Louis Vuitton invests its future in former seller of gas

By Andrew Gomes
Advertiser Staff Writer

When Louis Vuitton Hawai'i's chief executive Gary Hahn decided to retire at the end of this month, he never imagined that a former Exxon manager would be selected to fill his shoes.

As outgoing Louis Vuitton's Hawai'i chief executive Gary Hahn and successor Hiroaki Nakamura discuss the change of guard at the luxury goods retailer, Hahn gazes out the 14th-floor window of the Louis Vuitton offices in the Waikiki Trade Center. After 40 years in retailing, Hahn is contemplating the joys of retirement that lurk on the horizon. Meanwhile, Nakamura, formerly of Exxon, is looking forward to applying what he has learned about customer service to a very different kind of retail establishment. Jeff Widener • The Honolulu Advertiser

Hiroaki Nakamura, a 14-year veteran of the petroleum company in Japan, has been on the Louis Vuitton management fast track for the past 14 months. Now he will oversee about 250 employees at six Louis Vuitton stores, two Celine Paris stores and two Loewe stores in the Islands.

The leadership change comes at a crucial time. The tony retailer derives some of its highest sales in Hawai'i. But much of its revenue comes from the Japanese tourist market, and arrivals and spending levels of these visitors are shaky.

The situation, fueled by a weak yen and cheaper trips closer to Japan, poses challenges for Louis Vuitton as well as other upscale fashion retailers with outlets in Hawai'i whose sales depend largely on tourists.

Nakamura, in making the recent transition from refined oil to refined luxury apparel, may appear to be an unlikely replacement for Hahn. But Hahn, a 40-year veteran of retailing, believes that Nakamura is perfect for the job.

That's because gasoline sales in Japan are driven by customer service — not unlike the sale of handbags, clothing and luggage by Louis Vuitton.

At Exxon, Nakamura was in sales and consulting. He worked on the wholesale side of the business, helping dealers improve their sales. He said that in Japan gasoline sales are driven first by customer service, followed by location, then price.

Nakamura, 38, became interested in the luxury goods industry about six years ago while earning a degree in multinational management from The Wharton School of the University of Pennsylvania.

"Luxury goods are a purely, purely global product," he said. "Anywhere you go, you see the same value. A Louis Vuitton bag has the same value in North America, Japan, Europe. It was very, very interesting."

Nakamura also said he found it exciting to work for a company fulfilling people's fashion dreams — far more glamorous than helping Exxon dealers sell gasoline.

His experience with customer service and his master's degree led to a position with Louis Vuitton in Tokyo in March 2000. After six months of training, he rose from store manager to group manager of eight stores. He had worked for the company just long enough (one year) to qualify for an overseas work visa when Hahn announced his intent to retire.

"Suddenly, I was very fortunate," Nakamura said.

Hahn, 64, said that after more than 40 years in retailing it was time to wrap up his career, which included positions at the Broadway and May department store chains on the Mainland before joining Duty Free Shoppers in 1974.

DFS promoted Hahn in 1991 to vice president of Hawai'i stores, the company's largest operation. In 1994, two years before LVMH Moet-Hennessy Louis Vuitton acquired DFS, Louis Vuitton Hawai'i appointed Hahn to its top post as chief operating officer.

During his seven-plus-year tenure, Hahn oversaw a doubling of Louis Vuitton's local presence, from three stores to six.

From 1993 to 1997, Louis Vuitton's flagship location at the Gump Building in Waikiki was the company's No. 1 store in sales volume. It finished second in 1998 and 1999 to a new store in Paris, before reclaiming the top spot among 284 stores last year.

Also, Louis Vuitton's store at Ala Moana Center has produced the highest annual sales per square foot at the mall since 1993.

Hahn will turn over the operation in good shape, but notes: "It's a fragile business. We're dependent on Japanese tourism. We're dependent on the yen. There's a lot of great competition out there for visitors, like Las Vegas and Korea."

In May, the number of Japanese visitor arrivals was down 7.6 percent. For the year through May, the number was down 4.2 percent. The yen's value to the dollar is off about 18 percent compared to this time last year.

Taka Kono, president of Honolulu-based market research firm Japan Report, said that if the downward trend continues, it could mean a 7 percent to 9 percent decrease for the year.

Hahn, who noted that Kono is usually one of the more upbeat forecasters of Japanese tourism here, is concerned about the market but confident in Nakamura's ability to handle the challenge.

As Nakamura takes over, Louis Vuitton's plan in Hawai'i will be to re-establish a store on Kaua'i within the next three years and expand the Ala Moana store possibly with other LVMH brands such as DKNY.

Nakamura will focus on customer service, pricing and atmosphere, as well as on generating more business among Mainland visitors and local residents.

"We can't control the economy of other countries, and that means we can't control the sales from tourists," he said.

Nakamura will move here with his wife, Kayoko, and 6-year-old daughter, Noel. Hahn, who is from York, Pa., will continue to live in Hawai'i with his wife. He plans to do consulting work for at least a year, spend more time with his family and improve his golf game.

Hahn has served as an officer of the Waikiki/O'ahu Visitors Association. He co-founded the French Festival in 1997 and was named Retail Merchants of Hawai'i's outstanding retailer for 2000.

Nakamura will likely take Hahn's place on several boards including the Waikiki Improvement Association, Retail Merchants of Hawai'i and Ala Moana Merchants Association. Hahn will probably stay on as a director of Hawai'i Theatre Center.

Andrew Gomes can be reached by phone at 525-8065, or by e-mail at agomes@honoluluadvertiser. com