Enjoy a 15% discount on all purchases until the 31st of March 2023 using the promo code EOFWEB22 at check out!

Luxury and Fashion Our global industry experts explore the key trends shaping consumer preferences that drive fashion and luxury, using timely insights to stay one step ahead of the latest innovations and business strategies.

LVMH’s Purchase of Rimowa Illustrates the Uncertainty of the Luxury Market

Jasmine Seng Profile Picture
Jasmine Seng Bio

2016 has been a bumpy year for the luxury market, plagued by the decline in luxury spending by Chinese tourists, plunging oil prices which have led to a major currency shake-up in Latin America and Russia, terrorism threats in traditional luxury markets like France, and further economic upheaval triggered by Brexit. Hermès International SCA has revised its annual sales growth target from 8% and Richemont SA announced a 13% decline in sales for the first five months into its financial year from March 2016. At a time when luxury companies are trying to stay afloat, Samsonite International SA kicked off the first quarter of 2016 with its US$1.8 billion acquisition of leading luxury luggage player, Tumi Holdings Inc. Just as Euromonitor International predicted for 2016, consolidation of brands would be imminent, with bigger players stepping in to resuscitate independent players, as the global slowdown in the luxury industry offers opportunities for cash-rich conglomerates to buy smaller competitors. On 4 October 2016, LVMH Moët Hennessy Louis Vuitton SA announced its purchase of an 80% stake in Rimowa GmbH.

Rimowa GmbH stands to gain from LVMH’s leadership in luxury goods



In a market that is becoming increasingly saturated, the impending exit strategy of Rimowa, starting with the initial purchase of an 80% stake by LVMH, reveals the company’s uncertainty in surviving in the luxury market alone. Moreover, the global luxury travel goods industry saw decline of 4% from 2014-2015 with Rimowa’s key region, Western Europe, facing an even sharper decline of 12%. With a gloomy outlook for the luxury market due to an increasingly volatile global economic situation, coupled with Samsonite’s acquisition of Tumi, Rimowa is in a vulnerable position.

It’s Rimowa’s Electronic Baggage Tag Technology that LVMH is after

LVMH may have paid less than the EUR640 million it paid for Rimowa if the luxury conglomerate had waited a little longer, due to the continued pressure on the luxury goods market. But seizing the opportunity allows LVMH to strengthen its reputation as a luxury house, and also strengthens its foothold in the luggage industry. The purchase of Rimowa allows LVMH to hedge its risk against uncertainties currently troubling the luxury industry.

Despite being the leader in bags and luggage due to the company’s extensive portfolio in bags, with brands like Louis Vuitton and Christian Dior, LVMH is still a far cry from Samsonite in luggage. With Samsonite’s acquisition of Tumi earlier in 2016, LVMH’s move with Rimowa is set to partially counter-balance Samsonite’s dominance in luggage. With watches and fine jewellery on decline, an additionof a luxury luggage player to its portfolio will allow LVMH to benefit from the rising number of affluent travellers.

However, the most important attraction of Rimowa is not its strong heritage and reputation as aluxury luggage player. It is its patented electronic baggage tag technology that LVMH wants. Rimowapioneered the electronic baggage tag launched in 2016, a game-changer that will shave time off for many travellers, allowing them to check in luggage faster, paving the way for the future of traveling. Currently, Rimowa is in partnership with Lufthansa Airlines to launch the Rimowa electronic tag. In the future, with more airlines and airports building facilities to support the use of electronic baggage tags, this is likely to become a cash cow for LVMH, as it sells the patent to other luggage manufacturers when the time comes for widespread adoption of electronic baggage tagging across the world.

Maintaining its reputation as a luxury house should remain key for LVMH

LVMH has been actively acquiring luxury brands and investing in upcoming brands through its investment arm, L Capital. The company should remain cautious in the brands it is adding to its portfolio. Diversification is important for LVMH in the highly unpredictable fashion world, where consumer preferences may be skewed to different brands at different points in time. However, LVMH should reassess the brands within its portfolio to ensure that they remain in line with its reputation as a luxury house.

Moving forward, LVMH should increase synergy amongst its brands, such as encouraging collaborations between its various brands. If Louis Vuitton could collaborate with designers like Christian Louboutin, the French fashion designer whose brand is not part of the LVMH Group, for Louis Vuitton’s Celebrating Monogram project, collaborations between brands within LVMH’s portfolio should also be considered. Collaborations between brands would serve the purpose of raising the profile of designers within the LVMH group, allowing it to build recognition in the fashion world. Most importantly, revenue generated from these special collections would add value to the luxury conglomerate’s sales performance as a whole.

Interested in more insights? Subscribe to our content

Latest Insights

Luxury and Fashion: What to Expect in 2023?

Fflur Roberts 01 March 2023

100% Optical 2023

Euromonitor International 31 January 2023

Shop Our Reports

Competitor Strategies in Personal Accessories

Personal accessories sales growth slowed in 2022, due to a high inflation environment, continuing COVID-19 restrictions in China, and the impact of the war in…

View Report

IFA 2022 Event Insights

This IFA 2022 Event Insights report unveils important product launches from one of the biggest trade shows for consumer electronics and appliances held annually…

View Report

Wellness as a Key Value Driver in Sportswear

Sportswear continued to outperform the overall industry in 2022, but a more challenging environment over the forecast period calls brands to shift their message…

View Report
Passport Our premier global market research database with detailed data and analysis on industries, companies, economies and consumers. Track existing and future opportunities to support critical decision-making across all functions within your organisation Learn More