Longchamp’s Le Pliage is one of the fashion world’s most successful products, a cultural icon across the globe. But managing the low-priced, nylon handbag is challenging as Longchamp tries to move its brand upmarket into higher-priced, luxury leather goods. Senior Lecturer Jill Avery discusses the balancing act of cherishing the heritage of an established brand against the need to look forward and grow in the face of a rapidly changing industry.
Brian Kenny: Here’s an icebreaker question for your next cocktail party: What do horses and handbags have in common? The answer? Longchamp. Let me explain.
Longchamp racetrack outside of Paris is a premier horse racing venue. It happened to be on the same street as the tobacco shop where Jean Cassegrain began making high end leather-wrapped pipes that became very popular with GIs passing through the city during the war. Inspired by the vibrancy and beauty of the racetrack, he adopted the name, which means long fields, for his burgeoning business. Fast forward 60 years, and Longchamp is a major player in the $4 billion industry of luxury handbags, where competition is fierce and growth hard to come by. It’s a competition of thoroughbreds. Today, we will hear from Professor Jill J. Avery about her case entitled Longchamp. I’m your host, Brian Kenny, and you’re listening to Cold Call.
Jill Avery is a senior lecturer in the Marketing Unit at Harvard Business School, and an expert on brand management and customer relationship management. Before coming to HBS she managed several world class brands herself, the likes of Gillette, Braun, Sam Adams, and AT&T. Jill, thanks for joining us today.
Jill Avery: It’s my pleasure.
Kenny: It’s sort of a case about contrasts. Luxury versus accessible. Retail versus wholesale. History versus forward looking. I’d love to tease some of that out in our conversation today. If you can just set the case up for us. Who’s the protagonist and what’s on their mind?
Avery: We have two protagonists here, sister and brother, and they are the grandchildren of the founder of Longchamp. We have Jean Cassegrain, who is the chief executive officer, and his sister Sophie Delafontaine, who is artistic director. They work together to run the company.
The case begins as they nervously await buyers. They are about to present their spring and summer collection. This is a big moment for any fashion brand. The future hangs in the balance, and they’re waiting for the buyers to decide whether this collection will fly. It’s a moment in time where they’re both looking back at the heritage of the company that their grandfather founded, but also looking forward. They have ambitious growth goals. They’re trying to grow the company by double digits, but they’re in an industry of slow growth. They’re facing encroaching competition from the Americans. Accessible luxury brands like Tory Birch, Michael Kors, Coach are encroaching onto their territory. That’s making their brand position feel a little crowded in the marketplace.
Kenny: Why did you choose to write about Longchamp aside from the fact that you get to go to Paris to write the case?
Avery: Life is tough. One day my daughter, a teenager in high school, came home from school and said, “Mom, can I get a Longchamp bag?” I thought, “Oh my goodness. How does my teenage daughter know about one of the world’s best luxury brands?” I thought it was so interesting that someone so young could be interested in a brand that had so much meaning and accessibility for me at my age. It made me start thinking about Longchamp and how iconic its Le Pliage bag had become. The fact that teenagers were finding it to be an “it” bag, that I, as a mother, was using it, and that even my own mother was attracted to the brand, was interesting. Usually we don’t see brands that have that broad appeal across social dimensions.
“ACCESSIBLE LUXURY LOOKS LIKE LUXURY, BUT IT ACTUALLY IS FUNDAMENTALLY DIFFERENT”
Kenny: Spanning the generations—that’s really interesting. The history of the company was interesting to me as well, because they didn’t start out making handbags.
Avery:: Longchamp has a long and storied tradition. They are a French luxury brand, and very much steeped in the tradition and heritage of artisan manufacturing and their French heritage. It was started as a brand in the post-World War II period in Paris. As you mentioned in your opening, the Cassegrain’s grandfather, also named Jean, opened a cigar shop and found that there was a taste for luxury in the post-war environment. He began wrapping his pipes in beautiful leather as a way to bring luxury to the smoking category. He used the best materials and the finest craftsmanship to build the pipe covers.
He eventually branched out into small leather goods, and also caught the wave of international travel, and introduced luggage and travel goods. He was one of the first retailers to open a shop in Paris’s Orly airport, and also featured his goods on some of the transatlantic ships making trips to America. In the 1970s he branched out into women’s handbags, which became an instant success in some of the Asian countries, particularly Japan and Hong Kong.
The company’s real breakthrough came in 1993 when his son, Philippe, introduced Le Pliage, a nylon handbag for women that featured a truly innovative origami-like folding design, which made it incredibly practical but also quite fashionable because it bore the Longchamp brand and featured a leather handle and meticulous craftsmanship. This was a product that immediately caught on with schoolgirls and became an “it” bag during the early and mid-1990s.
Kenny: This is a family-owned business, now the third generation. Does that create a difficult dynamic for them as a family? You worked with them when you wrote the case.
Avery: They’re an amazing family. They have grown up in the company. Both of their parents are still very actively involved. They live and breathe Longchamp. The brother and sister pair that are currently working the company work extremely well together. I think what I found most interesting was the fact that it being a family business allows them to take a long-term perspective. Very different from some of the publicly traded companies that I’ve worked with. This is a management team that thinks in generations, not in quarters. It gives them a much different perspective. They do things that are right for the future. They really think about their brand as an asset to be protected and to be nurtured. That affects everything that they do. When they think about strategy, they’re cautious. They’re slow, they’re steady. They take risks, but they’re measured risks, and they’re really about making sure they deliver the company, in the future, to the next generation in a stronger position than they were handed when they took over.
Kenny: You had a great quote by Jean Cassegrain in the case, where he says, “Even though everything has evolved, nothing has changed.”
Avery: Yes, and that’s where we find ourselves at the time of the case. We’re looking back and we’re cherishing the heritage of this brand that has been built up over decades, but also looking forward in a rapidly changing industry. How do we marry the past with the future, and what do we need to do in the present to make sure that we’re true to the heritage that our grandfather started, but also true to consumers’ desires and needs in the future?
Kenny: This is a very competitive space. Can you describe this luxury handbag space?
Avery: Luxury accessories are definitely on the upswing. This is a market that has had a lot of attention and has changed in very fundamental ways over the past decade in particular. Luxury accessories used to be an afterthought. They used to be purely functional. You would carry a handbag, wear a pair of shoes, and put on a scarf, for functional reasons. Over the last decade luxury accessories have really taken on a life of their own. They’ve become much more fashion forward. A woman, now, has multiple handbags, multiple pairs of shoes, multiple scarves, each one expressing a different perspective about her and a different piece of her identity. It’s almost been an anthropological shift, where we’ve moved from function to fashion.
At the same time, we’ve seen lots of competitors come into the space. Traditionally, particularly in leather making, there were specialty houses, companies that were skilled in choosing the right materials, selecting the very best leather, and carefully and meticulously crafting that into beautiful products. Today, we have literally every fashion brand in the leather space. People who have started in soft goods, ready-to-wear fashion, have moved into handbags, and shoes, and other accessory categories. It’s getting a lot more crowded. The traditions are falling by the wayside for many of these new companies who are imitating but not replicating the craftsmanship of the true leather makers.
“THIS IS A MANAGEMENT TEAM THAT THINKS IN GENERATIONS, NOT IN QUARTERS. IT GIVES THEM A MUCH DIFFERENT PERSPECTIVE.”
Kenny: Does that constitute the accessible luxury category? They’re sort of mass producing things that have a brand, but they’re not doing it in a way that’s really consistent with the tradition of luxury goods.
Avery: I think accessible luxury is accessible on two parts. It’s accessible from a price perspective. Accessible luxury products are priced lower than traditional luxury. They’re also accessible from a distribution standpoint. They’re widely available, distributed widely, loose restrictions on distribution, lots of licensing opportunities. Consumers are able to buy into these brands … much more than they would for traditional brands. What you’re seeing the accessible luxury brands do is borrow the codes of high luxury, of traditional luxury, but shortcut some of the traditions and the processes, the materials, the workmanship, the artisanry of traditional luxury. Accessible luxury looks like luxury, but it actually is fundamentally different, and that’s what enables them to have a lower cost base and therefore support lower pricing.
Kenny: Longchamp did it differently with their Le Pliage. They’ve been able to find an accessible product that still holds true to the traditions that the company had.
Avery: Le Pliage is really interesting. It’s almost a paradox in itself. It’s a luxury product at a low price. It’s priced at about 55 euros, much lower than the rest of Longchamp’s line, but meticulously crafted in their own workshops. It’s beautifully constructed. It’s functional and fashionable. It’s chic and timeless. It’s one of these products that has become an icon and has lived on through the ages.
The challenge with the product for Longchamp is it tends to anchor the brand in that accessible luxury space. Its lower price point, its wider accessibility, makes the brand be perceived as more of an accessible luxury brand than Jean and Sophie would like the brand to be. Part of their goal for growth is to move the brand closer to traditional luxury, to higher luxury, to what they call optimistic luxury, moving it away from the accessible luxury space. Every time they make moves in that direction, the success of Le Pliage pulls them back down closer to accessible luxury.
Kenny: Is there any disagreement in the family about (Le Pliage)? If they really went full bore with it, they could make all the profit that they need off of it, but there seems to be a tension there.
Avery: We definitely had some great conversations when I was in Paris about unleashing Le Pliage. A quick way to grow the company, if you want to achieve that double-digit growth, is to unleash some of the restrictions on Le Pliage. We could distribute Le Pliage more widely. We could license Le Pliage for other products. We talked about foldable shoes, or foldable T-shirts, or opening Le Pliage-only shops, and really unleashing this brand that has tremendous energy and excitement behind it. But every time we got too excited about that, we started to worry about what would be the impact of Le Pliage on Longchamp?
When you talk to many people outside of France, in particular, about Longchamp, they talk about Le Pliage. I think the challenge for the brand is keeping Le Pliage going and leveraging its strength and excitement, but really refocusing customers’ attention on the core Longchamp brand and its leather handbag collection and other goods.
Kenny: You could almost have a two-tiered strategy where you’ve got the very exclusive Longchamp luxury products on one tier, and Le Pliage on a separate tier.
Avery: Right. Structurally, how does that work? Le Pliage benefits greatly from its association with the Longchamp brand. Longchamp benefits greatly from its association with Le Pliage. Any kind of separation starts to feel uncomfortable. Le Pliage also hurts Longchamp to a certain extent, and perhaps Longchamp hurts Le Pliage to a certain extent. The degree of separation, how much separation is appropriate, is really the strategic struggle that the team is working through.
Kenny: I thought it was very interesting that they had started to move into adjacent areas. I’m thinking about fashion in particular and the way that that happened.
Avery: This really came out of a dilemma that Sophie noticed as she was merchandising Longchamp’s flagship stores. These are stores owned by the company. She felt, as she was merchandising them, that they felt lifeless, that they felt flat, that the shelves of handbags, and leather goods, and luggage were lacking a vitality that would make them more appealing. She wanted mannequins in the store, and she wanted mannequins to be able to wear clothing and present a full Longchamp lifestyle, so she dressed the mannequins, and that’s how the original ready-to-wear and shoe collections came into being.
Kenny: You can buy a whole matching ensemble, clothing, shoes, accessories.
Avery: Yes. Women’s ready-to-wear shoes. A lot of it focused on leather, but not necessarily. Presenting a full look for the collection so that a woman could imagine herself in a Longchamp lifestyle.
Kenny: What about the guys? There’s nothing for the guys at Longchamp?
“I THINK THEY CONTINUE TO STRUGGLE WITH THE OPPORTUNITIES AND CHALLENGES THAT ARE PRESENTED IN THE CASE”
Avery: Actually, there’s so much for men at Longchamp. Longchamp offers a full selection of men’s travel luggage, briefcases, wallets, small leather goods.
Kenny: You don’t have to give anything away, but any insights that you can share (about the case)?
Avery: I think they continue to struggle with the opportunities and challenges that are presented in the case. They have decided to keep Le Pliage within the Longchamp brand family, but they have extended the brand upwards with two exciting leather products, Le Pliage Heritage and Le Pliage Cuir. Cuir is a foldable leather version of Le Pliage, priced much higher. Heritage is a top-of-the-line, high priced leather handbag that has the same silhouette as Le Pliage. What they’re trying to do is stretch the meaning of the Le Pliage brand into those higher price points, and more importantly, into leather making and the quality of leather craftsmanship.
Kenny: I should point out that we’re recording this just shorty after Michael Kors announced that they’re closing numerous stores in the US, so it’s clearly a very competitive space and continues to be tumultuous.
Avery: Accessible luxury is growing rapidly as a category. It’s something that consumers are responding very positively to, but it’s often populated by brands that exhibit fad lifestyles. These are short-lived brands that shoot up in sales very, very, quickly, but also tend to fall hard when they fall out of favor. This is why Longchamp doesn’t want to be in this category. Longchamp is a brand for the ages. They want to be a brand that’s as relevant tomorrow as they are today. They are fighting any kind of fad lifecycle for their brand and trying to maintain it for the longer term.
Kenny: You can find the Longchamp case along with thousands of others in the HBS case collection at HBR.org.