Provided by Casey Hall
Shanghai (Reuters) -Louis Vuitton’s latest Shanghai store is not your average luxury flagship. A 30 -meter -high, ship -shaped Louis shop is taxed as an experience, it has an exhibition space and a cafe in the center of Shanghai city in the center of the Nandjing Road.
Luis, who had the big opening on Thursday, will undoubtedly attract crowds to post photos to the social media about their shimmering facade and exhibits prepared for the photos. However, LVMH Louis Vuitton also hopes that this can lead to sales of Chinese consumers whose costs have slowed out luxury goods.
The LVMH Business Strategy corresponds to the broader transition of luxury retailers from the operation model – when the store just sells goods to customers – to lure customers with “experience”, which eventually encourages growth.
The bets of luxury brands are large, which for many years relied on fast sales in China to encourage its global growth and ambitions, but are now facing a retarded demand in the world’s second largest economy.
The Chinese market size decreased by more than 18% to about 350 billion yuan ($ 48.80 billion) last year, with sales of 2025 based on Consultancy Bain estimates.
Zino Helmlinger, the head of the Chinese retail real estate service provider, admits that the entire luxury segment in China has recently been “hit”, although he believes the slowdown has been expected.
“If you look at Megastars – I mean LVMH, KERING, Richmont, Hermès – they almost increased their profits in five years,” he said. “At some point, there is some counterweight, only as much as you can grow, only as much as you can generate.”
In the first quarter, LVMH’s revenue in the region, including China, decreased by 11% of eco -friendly basics – the Asian and Pacific Ocean, except Japan, account for 30% of the total sales of the group.
Chinese consumers who have severely affected the downturn of the broader economic uncertainty and the long -term real estate market have tightened the costs of discretion in purchases, including luxury branded handbags.
Natalie Chen, a 31 -year -old Shanghai’s native, says she already has enough “things” and has directed a considerable part of the funds she once used to travel to luxury goods.
“Actually, I don’t feel like buying another bag will improve my life,” she said, although she has already visited a new restaurant opened in Shanghai by Prada and is going to check the new concept of Luis Vuitton café with girls.
“It causes a different feeling than just [shopping] In the supermarket,-said Chen, though she was not sure that a ship-shaped store would encourage it to buy any purchases outside the coffee and cake.
However, luxury brands feel the long -term opportunity to pump Prime sales.
While appetite is decreasing due to personal luxury goods in China and worldwide, economic pressure and price fatigue are damaged by the percentage of “experienced goods” sales, according to Baino, which emphasized the increasing sales of individualized luxury hospitality and increasing sales in their spring luxury.
For example, in 2024. The overall market for personal luxury goods has fallen from 1%to 3%worldwide, even when experienced luxury costs increased by 5%, Bain said.
Luxury evolution
New research earlier this month has been announced by Savills, a real estate advisor this month, indicates this as a significant new trend that it describes as a Chinese “developing” luxury market, where people looking for experience are attracted to experiential luxury brand points, ranging from restaurants to Salon Privé – private, only for all -specific VIP buyers.
“All brands close shops, but those who can afford also open up large flagships or organize several big events or exhibitions to make their visibility extremely high,” said Patrice Nordey, CEO of the Innovation Advisory Trajectory, which is essentially preparing for future success.
Brands from Balenciaga to Chanel, Louis Vuitton and Prada have been closed in China since last year. Gucci goes to close 10 stores in the market this year, said Helminger.
Louis Vuitton’s Stablemate Dior opened Chengdu Chengdu this year, and in March Prada opened a Wong Kar Wai restaurant in its Rong Zhai cultural space in Shanghai. Jeweler Tiffany and Co. recently reduced the big center of Shanghai, but in March it also opened a new three -story flagship Chengdu.
Nordey says that while more people call this trend “experiential” retail, it actually talks about something much deeper.
“I think it’s a way to look at your customer, either as someone who will buy products or as a person trying to live a more full -fledged life,” he said. “If your goal is not only to feed your customer with consumer products, but more, you can actually claim it with them.”
Although the closure of high -level luxury stores in the mainland China has led to speculation that brands reduce investment in the slowing market, the CBE Helminger says the real story is more nuanced, showing strategic resource redevelopment than on the market.
“You have to create this concept of rarity, and the rarity comes with a drawback,” he said. “When there are 80 or 90 stores in one market, it no longer looks so rare, it seems to be the main one.”
(1 USD = $ 7,1714 Chinese yuan Renminbi)
(Casey Hall, Shanghai, Reports; Additional Mimosa Spencediting Notifications SHRI NAVARATNAM)
