Ben Gilbert: preference

Transcript context

…Unlike the jewelry business, which also can be a great business and LVMH has gotten into, these things are leather. There are a lot of cows out there. People eat a lot of beef. Right, it's a renewable resource. Unlike the diamonds, which the earth has only made a certain amount of and the earth doesn't move super fast to make more diamonds, the earth moves quite fast to make more leather. The interesting thing about you can justify the high price point, the opposite is also true, where because there are things that you use so often, you can justify buying more of them. Coach commissioned this research in 2000, I believe, that the average American woman who purchased a handbag, purchased two new handbags per year. By 2004, that number was four new handbags per year. It is an expensive recurring purchase that requires really low overhead to sell. It's wild, and the margin structure is amazing. One final fact on handbags, at Louis Vuitton's immense four-floor global store in Tokyo, 40% of all sales are made in the first room which sells only monogrammed handbags, wallets, and other small leather goods. It very quickly became the product of Louis Vuitton. But Louis Vuitton is a quarter of the entire empire even today with the 75 other brands. The whole thing revolves around this nice, extremely branded leather handbag. One more telling point to really illustrate this. Way back at the beginning of the whole empire, there's Dior. It's a fashion house. It's about showing off the newest season’s clothing. It's couture. They're walking down the runway. It's custom-made. The shows that people would go to were originally to show off what customers could buy. Customers would take notice of it. Financiers would be there to get the demand signal from the customers to be able to fund the manufacturers to spin them up. Today, they don't really create this clothing for many people or anyone to order. They do it to show off a branding event. Come to the Louis Vuitton show and you'll be immersed in a Louis Vuitton experience. We don't really expect you to buy any of the things on the models, except all the models are carrying our accessories. No matter what crazy, cool clothes they're wearing, a person is singing, or a crazy light show is happening, I will tell you, if you've not watched a fashion show in a long time, go to Louis Vuitton's website and just watch a video of what a show is today. It is a super high-production, crazy event. It's like Monday Night Football.…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.