Why Louis Vuitton Needs Richard Prince

Lauren Goldstein Crowe is unimpressed with my defense of Richard Prince's new handbag line for Louis Vuitton, claiming that "Vuitton is going too far from its roots" and wondering whether this handbag line might not be financially disastrous for the fashion house. The answer, I think, is that it won't be – and that the criterion of financial success, here, is not necessarily the obvious one (sales).

Remember that the most valuable thing that any luxury-goods house owns is its brand. The success of the Marc Jacobs – Richard Prince collaboration should be measured not by the number of genuine Richard Prince handbags sold, but rather by the degree to which the existence of those handbags has increased the value of the Louis Vuitton brand.

Think back to Gucci in the 1970s, when the erstwhile luxury brand licensed itself out to dozens of ill-advised mass-market ventures in an attempt to boost sales; the result, inevitably, was bankruptcy. Sometimes, increasing sales can devalue a brand so much that it becomes worthless. And the converse is also true: launching an avant-garde handbag line which nobody wants to buy can actually bolster the reputation, and therefore the value, of the brand.

Lauren should know this better than anyone, since she's been covering the couture industry for years. Couture, of course, has never been profitable: it's a way of building a valuable brand, which can then be slapped onto the real money-makers: perfumes and handbags and sunglasses and the like.

For years, it has been perfectly acceptable to send unwearably improbable clothes down the catwalk. If Jean-Paul Gaultier, say, shows something weird and gets lots of press for it, then that only serves to boost the sales of his perfumes and his jeans line. The interesting thing about the Richard Prince handbags is that until now, fashion houses have jealously prevented their cash cows – the handbag lines – from venturing too far into the realm of the outré. After all, if no one buys an unwearable dress, that's fine, it wasn't designed to make money. But if no one buys an ugly handbag, then that's real potential profits down the drain.

But here's the thing: Louis Vuitton already has an extremely well-established and very profitable handbag line. The Richard Prince bags won't replace the extant Vuitton bags. Rather, they'll give an edgy glamour to the Vuitton brand which it does rather need.

Lauren asks me whether I would by a Richard Prince bag: no, of course I wouldn't. And she asks whether "management shouldn't be taking more care with its cash cow" – by which I assume she means the Louis Vuitton handbag line. Maybe that's exactly what they are doing. Vuitton is in a difficult position: it's on every street corner in Japan, which means that it's the dominant behemoth whose market share all the other brands want to eat into. The worst thing it can do, in such a context, is allow itself to get stale: it has to be ahead of the curve, in order to keep its entire inventory desirable. The Prince bags serve that purpose: so long as Vuitton is putting out stuff like that, no one is going to consider the brand to be passé.

In fashion, complacency is death. Vuitton can't stay close to its roots and maintain its present level of sales: if the brand isn't changing, then it's dying. A strategy of "we do certain things incredibly well" might work for a niche house; it can't work for a brand the size of Louis Vuitton. Mark Jacobs, in bringing in Richard Prince, is trying to keep the Vuitton brand vibrant and relevant. The measure of his success will not be the sales of Richard Prince bags in Vuitton stores: the true measure of his success will be the sales of fake Richard Prince bags on Canal Street.