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Louis Vuitton holds luxury crown

After several years of frugality, consumers now feel entitled to spend on luxury.

And Louis Vuitton has once again bagged the top spot as the world’s most valuable luxury brand in the seventh annual BrandZTM Top 100 Most Valuable Global Brands study commissioned by WPP Group and conducted by Millward Brown Optimor.

The study found luxury brands grew by 15 per cent in value over the last year.

With a value of $25.9 billion, Louis Vuitton’s value grew by seven per cent. Hermés, at number two in the luxury category with a brand value of $19.2 billion,  posted an increase of 61 per cent, gained the most places in the Top 100 ranking and is now 32nd globally, up 39 places. Hermés increased its operating income by 32.5 per cent to 885.2 million Euros ($1.2 billion) with sales growth of 18.3 per cent.

“Although shoppers have become smarter in the way that they choose brands – with considered rather than conspicuous purchasing – they are still determined to spend, but spend more wisely,” said Nick Cooper, MD of Millward Brown Optimor.

“Luxury is seen as a good investment, with people increasingly buying classic pieces rather than high fashion. Those who can afford it indulge – including young professionals who, increasingly unable to buy houses, are spending their disposable income on mid-tier luxury.”

With healthy demand for a little bit of luxury, brands expanded their presence with many opening new stores, engaging with e-commerce and conducting extensive advertising campaigns.

Prada was also boosted by strong sales growing by 21 per cent and making its debut in the luxury ranking with a value of $5.7 billion. The brand plans to add about 80 stores annually over the next three years. Many of these will be Prada brand stores, reflecting a general trend among luxury brands to assert tighter brand control by shifting away from licensing and franchising.

Quality craftsmanship, heritage and history are key factors of success for luxury brands. As a result many of the big brands such as Chanel, Louis Vuitton and Prada, are making a beeline for Britain’s wool, footwear and leather factories. The Made in Britain “label” has global appeal and has helped luxury brands like Burberry enjoy healthy sales in China and other fast-growth markets with expanding middle classes.

The 2012 ranking demonstrates the power of strong brands as a driver of new business growth but also as an insurance policy in hard times.

“Luxury businesses can embrace brand management as a critical competency for building long-term financial value,” added Cooper.

The Most Valuable Luxury Brands 2012

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