How Longchamp can Stay Relevant in the Changing World of Luxury Fashion

This was written for a class assignment.

Situation Analysis

Longchamp is a French luxury goods company, mainly known for their leather goods and handbags. In the context of this case study, there are some key internal and external trends that might affect the future of the brand and its products.
Internally, Longchamp has a hit product with Le Pliage, a packable nylon bag which is more affordable than many of their other products. But the brand has struggled to push entry-level buyers of the bag into purchasing more traditional leather goods from the brand, and the family is worried about overexposing the product and killing its current golden goose. In addition, the family feels the need to expand beyond their comfort zone into new product categories in a push to increase sales of their iconic bags. There is disagreement among the family, even, about how to expand that focus, and how much to stick to values of artisanship, fair pricing, and French heritage.
Externally, the world of luxury is changing. The handbag market is a lot more diverse than it was early in the life of Longchamp, with the passing on of handbags from parent to child no longer a relevant entrypoint into the brand. As an added challenge, new American brands are adding more options for consumers looking for handbags in the same vein as those of Longchamp, making standing out in the market more difficult. Finally, Longchamp also has to now decide which price segment they want to focus on: with “affordable luxury” brands competing with entry-level products like Le Pliage and traditional luxury brands offering more competition, Longchamp has to either pick a lane, or as Beraud expressed in the case study, be bold by owning a middle ground where there seemingly isn’t much competition.

Assumptions

Some key assumptions are affecting the family’s opinions on how to move forward with the Longchamp brand.

One assumption, expressed by Beraud, is that brand-building is something that can only be done in brick and mortar stores. The hesitancy to embrace e-commerce, is a missed opportunity to reach consumers who might not otherwise be able to access Longchamp as a brand, whether that be customers outside of major shopping destinations or even younger consumers who have entire closets filled with online purchases.

Another assumption is that leather goods should be the primary focus of Longchamp as a brand. While understandable given the brand’s legacy, this limits ambitions by focusing on the sales of a relatively infrequent purchase with tons of competition at every price point. If even ready-to-wear is thought of as an extension of leather handbags, how is the brand supposed to create products for audiences who might not currently want or need one?

Problem Statement

The crux of the problem for Longchamp is this: how can the brand continue its growth in the future, while not devaluing the brand values and Le Pliage?

Evaluation of alternatives

Based on the information in the case study, there are a few options:

Use Le Pliage as a jumping off point for a more affordable Longchamp diffusion brand

This has the advantage of allowing Longchamp to more comfortably sell the products it wants — high quality leather goods and related fashion — while also giving it true access to the affordable luxury and the customer base that comes with, along with whole new possibilities for products to sell. However, balancing affordable luxury while also keeping Le Pliage as a great-equalizer of a bag may be difficult — some buyers may not want to buy the bag if they are aware it’s from Longchamp’s “cheaper” brand. This is in addition to the challenge of trying to create affordable products at the handcrafted level of quality Longchamp is used to. A diffusion brand may also step on Longchamp’s message of being a luxury brand for the everyday person, by dividing more affordable and more luxury goods into two different lines.

Embracing new product lines, including with licensing

This has the advantage of bringing Longchamp to a broader audience while keeping the brand’s luxury image. With more products, there can also be more brand-building, giving Longchamp lovers not just bags, ready-to-wear and shoes, but also sunglasses, makeup, fragrances, and other products in their everyday life. But, the only way to expand in this way is to partner, especially when entering lines like makeup, sunglasses, and fragrances. This means the brand will lose its strong control, even if it finds partners that are willing to meet their standards. Also, since not all products will be made by Longchamp, its ideals of fair pricing and quality craftsmanship may become forgotten in favor of their additional presence in new markets.

Expanding distribution to include more wholesale, outlet, and e-commerce

This solution has the advantage of giving Longchamp a wide footprint while also giving it infrastructure it can use for decisions down the line — if it wishes to create new product lines, it will now have more places to sell those products, for example. The expanded distribution will also allow Longchamp to reach consumers it couldn’t reach as easily before, with outlet stores in suburban areas, wholesale distribution to luxury stores with wide reach, and e-commerce to fill in gaps elsewhere. The biggest downsides of this approach are a loss of control when it comes to brand building — wholesalers may not want to build the Longchamp image in the same way as the brand itself, and e-commerce may not attach people to the Longchamp brand as much as seeing the whole brand story in a flagship location.

Recommendation

For me, the solution is obvious — focus on expanding distribution by increasing wholesaling, expanding outlet stores, and aggressively pushing into e-commerce. This has the most benefits for Longchamp while having the least harmful downsides: the brand gets to keep its image and values intact, with the level of product control that the family is used to, while also allowing new markets and audiences to experience Longchamp. While the downsides include a lack of control after wholesaling, and possibly having to work harder to brand build in an e-commerce environment, this shouldn’t dissuade Longchamp from taking this approach. There is lots of upside to expanding reach, especially if the brand is focused on growth in a sustainable way. Worst case scenario, even if the expanded footprint doesn’t reach the level of sustained growth the brand wants, Longchamp now has the robust infrastructure to try the other two approaches (the diffusion brand, licensing) without having to worry that a lack of distribution would hamper those experiments