Sacre Bleu! Louis Vuitton Buys Building Next to Its Flagship for $60 M.
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Commercial Breaks
The master of all things leather bags, Louis Vuitton could be seeking an expansion of the company’s American flagship store at 1 East 57th Street, as the luxury retailer recently bought the small office building adjacent to it.
Last month, the company paid $60 million to Centurion Realty for the skinny 10-story building at 743 Fifth Avenue, according to property records. The company’s storefront next door occupies a vast 20,000-plus square feet on four levels in one of the world’s top shopping districts. An expansion, should one be in the works, would signify the dominant power of the trendy French designer, which sports wallets for nearly $1,000 and handbags for well over $2,000.
The company did not respond to requests for comment, though Ralph Tawil, a principal at Centurion, confirmed that the buyer was indeed Louis Vuitton.
“They were the neighbor—so they wanted to own the property,” said Mr. Tawil, who bought the site just three years ago for $28 million. Louis Vuitton did not express its plans for the site, he said. Brokerage CB Richard Ellis last month issued a report that ranked the 10-block strip on Fifth Avenue between Rockefeller Center and Central Park as by far the most expensive retail strip in the world, with average rents of about $1,500 a square foot annually.
The Cushman & Wakefield team of Scott Latham, Richard Baxter, Jon Caplan and Ron Cohen represented the buyers on the sale. They would not comment.
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Louis Vuitton may be growing in popularity by leaps and bounds, but so too are the number of their disgruntled ex customers. If LVMH fails to reign in the counterfeit problem — not by launching lawsuits but by remedying their own internal practices — I suspect their market will diminish to pre-popularity boom levels, or worse.
The prevailing assumption, even among Louis Vuitton owners, is that the vast majority of LV-branded merchandise is counterfeit. LVMH could easily implement serial numbers and product registration requirements instead of easily copied date codes, which are presently the norm. Alternately, they could employ RFID or holographic technology to deter the rampant production of knockoffs. Instead, LVMH's primary modus operandus is to sue everyone from Ebay and Google to BMG and Sony Entertainment rather than to improve upon their own image through more aggressive anti-counterfeiting measures within their own product lines.
To make matters worse, Louis Vuitton hires staff who are not well versed in the art of courtesy and class. Luxury does not mean that all social conventions fly out the window. To the contrary, those who are well heeled often display a higher sensitivity to the social graces, not fewer. Perhaps this gaping blind spot in LVMH's business model is a product of their French origins? If so, I would encourage LVMH to hire culture and customs consultants whose job it is to ensure that social norms for each respective market — be it Japan or the United States — are shown some level of literacy and respect.
The Louis Vuitton brand may continue to ride the momentum of its own popularity for quite some time to come, but signs that their facade is beginning to crack are emerging. One must ask why a Danish dignitary was caught at a photo op with First Lady Laura and President George W. Bush carrying a fake LV handbag, the evidence of which later appeared in a European edition of Vogue. Such a dignitary can well afford to carry an original LV handbag. So the question is, why not? Although this is purely speculation, I suspect that dealing with a low-key counterfeiter instead of buying from a legitimate Louis Vuitton boutique may have been a means to avoid or retaliate against the hassle, substandard anti-counterfeiting measures and rude sales associates that experienced Louis Vuitton shoppers the world over report.
In this former boutique shopper's opinion, the only people who are likely to entertain an infatuation with the brand are those who have never had the displeasure to shop at a LV boutique. It is not uncommon, after all, to hear LV owners on purse blogs lament that they "love the products" and "hate the service". Therefore, if LVMH wishes to reduce the demand for counterfeits, they must first realize that counterfeits are not merely a tasteless attraction for those who are too "disadvantaged" to afford the genuine article. Go to any high-end retail district and the truth becomes all too apparent: It is not uncommon to see a counterfeit on the arm of a woman exiting a brand new BMW or Mercedes.
If LVMH is serious about protecting brand image, they should improve upon three critical areas: customer service, quality control, and anti-counterfeiting measures. It is easy enough to file lawsuits at any and all perceived threats, from Dooney & Bourke on up. Yet only time will tell if LVMH has the capacity for self reform.