Longchamp bets on optimistic luxury
Longchamp, a Paris-based luxury leather goods maker known for its handbags, luggage and accessories, opened its first store in India at Delhi’s DLF Emporio mall last month. With sales of €566 million (about Rs.4,200 crore) in 2015, the brand witnessed a revenue increase in all the geographies it operates in—13% in Europe, the Middle East and Africa; 21% in the Americas; and 15% in Asia.
The firm was founded in 1948 by current chief executive Jean Cassegrain’s grandfather. On a recent visit to Delhi, the 51-year-old Cassegrain explained why the family-owned business will never go public. Edited excerpts:
Longchamp is nearly 70 years old. A successful, mid-sized, family-owned French luxury brand. Have you ever faced an acquisition threat? Do you plan to go public?
There are many family businesses bigger than us and still not public or part of a larger group. As far as we are concerned, my parents, my two siblings and I, all of us go to work every day at Longchamp. And we have no plans of getting a partner or going public. It works well as it is. As the Americans say, “if it ain’t broken, don’t fix it”.
Having said that, private equity (PE) firms are always on the lookout for companies. So there have been some advances but we are not interested. Being independent for a long time is both advantageous and disadvantageous. Luckily for us, the advantages have outweighed the disadvantages, so far.
We don’t have the pressure to deliver short-term results. If you’re owned by, say a PE firm, usually they look for returns within five years. So, if you don’t deliver in that time, the future is uncertain. If you’re on the stock market, you need to deliver as per the expectations of the market. As a private company, we don’t have any such short-term targets and that helps us focus on the business in the long run, for the next generation rather than the next quarter.
Your first store in Asia opened in 1979 in Hong Kong. What took you so long to come to India? What are your plans for the country?
I think this is one of the disadvantages of being a family-owned, medium-sized business. We have to develop the brand one step at a time and prioritize markets. India was not at the top of that list at that time. It is also difficult to launch a brand here due to the lack of luxury retail space. We had been looking for more than three years before we secured the space at DLF Emporio mall.
In the next 24 months, the least we want to do is to open a store in Mumbai. But I think we can do better and go to other cities such as Bengaluru and Chennai. We can also open some more stores in Delhi and Mumbai, but it all depends on the opportunities that we get.
How do you see the luxury market in India?
I took a flight this morning (Wednesday) from Mumbai to Delhi and I was reading your newspaper. There was a report in it which said that Indians are now buying more luxury goods at home rather than abroad. Now, we do have Indian customers coming to our stores in Europe but I think it is time to have Indian customers locally. It is important for us to build and develop the business in local markets because that is more stable. I think we have the opportunity in India to establish our brand.
What is affordable luxury? Is there a massification of luxury?
Affordable luxury is an expression that I don’t like much. There are a whole bunch of things put under that umbrella. Apple is affordable luxury and so is Starbucks. But more people in the world today are considering buying luxury products. A lot of growth in the luxury industry in the past decade is because the masses in China and South-East Asia have more disposable income.
What is Longchamp’s USP?
At Longchamp, we talk about optimistic luxury. What makes us different from the other luxury brands is that we look at things a little bit more optimistically. We are a little warmer and more joyful and colourful than the others. We have a touch of humour in our communications. And it reflects in our products too. We use bright, warm, happy colours like red, yellow, pink and designs that are more playful.
You will open your first men’s store in Paris this year. What took you so long?
When we started in 1948, the brand was masculine. We used to make smoking accessories like pipes, cigarette cases, tobacco pouches, etc. Then we started making wallets, bags and luggage for men. For the first 30-odd years, we only did men’s accessories. Sometime in the 1980s, our Japanese distributor pushed my father to make women’s bags. And then we realized that the market for women’s accessories was much bigger and more dynamic than that for men. And today, 80% of our products are women-centric.
So, we are opening the first dedicated men’s store in Paris right across the road from our flagship store for women. And if the experiment works, we will try it in the other markets as well.