Luxury brands revise China strategy amid slowdown

What happened Luxury retail in China is showing more signs of stress as demand softens, store openings are delayed, and brands adjust their strategies. The much anticipated Louis Vuitton Taikoo Li North boutique in Beijing, originally slated to open earlier this year, remains under wraps. Insiders suggest the opening has been postponed to 2025, from the first half of 2024. Notably, there are no set dates for other LVMH brand launches in the area of Beijing Taikoo Li North. Tepid consumer demand and declining foot traffic in high-end malls are prompting some luxury brands, including Maison Margiela, Marni, and Jil Sander, to rethink their expansion plans. The challenge of attracting new customers has led some to downsize or shutter stores entirely, leaving malls struggling to secure tenants. The Jing Take Louis Vuitton’s store closures are particularly telling. On October 15, the brand shuttered its store in Shenyang’s Zhuozhan shopping center, consolidating its presence to a single location at MixC mall. Shortly after, Zhuozhan center announced its complete closure by November 15, with Gucci and other brands having already exited. This comes after Gucci closed its Taiyuan Wangfujing store in July and Louis Vuitton removed hoardings at a planned Hainan Haikou MixC Mall store in March, signaling a retreat from underperforming location Even rising brands like Italy’s OTB Group, hailed as a luxury industry disruptor in recent years, are scaling back. In October, Maison Margiela exited its locations Shanghai IFC Mall and Hong Kong’s K11 Musea, while in July it closed its Jinge department store in Kunming, resulting in OTB’s full withdrawal from the city. Meanwhile, other brands including Marni and Jil Sander have shuttered stores across Hong Kong, Xiamen, and Chengdu. The current situation echoes the challenges of a decade ago, when China’s luxury market entered a correction phase. In 2014 and 2015, an economic slowdown and an increase in overseas shopping led brands to cut back. Louis Vuitton closed 20% of its stores, including seven high-profile locations, while Prada reduced its footprint in China by a third. For years China was a beacon of growth for global luxury, spurring ambitious store openings and market penetration. Now brands must navigate shifting consumer sentiment, rising costs, and a more cautious retail environment. But the question remains: is this a temporary adjustment or the start of a longer-term slowdown reminiscent of 2014? Either way, luxury brands need to rethink their strategies to align with an evolving Chinese market and protect their bottom line. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

Luxury brands revise China strategy amid slowdown

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Published November 07, 2024

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Luxury brands revise China strategy amid slowdown