LV Will Cut 20% Of China'S Luxury Stores And Gradually Fall Out Of Favor.

Over the past ten years, many Western luxury brands have been expanding rapidly in China under the leadership of LV, trying to make huge profits by using China's rapidly growing "upstarts" group.

But with the anti corruption campaign launched at the end of 2012, the demand for all kinds of luxuries was weakened.

China's economic slowdown and sustained anti-corruption activities have been active in opening up stores in China in the early years.

It will bring a major blow. It is reported that Louis Weedon (Louis Vuitton, hereinafter referred to as LV) has closed 3 Chinese branches recently, and will be closing several more in the next few months. The report also quoted insiders that it is understood that LV will cut 20% of the Chinese branches in the next year, equivalent to about 10.

From 2008 to 2012, many luxury brands developed China's branch network at full speed to meet the endless purchasing power of China at that time. At present, LV has about 50 specialized stores in China.

However, brand names are also no match for the impact of slowing economic growth. People familiar with the matter point out that LV has recently completed its 3 branches in Yuexiu District, Harbin and Urumqi, Guangzhou.

The global luxury market surveillance report released earlier this year pointed out that the luxury goods market in the Asia Pacific region will be at a standstill this year, and the luxury income in the mainland will be reduced by 2% to 4%.

Other international luxury brands have also restructured their distribution in China. Comprehensive market data show that the number of luxury brands such as Prada and Gucci in China is also decreasing.

According to reports, Emmanuel Hemmerle, partner of Emmanuel Hemmerle, a leading consulting firm in Shanghai, said: "according to the latest information, 20% of the Louis Weedon stores in China will be closed before the middle of next year. At this rate, an average shop will be closed every month."

At the same time, the latest report released by The Demand Institute, an American think-tank, claims that multinationals have been fooled and made too many wrong investments in Chinese cities.

"Too optimistic growth and consumer forecasts have misled foreign investors," the report said.

Most Chinese have a long way to go before they really get into the middle class. "

According to people familiar with the matter, industrial cities such as Harbin and Shenyang have been affected by the slowdown in China, and two to three LV stores in the city will be closed.

In addition, the global economic slowdown and uncertainty, the negative impact of the strong US dollar and the depreciation of the euro has had a negative impact on the global fashion and luxury industry, and this effect will continue in the future.

Exane BNP Paribas global luxury Analytics Manager Luca Solca said, "we expect private

Growth will grow 3% to 5% in the next 3 to 5 years.

We now see that the impact of macroeconomic slowdown on the free market and luxury consumption will be the same as in the past few years. There will be no breakthroughs in the Chinese market. "

Solca is not the only analyst who finds signs of future luxury brand performance.

In last month's report on the Asian luxury brands conference, RBC Capital Markets's Rogerio Fujimori and his team said that the warmer demand for luxury goods in Greater China would take a lot of time, especially in Hongkong and Macao.

RBC pointed out that because of the high price pparency on the Internet, Chinese consumers are very sensitive to prices, which also exacerbates the competition in the luxury goods market.

He said that the investment industry's attitude towards luxury goods industry is still cautious, though stores with stores in Japan, Korea and Europe will continue to benefit from tourism consumption in China.

In October, Hugo Boss was forced to issue a profit warning, mainly due to the deterioration of the market environment in Asia and the Americas in the first three months of September.

The company said sales of Chinese fashion retailers were weak.

Burberry also said it was dragged down by Hong Kong and Macao markets.

At the same time, Barclay analysts expect Tod 's and Salvatore Ferragamo to face a bleak third quarter as Asia is also one of the two major markets for luxury goods, but its performance is sluggish.

Even analysts said that Gucci had to start shutting down if it wanted to pick up its performance.

On Monday, LV responded to the media and said it would "continue to invest in China's current store network to enhance customer shopping experience."

Last month, the LVMH Group executives said that the company's turnover increased by two digits in the first six months of this year, and Chinese consumers' demand for brands in the world is flat.

But this news will worry the world's luxury brands.

So far, the weakening of luxury consumption in China has been partly offset by overseas consumption of Chinese tourists, especially in Japan and Europe.

This will seriously cause domestic shops to fall into the "showroom" role.

LVMH executives blamed the weakening of Chinese consumers' purchasing power on the turmoil in China's stock market in August July.

They also admitted that in the third quarter, besides wine and spirits such as Moet and Chandon and Hennessy brandy, the overall turnover of other products in Asia dropped by more than 9%, and sales of LV in China continued to deteriorate.

Over the past ten years, many Western luxury brands have been expanding rapidly in China under the leadership of LV, trying to make huge profits by using China's rapidly growing "upstarts" group.

But with the anti corruption campaign launched at the end of 2012, the demand for all kinds of luxuries was weakened.

Some brands, especially LV, are becoming disgraced in the face of China's increasingly internationalized and mature consumers. Consumers often think that luxury goods are too commercial and expensive.

According to the data, more and more consumers in first tier cities are avoiding buying brand LOGO products.

The reason for this is that LV's LOGO is so high that it is full of its products, which is very similar to Burberry.

Chinese consumers are starting to prefer not to have LOGO products. Experts say more and more consumers prefer unique products, rather than well-known brands like Lu LV, Gucci and Prada.

"It takes us 20 to 30 years for us consumers, but for Chinese consumers, it took two or three years," said Olivier Abtan, global director of luxury consultants in Boston.

At the same time, a large number of niche brands have brought new competition to the luxury industry.

"To some extent, LV has been overexposed," said Torsten Stocker, partner of AT Kearney, a consultancy.

There are so many stores in China, especially in the two or three line cities, that the distribution is very unreasonable, and at the same time, it also brings negative effects to the brand connotation.

According to the data of FT China Confidential, only 18.8% of consumers surveyed in China's first tier cities, such as Beijing, Shanghai and Guangzhou, consider LV to be the most desired luxury brand.

By contrast, in smaller cities, the ratio is 38.3%.

The survey added that the brand opened new stores in Beijing and Hangzhou earlier this year.

LV spokesman also said that the group will continue to invest in China's existing branch network to enhance customer service experience, and stressed that the group opened new stores in Beijing and Hangzhou earlier this year.

However, there is no doubt that the trend of LV's domestic customs clearance is unquestionable. In fact, Jean-Jacques Guiony, the group's chief financial officer, revealed at the conference call last month that the group decided to integrate its branches in China.