China’s Chic and Wealthy Snubbing Popular Luxury Brands?
Louis Vuitton is in a predicament: the brand is very popular in China, but it may become a victim of its own success. “In China, Louis Vuitton is seen as the brand that even your ai-yi, or domestic helper, can afford,” an anonymous retail consultant recently quipped. But shoppers are becoming more candid.
“I have two Louis Vuitton handbags but I no longer carry them although they are still in fashion,” said Daisy Liu, a 31-year-old employee at a multinational cosmetics firm. Instead Liu now gravitates toward Hermes and covets a Bottega Veneta lambskin bag. Of Louis Vuitton, she said, “I don’t think the brand fits me any more.”
Now that China is situated as the world’s third largest luxury market and is poised to overtake Japan and the United States for the number one spot within the the next three years, buyers are learning to become more discerning.
Shaun Rein, the managing director of China Market Research Group said, “The truly wealthy, the real millionaires, they will not want to buy LV Louis Vuitton or Gucci because they are too commonplace. Rich people are getting richer and they want exclusiveness and more self-indulgence.”
Vincent Liu, a partner at the Boston Research Group, echoed the sentiment, saying, “In the past, it was just a checklist. If you were one of the top five brands out of some magazine, you found that people in China just checked the checklist and bought according to the list.”
While Louis Vuitton’s revenues are almost double of its closest competitor Gucci’s, the brand may have grown too quickly. There are currently 38 Louis Vuitton stores in the country, in areas as remote as he southern Guangxi autonomous region.
With the sense that consumers are growing restless, LVMH released details of a plan to revitalize the brand, announcing the opening of a new store in Shanghai’s Plaza 66 mall, a very hot piece of luxury retail property. “The Plaza 66 will confirm Vuitton as the trendsetting brand in China,” LVMH said in an email to Reuters.
While for the time being Louis Vuitton remains one of the most popular brands in China, Hermes is picking up popularity for its more elusive pieces – Hermes bags are limited in quantity, made by hand, and labeled at anything from $9,000 to $150,000.
“Luxury, embedded in that, is this notion of exclusivity: that not everybody has it. It’s always a fine line that the brands need to tread,” said Torsten Stocker, partner at business strategists Monitor Group. Sounds like a lesson Louis needs to learn quickly.
photo credit: louis vuitton