    P.S. You are a special and a worthwhile human irregardless, and it has nothing of what you’re wearing. Understand that, and maybe you’ll get the desired effect that you think you’ll get from wearing a handbag.

  21. I've had LV bags & have stopped purchasing. Yes, the craftmanship is appealing, but you have to babysit the bags bcuz they wear out easily.

  22. I rather buy unknown brand bags which is cheaper with decent quality than buy this expensive bag just because of the marketing and brand!🙄

  23. Rich want to have exclusive products to show off their status or whatever. LV typ of companies have successlully fooled them . A bag costing as much as a Toyota corolla?

  24. LV handbags. Good, actually, very good quality. Put a $700 price tag on it, and Muriel Greenblatt of Queens, NY can buy it. Put a $5000-20,000 price tag on it and the Kardashians buy it. It’s a marketing ploy. Probably their cost is pennies on the dollar.

  25. I want a cheap Hand bag but real dollars in my back acct. hand bag doesn’t really matter to me . Money should b in the acct. hand bags can be stolen . Nobody cares after a point . Just a show off thing. 😊😊 counterfeit LV is also nice . It’s serving my purpose

  26. Being branded is Ego & Attitude & Showoff is not healthy
    Dreams R unlimited but
    Life is Limited
    Creator knows what's best for Humanity
    Worship One Creator
    Not his Creations
    Life is a Test & Trail's of Faith Monotheism & Good & Evil Choices & we will be held. Responsible for our Action's & Deed's
    Without Devine Guidance Humanity is Lost in Darkness of Desires Evil Trap's& Deception of the world
    Mind based Spirituality is misguidance Deviation from Purpose of Life
    Qur'an is Word of God for Humanity Guidance , Peace Prosperity Tranquility for the Success of both the World's
    Don't judge a Religion by it's follower's & Media
    Go to the sources Scriptures Qur'an ,
    Plz Read Understand Practice for Success
    Tc of Right Knowledge True Faith Islam is the Oldest Religion on Earth started with Adam followed by Abraham Moses Jesus finally Mohammed is the last Massenger of God
    Follow him for Success & a Meaningful Life
    Well-wisher @Peace

  27. I studied marketing. It's all made in China. The designer brands just keep saying Chinese buy the most so they cover up for the fact that it is made in China. China makes money, LV makes money. It all comes down to the simple fact of it being the power of the brand that's all it is honestly.

  28. Did she just say cheaper locations? And btw as per the title..the whole video is a time waste. Say anyone reading this don't watch the entire video because it doesn't answer the question why are they priced so high. Thank you!

  29. Also to add..another huge blunder.
    They wanna target the Chinese consumers who are the future as per the luxury spends figure they quoted on the video but also they said they will not outsource te manufacturing to cheap locations.
    Well to conclude, the marketing of LV need some basic classes.
    The PR teams needs to see this also. Someone has messed up. If you then both the marketing and PR teams within the company are messed up!
    Marketing Strategy RIP.

  30. The first thing you need to learn is how to dress; for the products you display, You are not in some "Back-Yard" some place and if you don't have the money to buy what you display, "Don't" Disrespect the item with your "Negative" Comments!!! You will learn a lot if you try to be a success like the person who made the Purse you are holding!!

  31. This does not even need to be waterproof or durable bcz the people who afford it are like so Rich that they wont be any way travelling in rain and can afford many more bags😂if it gets worn out

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