How Louis Vuitton Has Adapted in China – LV 2.0 China

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A key part of our work is understanding the key dynamics that underpin luxury in China.  A market that has rising with China’s spectacular economic growth, but also been challenged by the increasing sophistication that now defines Chinese consumers.

A example of an established luxury brand that has had to re-define itself in China is Louis Vuitton – one of the earliest luxury brands Chinese consumers were exposed to, and one that has been affected by the phenomenon of ‘luxury fatigue’ – a combination of economic downturn, anti-corruption and a wide style/lifestyle trends impacting how luxury is understood and consumed in the Middle Kingdom.

In this post, SMART@Resonance’s Camille Pery looks at some of the key ‘religments’ that Louis Vuitton has undertaken in China to remain fresh, relevant and iconic in the eyes of local consumers.

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Iconic LV bag

The “secretary effect” – everyone has an LV bag!

When Louis Vuitton first arrived in China, it was the darling of the newly rich elite.  The brand quite simply was shorthand for ‘status and social arrival’.  In a society emerging from the classless system of pre-reform China, affluent consumers gravitated to brands (and logos) that would be ‘recognised socially’ by others.

However, as incomes improved, more consumers gained access to luxury goods.  The metaphor (or the pain point) for China’s rich was ‘those secretaries’. Lowly paid white-collar workers living at home, would save all their wages for a month, just so they could purchase an LV bag. This became their ‘pride and joy’, but from a macro-societal perspective, it meant Louis Vuitton started to become more mass – a direct ‘turn off’ for those Chinese consumers who believed it was their exclusive right and privilege.

Chinese customers select the luxury Louis Vuitton luggage at the first franchise store in Nanjing, in China's eastern Jiangsu Province, Wednesday, July 25, 2007. The franchise store is the seventeenth one in China.

The demand was hot for LV in this 2007 image, from a store in Nanjing

In response, Louis Vuitton has looked closely at how to maintain a special relationship with their VIP customers, investing strongly maintaining a more bespoke relationship with more affluent consumers. This is included exclusive access to new items, and special events held inside the brand’s boutiques. Louis Vuitton faced up to the ‘secretary effect’ by making a very determined effort to keep their ‘most sensitive’, but ultimately, ‘most loyal’ consumers.

Stemming the supply, no more stores 

The brand decided to stop opening new shops in China since 2010, sticking to the forty-one established at that time. Bernard Arnault LVMH CEO recently said: “Those who want to buy Louis Vuitton items must travel from now on”. An idea that works for Chinese luxury shopper, who travel on-mass to France to enjoy lower taxed goods.

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A Louis Vuitton store in Shanghai

Whilst brick and mortar stores remain an iconic part of Louis Vuitton’s presence in China,  The brand’s strategy is now focused on communicating digitally, so as to facilitate consumer’s purchases through mobile phones. The average level of the online spending in China increased 28% since 2014 and is still growing. Louis Vuitton has a 100% controlled distribution network, and a strong counterfeiting policy to cope with the trade of fake goods that reduces trust in their e-commerce strategy.

Making luxury relevant with KOLs

To refresh their relationship with Chinese millennials, Louis Vuitton worked strategically with KOLs.

For instance, KOL Zhang Yi, (a model with four million fans) posted one video to promote the “Proenza Schouler” bag. Later, during the 2015 Louis Vuitton Winter and Autumn Fashion Week, the brand invited a famous Weibo fashion opinion leader Gogobo, to take over its official Weibo account to report on fashion week.  The brand used KOLs to express an aspirational lifestyle message, but used social media, as a way for ‘normal consumers’ to gain new levels of access to the brand.

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KOL Zhang Yi on her Youku video

Less logo, and no logo 

To distance itself from the ‘mass culture’, Louis Vuitton featured their iconic logo-less in China and introduced more bespoke designs to re-premiumize the brand image.

New handbags were also created, in a limited edition with special consumer treatment and without a big logo or brand’s initials.

In fact, a team is mobilized to receive special guests in a private lounge, where the client can choose from 5 different shapes, 26 colours, and 8 types of leather. It takes between 5 and 13 months to receive that personal piece of art, enough time to imagine how unique you will look with it!

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LV rethought how they deployed their iconic logo

The brand as an experience 

Also, Louis Vuitton realised that the brand had become to narrowly defined as just a product in China.  To introduce the brand as an experience, Louis Vuitton focussed on culture, and a collaboration with Chinese actress and model – Fan Bingbing, including her involvement at their Paris events.

LVMH contemporary art foundation was created in the middle of the “Bois de Boulogne” near Paris where key LV fashion shows take place. It is also where special exhibition “Vuitton façon musée” took place last February. Only very special guests were invited to make them feel closer to their favourite brand, by introducing them to the brand’s story. On the guest list was Fan Bingbing, the famous Chinese actress (4th highest paid actress in the world) was a VIP guest as the Chinese ambassador of the brand and was escorted personally by Mickael Burk, Louis Vuitton’s CEO.

Fan Bing Bing et LV

Fan Bingbing welcomed by Michael Burk in Paris

So, in market as rapidly changing as China, you can never rest on your laurels, and MUST keep culturally attuned to your core audience

About Author

Camille Pery

Camille is a researcher on the SMART@Resonance team. Originally from Bordeaux, Camille is currently studying for a Masters in Digital Marketing at INSEEC Business School in Paris. Camille is a fluent Thai speaker and is making super progress on her Mandarin, as well as on the complex world of China’s social networks.

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