The world’s first Louis Vuitton airport store, which opened at Incheon two years ago, is losing its prestige. The French luxury brand is witnessing a continuing decline in sales due to its waning popularity and a decrease in Japanese customers.
According to Seoul Incheon International Airport,s duty-free zone Airstar Avenue on September 29, the average daily sales of the 550-square-meter airport megastore is US$230 million in 2013, down 18% from 2012’s US$280 million. Even after usual high demand during the first year for a new store are factored in, its negative sales growth so far this year is disappointing, which is more than twice the figure for 2012 (-7%).
US$230 million in 2013 represents a 23% decline in daily sales compared to US$300 million in 2011, when the store opened. In fact, daily sales per square meter totaled about 62 million won in 2011, far exceeding the average sales of duty-free shops at 38 million won.
The LVMH group that owns Louis Vuitton is reported to be taking extra-special care of its store at the Incheon airport, for it is the world’s only airport store. It also enjoyed high sales immediately after its opening. For these reasons, Bernard Arnault, Chairman and CEO of the LVMH group, visited the store in person in May 2012.
Industry analysts are saying that the biggest factor for the brand’s massive decline in sales is a decrease in Japanese tourists caused by a weak yen.
An official in the duty-free industry commented, “A sudden sharp decrease in Japanese tourists led to a reduction in the sales of some of their favorite luxury brands, including Louis Vuitton. I think that the situation is not much different at duty free stores downtown.”
As the official said, Japanese tourists make up a large percentage of the brand’s customer base in Korea. According to sales data on the airport store, as of February 2011 Japanese people had the second-highest rate with 18.6%, after local residents at 53.5%.
Some in the industry think that the reduced sales figure shows the brand’s dwindling popularity in the domestic market.
A luxury industry associate pointed out, “A few years ago Louis Vuitton bags were called the ‘three-second-bag’ in Korea, meaning they were ubiquitously seen on the street, like every 3 seconds. But the brand has recently lost its popularity, which is related to trends in mindful consumption.”
Shilla Duty Free, a part of the Shilla Hotel owned by Samsung Group, has been the owner and operator of the Louis Vuitton airport store since September 10, 2011.