Louis Vuitton’s brand fades in China

on April 23 2015 | in Daily Headlines Trending | by | with No Comments

Every luxury company fears the “Danniella Westbrook effect”. The phenomenon named after the former EastEnders actress recalls the deleterious impact she had on the Burberry clothes brand after she and her toddler daughter were photographed clad head-to-toe in beige check. The snobbish world of fashion judged the photo a travesty and Burberry’s sales in the UK were hit.

Louis Vuitton is facing a similar issue in China. While the brand’s owner, the French luxury retailer LVMH, has not fallen foul of any Burberry-style moment, it is nevertheless experiencing brand fade as consumers in higher-tier cities increasingly shun its products, according to data from China Confidential, an FT research service.

LV’s problem in one sense is much like Burberry’s: it has become too ubiquitous for its own good.

Just 18.8 per cent of survey respondents in China’s first-tier cities — Beijing, Shanghai, Guangzhou and Shenzhen — said LV was the luxury brand they most aspired to own, compared with 38.3 per cent among consumers surveyed in third-tier cities, China Confidential’s data show (see chart). Indeed, although LV remains the most popular luxury brand in China, Prada is eclipsing it in first tier cities, the data show.

This is at least partly because of the zeitgeist among China’s wealthier and more cosmopolitan consumers for individuality and exclusivity. Such people recoil from the idea that they will be seen sporting the same brand as, say, the mistress of a “bao fa hu” — overnight millionaires or billionaires — coal mine owner from a lower-tier city in the gritty inland province of Shanxi.

This aversion comes through in surveys. A large proportion of first tier city respondents said they specifically avoided purchasing brands that too many other people owned. When asked to rate the reasons for their luxury purchases on a scale of one to five (with higher scores indicating greater agreement), survey respondents gave a 3.92 rating to “expressing my personal tastes”.

The dwindling popularity of LV also shows up among Chinese travelers making purchases overseas. China Confidential’s recent annual survey of 1,277 Chinese outbound travelers showed that just 10.7 per cent of travelers who purchased designer goods on their most recent trip overseas purchased an LV-brand item, down from 15.5 per cent in a 2014 survey.

The decline was particularly pronounced among high-income travellers, with just 12.9 per cent of those with annual household incomes in excess of Rmb350,000 ($56,500) buying LV on their most recent trip, compared with 24.3 per cent a year earlier.



Read more at Financial Times.

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