FRANCE. Louis Vuitton has flatly rejected a Reuters report that in a “strategy shift” it is considering opening its first duty free store in China on Hainan island.
In a statement supplied to The Moodie Davitt Report, the French luxury goods house said: “Louis Vuitton is exploring opportunities in Hainan. The house is not considering any options within the licensed duty free market.”
That carefully worded terminology is consistent with The Moodie Davitt Report’s understanding – and coverage – of Louis Vuitton’s travel retail, China and Hainan-specific strategy.
The “plan” to open in Hainan, claimed Reuters, “would help Louis Vuitton capitalise on pent-up demand for luxury goods by Chinese shoppers”.
As revealed by The Moodie Davitt Report, Louis Vuitton is focusing closely on Chinese domestic air terminals to complement its rapid local market growth across the Mainland – by 2025 it expects to have a downtown store in every Chinese province.
Although pricing in Chinese domestic terminals is on parity with the local market, Louis Vuitton, in common with other high-end brands, is still able to generate high levels of business due to strong demand, heavy footfall and the ability to provide VIP and aftersales service to a local consumer base.
Key domestic passenger zones in airports such as Daxing and Beijing Capital in the Chinese capital, Chengdu Tianfu and Shanghai Hongqiao also offer an attractive ‘shop window’ role for luxury brands to reinforce their local market presence.
Airport opportunities beckon elsewhere but group tour-focused downtown channel loses allure
Airport retail is an increasing focus elsewhere too. The brand is set to open a duplex store at Hong Kong International Airport as soon as travel in and out of the Special Administrative Region begins to improve markedly. It will open with Dubai Duty Free at Dubai International Airport in late December and, as revealed, Louis Vuitton will anchor a reinvigorated luxury retail precinct in Sydney Airport’s T1 International terminal in 2022. Other major airport announcements are imminent.
Those developments represent an extraordinary turnaround from former days when Louis Vuitton eschewed the airport retail scene. That all changed in September 2011 when it opened a 550sq m store at Incheon International Airport in association with The Shilla Duty Free. And it has since opened in numerous airport locations including Changi, Heathrow (T3 and T5), Istanbul and Rome Fiumicino, as well as the Chinese locations mentioned above.
However, as we reported in June, Louis Vuitton is progressively withdrawing from much of its downtown duty free business – including its long-standing and expansive Korean presence.
The brand’s downtown stores in Macau that are focused on FIT rather than group tours, and the duty paid business with DFS in Okinawa, Japan will remain open. However, the company’s downtown duty free stores in Hong Kong with fellow LVMH house DFS are likely to be closed in due course.
Reliable sources in South Korea suggested earlier this year that Louis Vuitton wanted to move away from group tour-focused downtown stores into FIT-orientated businesses such as Chinese domestic airports and high-end Macau downtown locations. There, the company believes it can maximise high-class service to its exclusive clientele as opposed to the more transactional group tour-orientated environments.
Note: Every fortnight The Moodie Davitt Report publishes Hainan Curated, in association with Foreo, a curated selection of all recent stories from the offshore duty free sector. Click here to subscribe free of charge and to view all back issues.
