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PDF File Viewer and Reader - Read and Edit your PDF Documents. Simple PDF Reader App. PDF Converter - Reader for PDF. It's called vertical integration, and it's a practice that dates back to the s, when steel magnate Henri Recamier married into the Vuitton family and became the first outsider to take over the business. Recamier came up with a solution. From "Bargain Fever":Nixing that greedy retail middleman — in other words, opening wholly owned stores or controlling concessions — would mean Vuitton could keep that money for itself.
So that's what Recamier did. Ellwood writes that vertical integration means Vuitton not only owns its own factories, but the company also leases the space it uses for the LV mini boutiques you see on the selling floor of various department stores. Therefore, Vuitton can control the actual manufacturing of its products if a certain handbag isn't selling, it can decrease production of that handbag and it can staff and operate those mini boutiques directly. So LV never sells its products wholesale to a department store, which means the department store can't sell LV's products for a sale price.
Here's Ellwood's simple explanation of why vertical integration led to success for LV:As Recamier had realized forty years before, the equation for success at full price was simple: Controlling the channel meant you controlled the price. Without a middleman, margins are higher, offering a plumper profit cushion during downturns. This practice also confers exclusivity, since you can buy a given product only from an authorized dealer where price is fixed.
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