Tapping into Culture: A Louis Vuitton Autonomous Vehicle Service
By Grayson Brulte | May 24, 2023
Every day on the roads of San Francisco, CA, Las Vegas, NV, Phoenix, AZ and Austin, TX fully autonomous vehicles are chauffeuring passengers around with no driver behind the wheel.
The dawn of full autonomy is upon us, but up until now the final business model has yet to be finalized. Today’s business model is built around moving passengers from Point A To Point B in a safe and reliable manner. Tomorrow’s business model will be one that is built around brands, experiences and culture.
Since 1987, LVMH has deployed a captive vertically integrated innovative business model that has defined culture and ushered in global trends anchored by their 75 prestigious brands. It’s this business model that will enable LVMH to inaugurate a Louis Vuitton autonomous vehicle service in select markets around the world.
With €79 billion in 2022 revenues and a gross profit margin of 68.4%, LVMH has the financial wherewithal to propose ambitious projects that further broadens the group’s brands into popular culture. LVMH has a rich history of doing just that, as after the group’s $15.8 billion acquisition of Tiffany & Co. in January 2021, LVMH expanded the Tiffany brand into NFTs with the introduction of 250 custom jewel-encrusted pendants for holders of CryptoPunks NFTs at a price of $50,000 a piece. Followed by the collaboration with Nike for the Nike/Tiffany Air Force 1 1837 shoe.
The introduction of NFTs and Nike Air Force 1 sneakers were a bold move led in-part by Alexandre Arnault. Mr. Arnault understands culture and partnerships and he has clearly demonstrated the expertise from his time leading luxury luggage maker RIMOWA where the brand collaborated with Off-White, Fendi, Supreme, and LA based artist Alex Israel.
A collaboration with cult streetwear brand Supreme is not considered a luxury product, nor is an NFT or a pair of Nike sneakers. Instead they are considered a part of culture and that’s exactly where LVMH has had its finger on the pulse for years. This is further evidenced with the recent appointment of Pharrell as the new Men’s Creative Director of Louis Vuitton. Once again, LVMH has further embedded itself into the cultural zeitgeist.
One of the next big rising trends in society are autonomous vehicles. As autonomous vehicles expand beyond California, Arizona, Nevada and Texas, they will become part of cultural zeitgeist.
When autonomous vehicles become ingrained in society and part of the culture, the only thing to differentiate them from one another will be the experience factor and this is where LVMH is poised to prosper. At its core, LVMH is an experience business that is vertically integrated with luxury product offerings.
One of the next luxury product offerings, in our opinion, should be a Louis Vuitton Autonomous Vehicle Service. A Louis Vuitton Autonomous Vehicle interior designed by Peter Marino would further extend the group’s reach into the cultural zeitgeist while accelerating the revenue growth of LVMH’s selective retailing & other business group.
The beauty of this approach is that Mr. Marino and LVMH would not design the vehicle nor the technical hardware, instead they would simply follow the model that Mr. Alexandre Arnault has laid out with RIMOWA and Tiffany & Co. and partner with leading autonomous vehicle providers in each market to provide the service, while LVMH designs the interior and passenger experience. This approach would limit LVMH’s capital expenditure and allow the group to focus on their core expertise of luxury goods and experiences.
Today, the selective retailing & other business group accounts for 31% of revenue in the United States, 12% in Europe (ex-France) and 10% of revenue in Asia. All of these markets currently have autonomous vehicles operating on public roads and a favorable regulatory environment.
As part of the selective retailing & other business group, LVMH houses its hotel business — LVMH Hotel Management which consists of Cheval Blanc and the London-based luxury hotel group Belmond, which was acquired in 2018.
It’s this group within the group that stands to benefit the most from a Louis Vuitton Autonomous Vehicle Service, as an autonomous vehicle service would enhance the guest’s experience to and from the airport. For example, a guest staying at The Splendido a Belmond Hotel in Portofino, Italy, a roughly 2 hour and 30 minute drive from Milan could utilize this service.
Imagine arriving at the Malpensa Airport in Milan and being whisked into a Louis Vuitton Autonomous Vehicle that is provisioned with a perfectly chilled bottle of Dom Pérignon or Krug waiting for you to enjoy on the drive to the hotel?
When you are relaxing and enjoying your champagne, at some point during your ride you will be offered the opportunity to purchase an exclusive bespoke handbag that can only be purchased during that ride on your way to that particular hotel.
Upon your arrival at The Splendido you will receive your bespoke handbag presented in beautiful packaging inspired by the Italian Riviera. When this moment happens, LVMH will just have ushered in the world’s most luxurious and profitable autonomous vehicle ride in history.
With an average operating margin of 40% on fashion and leather goods and a classic bespoke bag costing north of $10,000, this experience netted LVMH $6,000 in profit. More importantly, it will provide LVMH, led by Mr. Bernard Arnault, the world’s most exclusive handbag thus dethroning the iconic Hermès Birkin Bag.
This is the future and it’s coming, but it’s just the first step in terms of where LVMH will be able to take an autonomous vehicle service. Would you sign up to ride in a Louis Vuitton autonomous vehicle and purchase the bag? We bet you will. After all, we all want to be part of cultural zeitgeist.