By Casey Hall
Shanghai (Reuters) -Louis Vuitton’s latest Shanghai store is not your average luxury flagship. The 30 -meter store -shaped store “Louis” is invoiced as an experience and has an exhibition area and café on the Nanjing Road shopping strip in Shanghai’s city center.
“Louis”, which made a big opening on Thursday, will undoubtedly attract crowds and ready -to -photo exhibitions for the social media of the glittering front. However, Louis Vuitton, a LVMH, hopes that he can encourage sales among Chinese consumers who slow down on luxury goods.
LVMH’s business strategy is compatible with a wider change than a process of processing a store among luxury property retailers only sells goods to customers.
For years, risks are high for luxury brands that have relied on paced sales in China to feed their global growth and ambitions, but are now subjected to slowdown in demand in the world’s largest economy.
Consulting Bain’s estimates, the size of the Chinese market fell more than 18% last year and fell to Yuan (48.80 billion dollars) ($ 48.80 billion), and sales are on the road for a fixed performance in 2025.
Zino Helmlinger, Chinese retail President of the Real Estate Service Provider CRE, acknowledges that the luxury segment as a whole in China has recently received a “hit”, but believes that the slowdown is expected.
“If you look at the megastars – that is, Lvmh, Kering, Richemont, Hermès – they have doubled their profits in almost five years,” he said. “At some point, there’s some counter balancing, there’s a lot to grow, just a lot you can produce.”
In the first quarter, LVMH’s income in the region, which contains China, fell by 11% organically – except Japan, Asia -Pacific constitutes 30% of the group’s total sales.
The Chinese consumers, who were very affected by the wider economic uncertainty and long -term real estate market decline, tightens the expenditures for optional purchases – luxury branded handbags.
31 -year -old Shanghai Native Natalie Chen says that he already had enough “things” and again directed a significant portion of the funds he once used to travel.
“If we talk, I don’t think that buying another bag will improve my life,” he said, but plans to visit a new restaurant opened by Prada in Shanghai, and to control the new café concept with Louis Vuitton’s girlfriends.
“It just brings a different feeling [shopping] In a shopping center, Chen Chen said, although the ship -shaped store will make him make any purchase other than coffee and cakes.
Nevertheless, luxury brands feel a longer -term opportunity for pump sales.
According to Bain, while the appetite for personal luxury goods in China and the world is reduced, the sales rates of “experienced goods” are increasing due to economic pressures and price fatigue, and according to Bain, an increase in personalized luxury hospitality experiences and increasing quality food sales in the spring luxury report.
For example, in 2024, the worldwide general personal luxury goods market fell to 1% to 3%, even if experienced luxury expenditures increased by 5%.
Luxury evolution
The new research published by Real Estate Consultant Savills points to what China describes as the “developing” luxury market at the beginning of this month, and the Salon Privé – Private, VIP shopping areas with more experienced appointment areas for those looking for experience here with more experienced luxury brand contact points.
“All brands are closing, but those who can welcome are opening large flagships or organizing some big activities or exhibitions to keep their visibility extremely high,” Patrice Nordey, Trajecry CEO of Shanghai -based innovation consultancy. He said.
The brands from Balenciaga to Chanel, Louis Vuitton and Prada have been closed for stores in China since the second half of last year. Helmlinger, Gucci this year in the market continues to close 10 stores, he said.
Louis Vuitton’s Stableton’s Stableton Dior opened a café concept in Chengdu earlier this year and opened a restaurant designed by Wong Kar Wai in the Rong Zhai cultural field in Shanghai, Prada, in March. Jewelery Tiffany and Co. Recently, a large Shanghai Store has shrunk, but in March it opened a new three -storey flagship in Chengdu.
Although Nordey expresses this tendency “experienced” retail, he says he actually speaks with something deeper.
“I think this is a way to look at your customer as a person to buy a product or as an individual trying to have a more satisfactory life.” “But your goal is not only to feed your customer with consumer products, but also more than that, in fact, you can echo more strongly with them.”
While the high -profile luxury store closures in the mainland in China lead to the speculation of brands that reduce investment in a slowdown market, CRBE Helmlinger shows that the real story is more nuance and that resources are strategically rearranged instead of a withdrawal on the market.
“You need to create this concept of rareness and rare comes with scarcity,” he said. “When you have 80 or 90 stores in a market, it doesn’t look very rare anymore, it looks like the main current.”
($ 1 = 7,1714 China Yuan Renminbi)
(Reporting by Casey Hall in Shanghai;
