Louis Vuitton PESTLE Analysis: What Factors Affect a Luxury Fashion Brand?

PESTLEanalysis Team
PESTLEanalysis Team
Louis Vuitton PESTLE Analysis: What Factors Affect a Luxury Fashion Brand?
Table of Contents
Table of Contents

Our Louis Vuitton PESTLE Analysis investigates how various external factors impact the operations of one of the biggest and most renowned fashion brands.

If we ask you to name the top five fashion brands worldwide, we can bet that one of the names would be Louis Vuitton. A person can't be alive and not be familiar with Louis Vuitton.

Louis Vuitton is one of the biggest and most renowned fashion brands. It offers different products to fashion lovers, such as clothes, bags, jewelry, shoes, perfumes, and whatnot.

Louis Vuitton is famous for its quality and high prices. You must be aware of the current operations of Louis Vuitton. However, many customers of the fashion brands don't know the history of the brand.

In today's article, we will discuss the history of Louis Vuitton and see how it evolved over the years. Other than that, we will also conduct the Louis Vuitton PESTLE Analysis to see how various external factors impact the operations of the famous brand.

Many of our readers would perceive that Louis Vuitton is a brand established a couple of decades ago. Well, that's not true. You will be amazed to know that Louis Vuitton has been around 1854.

Photo by Xuân Thống Trần

The brand was founded by a man named Louis Vuitton in Paris. He named the brand after his name. Louis Vuitton used to make trunks for high-end clients. He innovated and introduced flat-topped trunks. They were considered very innovative at that time.

These trunks gained huge popularity due to their modern design and good quality. The brand expanded as it gained recognition and opened a workshop in the suburbs of Paris. In 1896 the fashion brand picked up the LV monogram, which started featuring on Louis Vuitton's products.

The LV monogram soon became a status symbol. As the brand's popularity grew, Louis Vuitton expanded its operations internationally. In the late 19th century, Louis Vuitton opened its first international store in London.

After that, the fashion brand opened its stores in all the world's major cities, due to which Louis Vuitton gained international recognition. Over the years, Louis Vuitton shifted its focus from manufacturing luggage to the fashion industry.

Louis Vuitton diversified its products and started making wallets, shoes, bags, accessories, and clothes. This step increased the popularity of Louis Vuitton. It also increased the brand's customer base since now it sells products everyone wants.

Louis Vuitton collaborated with top designers and artists to make its products stand out from its competitors, which worked. The fashion brand kept on increasing its reach and kept on expanding.

Louis Vuitton acquired many companies over the years to expand. In 1987, it acquired Moet Hennesy, a luxury brand. By doing so, Louis Vuitton further increased its global reach and penetrated the luxury industry.

In the 21st century, Louis Vuitton further expanded its operations. It opened flagship stores across the globe and increased its online presence. Besides that, it further added more products to its product line, such as watches, fragrances, jewelry, etc.

Currently, Louis Vuitton is one of the giants of the fashion industry. The brand uses top models ad movie actors to promote its products. In 2022, Louis Vuitton's revenue was almost 79.2 billion euros.

The brand has more than 5,664 stores in more than 50 countries. Such a great market presence helps Louis Vuitton to generate such huge revenues. The brand also provides employment to 196,000 workers.

Now that we have discussed the history and the evolution of Louis Vuitton over the years, let's proceed further and conduct the PEST analysis of the brand. Before proceeding to the PESTLE analysis, let's discuss what a PESTLE analysis is.

PESTLE analysis is a tool businesses use to analyze what external factors impact the operations of a business. In today's article, we will conduct Louis Vuitton's PESTLE analysis to examine how various external factors impact the fashion brand.

Photo by 紅 心

Political Factors That Affect Louis Vuitton

Businesses are impacted significantly by government policies and a country's political environment. In this section, we will discuss how various political factors affect the operations of Louis Vuitton.

Multinational companies have to keep a close eye on international politics since they operate internationally because any political chaos on the international level can impact their operations.

Louis Vuitton is a fashion brand that operates in more than 50 countries. However, the brand is originally from France. Suppose there is political tension between France and the US; the US government might tell Louis Vuitton to shut its operations in the US. This would impact Louis Vuitton negatively.

Recently Louis Vuitton closed its stores in Russia due to the Russia-Ukraine conflict. Such an international crisis can make Louis Vuitton suffer financially.

Besides that, political stability impacts businesses. Louis Vuitton would always want to operate in a country that has political stability because in countries where there is political instability, protests and riots take place, and during these protests, there is a chance that Louis Vuitton's store might get damaged.

Moreover, in countries with political instability, people tend to spend less money due to uncertainty. Hence, such countries do not suit Louis Vuitton.

Economic Factors That Affect Louis Vuitton

The economic situation of a country impacts businesses. This section will analyze how various economic factors impact Louis Vuitton.

GDP per capita provides a rough estimate of the annual wealth every individual possesses in a country. People in countries with high GDP per capita are assumed to have a high standard of living.

Since Louis Vuitton is a luxury brand, it considers the buying power of people before entering the country. Ideally, Louis Vuitton prefers to open a store in a country with high GDP per capita.

Another economic factor that impacts Louis Vuitton is a recession. Recession causes unemployment and uncertainty, due to which the purchasing power of individuals falls. Like any other business, a recession also affects Louis Vuitton negatively.

As the purchasing power of people falls due to a recession, the demand for the products of Louis Vuitton also falls. As a result, the fashion brand has to bear financial losses.

Other than that, a high inflation rate causes consumption to fall. Whenever there is high inflation, the disposable income of consumers falls.

Due to this, they cannot buy products from expensive brands such as Louis Vuitton. As a result, Louis Vuitton will suffer if there is high inflation in its operating country.  

Photo by Erik Mclean

Social Factors That Affect Louis Vuitton

Social factors in a PESTLE analysis refer to the social and cultural factors that affect the operations of businesses. In this section, we will discuss how various social factors impact the operations of Louis Vuitton.

Louis Vuitton is a brand that offers high-priced luxury products. Its products are not for the masses; they are for the elites. However, in some countries, extravagance and spending much on fashion and clothes are not considered appropriate.

In such countries, people won't accept the prices of Louis Vuitton. Hence, people won't buy the products of the fashion brand.

Other than that, Louis Vuitton manufactures Western clothes. Unfortunately, all countries don't wear Western-style clothes. There are countries where wearing Western-styled clothes is considered taboo. There will be little demand for Louis Vuitton clothes in such countries.

Moreover, the average age of the population has a great impact on the operations of Louis Vuitton. Suppose elderly citizens are the majority in a country. In that case, it is possible that the sales of Louis Vuitton would be low in that country since the fashion brand targets young people and design most of its products for them.

Technological Factors That Affect Louis Vuitton

Technological factors are the factors related to technology and innovation that impacts businesses. This section will discuss how various technological factors impact Louis Vuitton.

E-commerce has revolutionized the fashion industry completely. Now fashion brands can reduce their operational cost by limiting their physical presence and selling through online platforms.

Louis Vuitton has also embraced this change and developed its online store. The fashion brand can sell its products to any part of the world through this store. The online store has increased the reach of Louis Vuitton and decreased its operational costs.

As technological advancement has taken place, different social media platforms have emerged. Businesses are now using these social media platforms since billions of people exist.

Louis Vuitton is also among the brands with a significant social media presence. The fashion brand advertises its product on the social media platform. Such presence on social media platforms has increased the reach of Louis Vuitton and attracted more people to the brand.

Other than that, technology and automation have made the manufacturing process easy for Louis Vuitton. Moreover, it has minimized supply chain delays since inventory management software ensures the stores don't run out of inventory.

Legal factors in the PESTLE analysis refer to the laws and legal framework that affects different businesses. This section will analyze how different legal factors affect Louis Vuitton.

Businesses have to follow the laws made by the government, or else they are punished legally. Various legal factors impact businesses. One such law is the labor law. Labor law also affects Louis Vuitton.

Suppose strict labor laws ensure laborers are not exploited and get high wages. In that case, Louis Vuitton will have to abide by the labor laws, or else they will have to face lawsuits. Similarly, if there is a case of discrimination against Louis Vuitton, the brand will be penalized.

Moreover, laws against counterfeit products will make Louis Vuitton feel safe since counterfeit products damage the brand's reputation. Hence, Louis Vuitton will prefer to operate in a country with strict laws against counterfeit products.

Other than that, strict quality assurance laws also impact the operations of businesses. If a country has strict quality assurance laws, Louis Vuitton must operate carefully, or it might face lawsuits.

Furthermore, Louis Vuitton also has to ensure that its customers' data across the globe is safe. Louis Vuitton might face heavy penalties in case of data leakages or data theft.

Photo by Antony Trivet

Environmental Factors That Affect Louis Vuitton

Environmental factors have a significant effect on businesses. In this section, we will discuss how environmental factors impact the operations of Louis Vuitton.

Due to climatic changes, irregular rainfalls are occurring across the globe, due to which various crops such as cotton, hemp, and flax are being damaged. Since all these crops are used to manufacture clothes, the damage caused to these crops can cause a shortage of inputs for Louis Vuitton in manufacturing clothes.

Moreover, Louis Vuitton has now opened its online store, and it relies heavily on social media to market its products. However, natural disasters due to global warming can disrupt the internet supply. This can have a negative impact on Louis Vuitton since its operations would get disrupted.

Other than that, Louis Vuitton has to adapt to eco-friendly practices such as eco-friendly packaging and consumption of renewable energy, or else pressure groups might start a campaign against the brand. This could harm the reputation and image of Louis Vuitton.


Louis Vuitton PESTLE Analysis: Final Word

Louis Vuitton is a luxury fashion brand known for its expensive fashion products. A trunk maker established the brand almost a century ago in Paris. Mover the years, the brand expanded its operations and became a multinational brand.

Later Louis Vuitton diversified its products and shifted its focus from making luggage to the fashion industry. Louis Vuitton hired top designers and artists who could design fashionable clothes, jewelry, and bags for the brand.

The brand gained further recognition, so Louis Vuitton further expanded its operations. Currently, the brand offers several lines of products. It has more than five thousand stores in 50 countries across the globe.

In this article, we shed light on the operations of Louis Vuitton and discussed how it evolved over the years. Moreover, we also conducted the PESTLE analysis of the fashion brand to see how various political, social, environmental, economic, technological, and legal factors impact the operations of Louis Vuitton.

The PESTLE analysis framework helped us highlight the external factors that impact the operations of Louis Vuitton. If you enjoyed reading this article and want to learn how to conduct a PESTLE analysis, look at more examples.

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