Judging by the endless crowd flowing into Louis Vuitton’s most recently opened, and largest, store in China on a simmering August day, the brand’s investment is already paying off.
“This is a beautiful store, and I love working here,” said Vicent Chen, supervisor of the new emporium at Plaza 66, a shopping mall on a fashionable stretch of Nanjing Road in Shanghai.
Chen was transferred here in late July from another Louis Vuitton boutique in the nearby city of Suzhou, one of 44 outlets in China, to work in the glittering four-story, Peter Marino-designed shop, the brand’s third in Shanghai.
“Chinese clients are familiar with Louis Vuitton watches,” Chen said, manning the watch department.
“They like the design of the Tambour models, but very few have technical knowledge about watches,” he said.
Best known for bags, leather goods and fashion accessories, Louis Vuitton, owned by the luxury group LVMH Moet Hennessy Louis Vuitton, has in the last two years taken giant steps to turn itself into a significant player in the watchmaking world, both by raising its visibility and by strengthening its technical capabilities.
The recent economic slowdown in the Chinese economy and the uncertainties in Europe, its most important markets, have not caused it to scale back its plans.
“Much of what we are doing today was decided three years ago,” Hamdi Chatti, Louis Vuitton’s head of watches and jewelry, said by telephone from Paris.
“Our long-term strategy is to establish ourselves as a high-end watchmaker,” Chatti said.
Chatti, who joined Louis Vuitton in 2010, brings much experience to the job, having previously been managing director of jewelry and watches at Montblanc, and before that chief executive of Harry Winston Rare Timepieces.
Louis Vuitton announced earlier this year that it would move its Swiss-based watch manufacture, which was opened in 2008, from the famous Jura watchmaking town La Chaux-de-Fonds to Meyrin, in the canton of Geneva, by the summer of 2013.
“Since Louis Vuitton launched its watchmaking activity in 2002, our aim has been to ensure that all our watches are assembled, controlled and developed in-house,” Chatti said.
“We already control sales, since all Louis Vuitton products are sold in our own stores,” he added.
The new manufacture will be located on a 6,500-square-meter site where an existing industrial structure of 3,500 square meters will be expanded and renovated at an estimated cost of 15 million to 25 million Swiss francs ($15.6 million to $26 million), as reported by the Swiss news media. “Geographically, Geneva is the place to be for Haute Horlogerie, and we must be there to obtain the Poincon de Geneve,” Chatti said.
The Poincon de Geneve, or Geneva Seal, established in 1886, is a prized hallmark for high-end watches bestowed by a commission operating under the authority of the Swiss education ministry, attesting both that the movement of the watch is produced within the Canton of Geneva and that it meets certain aesthetic and technical criteria.
The Geneva-based manufactures that are accorded the right to use it — and many watch fans — point to the seal as the ultimate symbol of quality.
Besides aiming to qualify for the Geneva Seal, Louis Vuitton plans to use its new premises to bring under one roof various specialist suppliers that it has acquired in the last two years, to advance its strategy of vertical integration.
Specifically, Louis Vuitton bought La Fabrique du Temps, a designer and builder of high-end movements, in July last year, followed by two dial makers, ArteCad and Leman Cadrans, in November 2011 and March this year.
“These acquisitions are about ensuring our independence,” Chatti said. “There are always shortages in Switzerland, and we need to make sure the supply we need is always there.”
With economic uncertainty in the air and a need to tightly control cost, availability and quality in the supply chain, the sort of vertical consolidation represented by the purchase of the two dial makers has become increasingly common in the Swiss watch industry.
The acquisition of La Fabrique du Temps, however, was more than just a defensive move. It added significant heft, in terms of both technique and originality, to Louis Vuitton’s in-house movement design capabilities.
La Fabrique du Temps was founded in 2007 by the master watchmakers Enrico Barbasini and Michel Navas, two of the three creators of the now-defunct BNB Concept, a cutting-edge designer and maker of complicated watch movements that collapsed in 2010, a victim of the global economic crisis. The third BNB partner, Mathias Buttet, was recruited after the collapse by Hublot, which is also an LVMH brand.
Since joining Louis Vuitton, Barbasini and Navas have helped the brand develop its Tambour Minute Repeater, a complicated chiming watch that has won respect from fans of horology for its technical quality and appealing aesthetics.
The minute repeater, which sells at prices from 250,000 to 520,000 euros ($312,000 to $650,000), represents a big step up into the top end of the market for the brand’s Tambour collection — originally introduced as a set of sporty, casual and women’s watches at prices averaging about 5,000 euros.
For a fashion brand like Louis Vuitton, with a watchmaking history spanning barely a decade, achieving credibility in the eyes of serious watch aficionados is a major challenge.
“We are targeting the watch and jewelry connoisseurs,” Chatti said. “To become an important player in watches, we must be comparable” to the established haute horlogerie brands that are now Louis Vuitton’s competitors.
In addition to fortifying its haute horlogerie credentials, Louis Vuitton has bolstered its watch marketing efforts, taking part in the Baselworld watch fair for the first time last year.
“Our participation in Baselworld is intended to increase media awareness of our models,” Chatti said.
What the effect of all this has been in financial terms is difficult to say since the brand does not publish watch sales figures. “We can only say that at Louis Vuitton, we have growth, but we do not communicate figures,” said Chatti. “Let’s just say that watches and jewelry are an important part of our growth.”
The International Herald Tribune