Louis Vuitton has unveiled its latest flagship store in Shanghai, a striking ship-shaped structure named The Louis, situated prominently on the city’s bustling Nanjing Road. Rising 30 metres in height, the space is more than a traditional retail environment. It houses a curated exhibition area and an in-house café, aligning with a growing industry trend that prioritises experiential engagement over transactional retail.
The store, which opened with fanfare this week, is designed to captivate attention both in person and online, with its gleaming exterior and social-media-ready interiors. For parent company LVMH, however, the hope extends beyond aesthetics. With luxury consumption in China facing headwinds, the group is counting on immersive brand experiences to stimulate renewed interest and spending.
This pivot reflects a broader strategic recalibration across the luxury goods sector, as brands increasingly shift from pure retail to curated experiences aimed at driving long-term customer loyalty and growth.
The urgency of this transition is underscored by recent market data. According to consultancy Bain, China’s personal luxury goods market contracted by more than 18% in 2023, falling to approximately 350 billion yuan. Forecasts for 2025 suggest a stagnant performance, placing pressure on brands that have historically relied on robust Chinese demand to power global growth.
Zino Helmlinger, head of China retail at property services firm CRBE, acknowledged the impact of recent market challenges. “The luxury segment as a whole has taken a hit,” he said, noting that the slowdown was largely anticipated following a prolonged period of outsized growth. “If you look at the megastars – LVMH, Kering, Richemont, Hermès – they almost tripled their profit within five years. At some point, there is some counterbalancing.”
In the first quarter of 2025, LVMH reported an 11% organic decline in revenues across its Asia-Pacific markets excluding Japan. This region accounts for 30% of the group’s total sales. The decline mirrors broader consumer caution in China, where economic uncertainty and a protracted downturn in the property market have dampened appetite for discretionary purchases.
Some Chinese consumers are now opting for experiences over possessions. Shanghai resident Natalie Chen, 31, noted a personal shift in priorities. “Truthfully speaking, I don’t feel that buying another bag will improve my life,” she said, although she expressed interest in the café within The Louis and other branded spaces such as Prada’s new restaurant in Shanghai.
“There’s a different kind of feeling than just shopping in a mall,” she added, though she admitted it is unlikely to translate into additional purchases.
Luxury groups appear increasingly attuned to this evolving mindset. While demand for traditional personal luxury goods has softened, Bain reports rising interest in “experiential luxury” – from fine dining and travel to tailored hospitality experiences. In its spring report, Bain noted that although the global personal luxury market shrank by 1% to 3% in 2024, experiential luxury grew by 5%.
This shift is evident in recent brand activity. Real estate advisory firm Savills highlights a surge in experiential touchpoints, such as high-end restaurants and exclusive VIP lounges. Despite widespread store closures in China – including exits by Balenciaga, Chanel, and Gucci, which plans to shutter 10 locations this year – several brands are simultaneously investing in high-visibility flagship formats and cultural activations.
Prada, for example, opened a Wong Kar Wai-designed restaurant in Shanghai in March. Dior has introduced a café concept in Chengdu, while Tiffany & Co., despite downsizing a downtown Shanghai store, recently launched a new three-storey flagship in the same city.
Patrice Nordey, CEO of Shanghai-based consultancy Trajectry, noted that the move is about future positioning as much as current sales. “All the brands are closing stores, but those that can afford to are also opening big flagships or holding some big events or exhibitions to keep their visibility extremely high.”
According to Nordey, the evolution of luxury retail is more profound than simple rebranding. “I think it’s a way of looking at your customer, either as someone that will buy products, or as an individual who is trying to have a more fulfilling life,” he said.
For Helmlinger, the recalibration represents a strategic tightening of presence rather than a retreat. “You need to create this concept of rarity, and rarity comes with scarcity,” he said. “When you have 80 or 90 stores in one market, it doesn’t seem so rare anymore – it seems like it’s mainstream.”
-Reuters
