LV China'S Closing Shop Is Not Entirely A Result Of Economic Recession.

LV (Louis Vuitton) closed three stores in Guangzhou, Harbin and Urumqi.

The article quoted Shanghai sources as saying that 20% of LV stores will disappear, especially in two or three tier cities.

At present, there are two to three Louis Weedon stores in Harbin and Shenyang, and this will also become a focus area.

Recently, the group's earnings data showed that sales in the third quarter fell by more than 9%, and the main problem was in the Chinese market.

It's easy to think of the Chinese economic recession that has been widely publicized this year.

The shrinking market in Hongkong, the prosperity of overseas markets and the policy of combating corruption and building a clean government are the main reasons for this year's slump in the luxury Chinese market.

China is widely regarded as the BRIC leader at the moment, but the problems in emerging markets, or Japan, as a once emerging market, has been in recession after thirty years of prosperity.

The prosperity of China's economy is accompanied by a rise in housing prices, and housing is a rigid demand in consumer preferences. Even if the salary level seems to rise, the cash in the hands of people has not increased, which leads to lower consumer confidence - even if the money is rich, it is hamper by mortgage and future uncertainty.

But these are not the main reasons why LV stores are closed.

In response to Bloomberg's response to the news, LV group said it would continue to invest in China next year, opening new stores in Beijing and Hangzhou, hoping to focus on customer experience in key cities.

Such a public statement sounds very familiar, and it will not go wrong. Almost all brands that are "two words" with "luxury" can express this view, which in itself is part of the definition of luxury.

So what does LV's decision in the Chinese market mean? Will it create an industry trend that will lead to a predictable and similar brand decision that may be made in the next few years?

"This is just a question of the LV family," Wang Ersong, a luxury columnist, told reporters. "In 09 years, I saw Arnott (Bernard Arnault, President of LVMH group) boasting about the group's financial data in the TV interview. He thought that such prosperity could not last long - this may be related to the background of Arnott himself. He paid too much attention to the earnings data, which led to inaccurate judgement of the potential of the regional market."

Some of the luxury goods will probably agree with the following view:

Over the past ten years, it has been too optimistic about the Chinese market, and has been "aggressive" in the market strategy of entering the two or three tier cities and product line development.

A luxury brand from a travel box (which is often regarded as a benchmark for luxury brands) wants to get close to the new middle class that is emerging in China. This decision seems to be a bit of a quick success.

"It's too busy in China."

Vice President Ren Guoqiang also thinks so, "but as the price of luxury goods is not cheap, the consumption in the second tier cities is mainly supported by public relations consumption, and the consumption power of the city itself is not enough."

All of these involve China's new middle class, white collar workers who have some spare cash on hand.

In fact, from the perspective of standard luxury, the rise and fall of the economy will not affect it. The core consumer of luxury goods is itself a group of people who will not be affected by the average economic curve.

But the key is that LV's main consumer in China has changed.

Those new middle classes are

They are more cautious in their consumption, prefer the light luxury brands with high cost performance, and are more skilled in acquiring information. There will be more price behavior on the purchase. Since shopping abroad is becoming more convenient, why not? But, like the The Demand Institute report quoted in the financial times, too optimistic growth and consumption forecasts mislead foreign investors, and there is still a long way to go for the vast majority of Chinese citizens to enter the real middle class.

The luxury market, which was built on the consumption of public funds, is largely blind to the consumption power of China.

Money comes too easily, causing neither shop location, store service to distribution to match individual consumers.

After the dust settles, it will be normal to close several stores.