New Book on the Luxury Goods Industry Supplies Food for Thought

Last Updated Aug 27, 2007 2:11 PM EDT

New Book on the Luxury Goods Industry Supplies Food for ThoughtThis week BNET is featuring a list of underrated business books. The recommendations are noteworthy for their diversity -- we've got everything from the eye-opening and incredibly sad "Nickel and Dimed in America" by Barbara Ehrenreich, to the fast and fun insights of Malcolm Gladwell's "The Tipping Point." If you're in the market for more reads relevant to managers, this week the business press has another suggestion for you: Dana Thomas' "Deluxe: How Luxury Lost Its Luster.''

The book tells the story of how luxury brands like Louis Vuitton, Cartier and Christian Dior went from being purveyors of genuinely luxurious products, hand-crafted from the finest materials and available only to the very richest, to selling a logo and a dream attached to mass produced goods for the mass market. Bloomberg.com calls the book "lively and incisive."

The NY Times, in its review, summarizes the changes in the luxury goods industry,

"in the last decades of the 20th century, when a new breed of luxury purveyor, epitomized by Bernard Arnault, now the chairman and chief executive of the multibillion-dollar LVMH Moët Hennessy Louis Vuitton conglomerate, first came on the scene. "A businessman, not a fashion person," Arnault realized that the mystique of the great brand names represented an invaluable -- and historically underexploited -- asset. Identifying the luxury sector as "the only area in which it is possible to make luxury margins," Arnault snapped up Dior, Vuitton and a clutch of other star brands. Then, by spending hundreds of millions on advertising, dressing celebrities for the red carpet, "splashing the logo on everything from handbags to bikinis," and pushing product in duty-free stores and flagship boutiques all around the world, he turned these brands into objects of global consumer desire. In so doing, Arnault changed "the course of luxury forever.
Arnault's strategy has been profitable. But if people purchase luxury goods for their ability to telegraph their owner's social position, rather than for the product itself, then what is the future of these products if they no longer reliably signal anything about their owners. If middle class suburbanites can buy Louis Vuitton, will Louis Vuitton lose the cache that has become its most valuable asset? Thomas' exploration of these issues and the rise of luxury's new business model (Underexploited assets? A core strategy revamp? Increased profit margins through cost cutting?) is excellent food for thought for managers.

(Image of huge Louis Vuitton bags by MoonSoleil, CC 2.0)

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    Jessica lives in London where she works as a freelance writer with interests in green business and tech, management, and marketing.