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Louis Vuitton towards a new distribution strategy?

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French luxury group Louis Vuitton is reportedly considering a new strategy for the Chinese market, through the opening of a duty free store on Hainan Island.

 

Louis Vuitton is known for managing its distribution with an iron fist and never offering discounts on its luxury goods. Nevertheless, according to several sources, executives are reportedly exploring the possibility of opening a duty-free store in Sanya’s Haitang Bay shopping mall through an agreement with the mall’s state-owned operator, China Duty Free Group.

 

The mall boomed as a high-end shopping destination during the Covid-19 pandemic, as Chinese consumers were unable to travel abroad.

 

Some luxury brands, such as Gucci or Ferragamo, are already selling their products in the mall. But the most prominent fashion and leather goods brands of the LVMH group, such as Dior for example, are not present in Hainan, except for their perfume and cosmetics range. A Louis Vuitton duty-free store on the island would be one of the few such outlets for the brand.

 

The global duty-free sector was worth $86 billion in 2019, but has declined to $45 billion in 2020 after the pandemic, according to Generation Research. At the same time, the Chinese government tripled the amount consumers could buy in duty free in Hainan, now set at 100,000 yuan ($15,635) per year, helping to lift some purchase limits.

 

Meanwhile, according to a report revealed by KPMG China and Moodie Davitt Report at the China International Consumer Products Expo (CICPE), Hainan’s offshore duty-free sector has been the “rising star” of duty-free and travel retail since its inception in 2011. It is reportedly on track to become the world’s largest duty-free market in the next two years.

 

The closure of borders and international flights, during the pandemic, hurt the gray market driven by “daigou” (professional buyers who purchase high-end products overseas for mainland Chinese customers). This has boosted duty-free sales in Hainan to five times pre-pandemic levels. Moving to Hainan gives luxury brands access to a wider customer base. However, Louis Vuitton and other luxury brands are wary that this will reduce the “exclusivity” of their products and fuel the grey market.

 

 

Read also > LOUIS VUITTON INAUGURATES AN EPHEMERAL BOOKSHOP IN THE HÔTEL BRACH IN PARIS

 

 

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French luxury group Louis Vuitton is reportedly considering a new strategy for the Chinese market, through the opening of a duty free store on Hainan Island.

 

Louis Vuitton is known for managing its distribution with an iron fist and never offering discounts on its luxury goods. Nevertheless, according to several sources, executives are reportedly exploring the possibility of opening a duty-free store in Sanya’s Haitang Bay shopping mall through an agreement with the mall’s state-owned operator, China Duty Free Group.

 

The mall boomed as a high-end shopping destination during the Covid-19 pandemic, as Chinese consumers were unable to travel abroad.

 

 

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French luxury group Louis Vuitton is reportedly considering a new strategy for the Chinese market, through the opening of a duty free store on Hainan Island.

 

Louis Vuitton is known for managing its distribution with an iron fist and never offering discounts on its luxury goods. Nevertheless, according to several sources, executives are reportedly exploring the possibility of opening a duty-free store in Sanya’s Haitang Bay shopping mall through an agreement with the mall’s state-owned operator, China Duty Free Group.

 

The mall boomed as a high-end shopping destination during the Covid-19 pandemic, as Chinese consumers were unable to travel abroad.

 

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Thanks to its extensive knowledge of these sectors, the Luxus + editorial team deciphers for its readers the main economic and technological stakes in fashion, watchmaking, jewelry, gastronomy, perfumes and cosmetics, hotels, and prestigious real estate.

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