Go Big or Go Home?

ANYTHING BUT THE MOST cursory of glances at the share price of LVMH (Paris), the conglomerate that owns, among other things, Louis Vuitton, would be sufficient to inform the viewer that things have been, well, a little tough over the last 12 months.

At the time of writing, an LVMH investor would be nursing a 25 percent decrease in the value on the share price taken a year ago and might perhaps be wondering what to do next. The same is probably true of LVMH itself and given the number of pop-ups, makeovers (think about what’s happening to Louis Vuitton’s Fifth Avenue flagship in New York currently) and events, this might seem to be an outfit that is clutching at many straws in the hope that one may actually prove to be a glittering rope.

At the heart of all of this, according to many observers, is China. This is the country on which the luxury operators have been relying to keep them buoyant and the opening of “The Louis,” a store-cum-LVMH exhibition space in Shanghai, is a case in point. This is a faux ocean-going cruise liner and it looks impressive. But will it provide a return on investment as a store in its own right owing to the setup cost?

The nearly 100 foot-high, three-floor project is probably more a Louis Vuitton experience that just happens to have items that can be purchased. If you like cruise liners, then your eye may be drawn to this one, but it’s hard not to wonder whether the brand might have been better off opening something rather less costly and more conventionally “store-like” in terms of making progress against a tricky financial backdrop.

There is plenty to be gained from stores that capture admiring gazes, but when the method of doing so makes the business of profitable trading parlous, then perhaps a rethink may be required. Winsome stores are about winning over potential shoppers and then being part of an operation that equates to a healthy bottom line.