Stratechery:
Conspicuous consumption and status-seeking are major drivers of the Asian market in particular, and are why Asians make up over 50% of the luxury market by nationality. In the case of handbags, you absolutely are saying something with your selection: a Louis Vuitton bag is many people’s first luxury purchase, and shows you have some means; a Chanel bag, on the other hand, signifies you are at least upper middle class, maybe even rich.
At the top of the heap, though, is Hermès: sport a Birkin bag and there is no question as to your status.
While I don’t agree with all of his points, it’s a very instructive way to look at Apple and perhaps how and where they see their place in the market.
So which of those three brands makes more money, and which generates higher profit margins?
LVMH has 14% net margin.
Hermes has 21% net margin.
Chanel has 25% net margin.
whole company not just bags for year 2012.
I can picture Samsung’s next attack ad: overly fashion-conscious men and women lined up outside an Apple Store, flaunting their designer clothes, purses, and haircuts. Voice-over: “Do you really want to be like these people? Yeah, did’t think so. Buy a Samsung. Be the 52%.”
Of course. The commercial will take place in New York City, on Canal Street, where sidewalk merchants provide the solution: folding-tables full of the newest knockoffs.
Here are my two problems with this article:
1.
In China, Apple is already there. They are the top of the line, most coveted brand for electronics. Unlike 99% of Android devices that become cheaper very quick, Apple’s devices stay at their high prices for most of their life.
2.
Apple is a premium brand, not a luxury brand. Luxury is the antithesis to Apple’s design philosophy, where the point is to make people pay for unnecessary things — think Vertu and diamond-encrusted iPhones. It’s easy to forget this, because Apple’s devices are the de facto standard for people who will buy brands like Chanel and Hermes, but only because there really isn’t anything else that’s worth buying.
I imagine we’re going to hear a lot more foolish misunderstanding about the differences between “premium” and “luxury” after the 9/9 presentation.
Exactly! “Aspirational product” is a much more accurate phrase than luxury or premium.
You have to be a little careful with those numbers. LVMH Moët Hennessey is a fairly vast conglomerate holding clothing, leather goods, cosmetics, vineyards, wineries, distilleries, and retailers. It’s net margin across the entire company would comprise a really wide variety of products and not be very informative.
Perhaps, but you can bet money that someone in the popular press will misuse that term, too.
Here’s an analogy:
Apple is travelling on first or business class. Most Android is economy/coach. Most people will not see the value of paying 3x or 5x of a regular economy ticket since everyone gets to the destination at the same time. That is fine; I usually travel economy too. But we’d be lying to ourselves to deny the value of better meals, better service, bigger personal space, priority clearance etc.
That’s what Apple offers to me, as a consumer. I don’t have to deal with out-of-date operating systems, dodgy hardware, questionable apps etc.