China's luxury market is changing. After years of logo mania, Chinese shoppers are turning away from conspicuously branded goods in favor of products that are more understated and sophisticated, projecting an aura of refinement and exclusivity. That might sound like good news to champions of classic French style, which is more about simplicity and quality than ostentatious displays of wealth, but one French luxury company is scrambling to catch up.
Louis Vuitton was one of the first big brands to pursue Chinese expansion, but after enjoying a period of immense popularity, it's seeing demand in the country shift to niche labels like Bottega Veneta and Yves Saint Laurent.
Because the fashion and leather goods label accounts for nearly half of parent company LVMH's operating profits, the company's approach to addressing lagging sales has been the subject of intense scrutiny for months. The booming Chinese luxury market has changed the fashion industry into a global behemoth, and Louis Vuitton and LVMH were crucial to the transformation. (LVMH chairman Bernard Arnault's recent confession — and the subsequent court battle — that he secretly acquired a 22.6% stake in Hermès, one of the last big independent European luxury brands, doesn't detract from curiosity about the conglomerate's next steps.)
Arnault quashed rumors that Louis Vuitton was developing logo-free products (specifically handbags) and advertising exclusively for China, but the company is planning to slow down its expansion in the region, cutting down the number of planned yearly store openings from 10-15 down to merely two.
The conglomerate will make up the difference in dwindling handbag sales with cosmetics, skincare and fragrance: LVMH also owns Sephora.