240 yuan to buy LV, who is paying for the "poor man's business" of luxury goods?

Buying LV for 240 yuan, who is paying for the “poor man’s business” of luxury goods?

2024-08-13

Seeing that the demand has only increased since the full implementation of the reservation system, scalpers have raised the price, asking for at least 150 yuan more per box. They even launched a "discount package" - spending 650 yuan to buy an invitation to enter the store, you can get the right to buy five boxes.

Nowadays, it is difficult for people who want to buy LV chocolate to just buy chocolate. They either spend money in advance and become core LV users; or spend hundreds or thousands of yuan to "match some goods", and the "matching ratio" alone may be higher than buying a bag at Hermès 1:1. Otherwise, they can only choose "professional purchase" scalpers, give them hundreds of yuan, and in the end they get nothing but chocolate.

Text | Tian Yun Mo Xiao

Editor | Xinye

Operations | Puffs

Buying chocolate also requires "matching goods"

During the just-passed Chinese Valentine's Day, the hard currency for showing off happiness on WeChat Moments and Xiaohongshu has changed from a screenshot of a transfer of 520 yuan to a box of chocolates.

A box of chocolates packed in a classic LOUIS VUITTON orange box and tied with a blue ribbon, with a minimum selling price of 240 yuan.

▲ Photo/ Screenshot of Louis Vuitton’s Weibo

To the layman, what he sees is LV selling chocolates, creating a gimmick and excitement, but insiders know at a glance that the chocolates are of no ordinary origin - you have to know that on August 10, the Chinese Valentine's Day, you can't buy them by rushing into the store directly, unless you are a platinum/diamond member of Taikoo Li Qiantan and have made an appointment in advance to enter the store for consumption on that day; or you have obtained an invitation letter issued by the sales clerk or saleswoman, provided that you "taken along" one or two pieces of jewelry or wallets first.

The hot trend can be traced back to more than half a month ago, when the LV chocolate store officially opened to the public in the Central Park on the west side of Taikoo Li Qiantan in Shanghai. This is the third chocolate store opened by LV in the world and the first in China after Paris and Singapore, and it quickly became a hot topic in the luxury goods circle. For many people, getting a box of LV chocolate and taking a photo has suddenly become an urgent matter.

At first, it takes time and patience to catch up with this wave of freshly baked trends. Even when the outdoor temperature approaches 40 degrees in the afternoon of the dog days of summer and the sun bakes the cobblestone road scorching, it can't stop people from queuing in front of the store.

After learning about the opening, Jessie, who works in Shanghai, rushed to the scene as soon as possible on the afternoon of July 22. Although it seemed that there were only a few people in the front line, the line moved forward very slowly because the salesperson had to receive one-on-one reception for each group of customers entering the store to shop.

▲ People queuing in front of the LV chocolate store in Shanghai. Photo/ Visual China

Behind Jessie, a man kept answering the phone. "No stock, no stock, this one has been sold out, please change it." "This price can't be any lower, it's so hot and it's hard for me to queue up."... At the scene, the scalpers who buy chocolates on behalf of others are not difficult to identify. They always carry a few bags of chocolates and stop people who give up queuing and are about to leave, "Add 50 yuan a box, do you want it?"

Jessie was lucky. She waited in line for less than 20 minutes before entering the store to make her purchase under the guidance of the salesperson. According to LV officials, the chocolates on display in the store are all made by Maxime Frédéric, the pastry chef of the luxury hotel Cheval Blanc under the LVMH Group. The raw cocoa comes from small-scale cocoa plantations in Vietnam, Peru, Madagascar, the Dominican Republic and Sao Tome, and have a unique aroma.

It is not difficult to see that the LV chocolate store wants to create a refined atmosphere. The salesperson also emphasized that in order to ensure the quality, all chocolates are airlifted from Paris. Jessie's favorite hazelnut chocolate was sold out, so she chose the cheapest milk chocolate bar, 240 yuan for five pieces, with the LV logo engraved on it. Buying chocolate is like buying a bag, with a full sense of ritual. The receipt is separately sealed in an envelope, and the chocolate is wrapped in an ice pack and put into the orange shopping bag of LV.

But for many people who heard the news, it is not easy to experience this exquisiteness up close.

Less than a week after opening, due to the large flow of people, long queues in hot weather, and frequent shortages of chocolate, LV announced that it would cancel the queues for the public after July 28 and change to a reservation system. Customers who want to buy can make an appointment with their own LV exclusive sales consultant or call Qiantan Taikoo Li to make an appointment. On the morning of July 29, someone called the Taikoo Li front desk to make an appointment, but the queue was already after 400. After a while, someone else said that the front desk was no longer allowing appointments.

▲ Scalpers charge 150 yuan for a box, and 650 yuan for an invitation. Photo/Webpage screenshot

Taste may be the last thing that LV chocolate buyers consider this time. "It's almost 50 yuan per bite, which is a bit painful. It's quite expensive to eat it yourself, but it's a good choice for gifts."

After buying the chocolates, Jessie stayed in the store for more than ten minutes before leaving. The camera scanned the store decoration, cabinet displays, and the exquisite packaging details of the chocolates, and took a bunch of photos and videos.

"I've bought LV." Carrying a classic shopping bag with the LV logo, Jessie walked along Qiantan in Shanghai. No one knew what was inside. Jessie smiled and said, "I still think it's worth it."

“Poor man’s business”, backfires on LV?

Before this, Jessie had never bought any LV item.

The 35-year-old has been working in Shanghai for ten years. After work, she often checks in for popular food and occasionally visits offline events held by luxury brands to experience the fashion atmosphere. However, as a self-proclaimed "working woman in Shanghai", she usually wears clothes from Uniqlo and ZARA. Luxury goods that cost tens of thousands of yuan are not within her consumption range.

For most ordinary workers, it may take one or two months' salary to buy a medium-sized CARRYALL handbag from LV with a price tag of 22,800 yuan. However, spending 240 yuan on a box of LV chocolates is an affordable expense. In Jessie's words, "It doesn't cost much, but it gives you a lot of face. After all, it's LV."

Almost all the pictures posted on the Internet emphasized that this was "the cheapest item in LV history", and titles such as "I queued for 2 hours to buy LV for my bestie" and "240 yuan, my first luxury item for myself" attracted a lot of traffic. Some people also believed that even luxury brands like luxury goods have set their sights on "poor people's business".

▲ Photos posted all over the internet emphasize that this is "the cheapest item in LV history." Photo/ Screenshot from Xiaohongshu

Prior to this, LVMH Group, the parent company of LV, had already carried out several high-profile breakthrough marketing campaigns in the Chinese market.

In May 2023, LVMH's brand FENDI cooperated with HEYTEA to launch a co-branded drink called "FENDI Joy Yellow", with a single cup priced at 19 yuan, and two cups priced at 38 yuan, plus a coaster or badge. Less than half an hour after the drink was launched, HEYTEA's ordering app crashed, and the product was sold out a few hours later, while related topics on social media platforms kept flooding the screen. Many consumers who got the drink said when posting their orders: "This is the closest I've ever been to FENDI."

Although there are also comments that the result of this cooperation is that HEYTEA makes a fortune and FENDI "loses value", the overwhelming discussion and attention from young groups are unprecedented for the previously high-ranking FENDI.

After that collaboration, LVMH may have tasted the sweetness of cross-border cooperation. A few months later, LV announced that it would join forces with three coffee brands, MANNER, Metal Hands and PLUSONE, to launch a pop-up bookstore event in Shanghai. If you buy a book from the "City Guide" series launched by LV, you can receive a canvas bag for free.

Cross-border collaborations between luxury goods have been one of the most prominent marketing trends in recent years, and the results are quite significant. After some operations, luxury goods not only continue to maintain their classic luxury image in the traditional high-end field, but also expand their influence among young groups by standing together with emerging brands in the fields of trendy culture and lifestyle, thus promoting the brand's rejuvenation process.

Such joint activities often have strong scarcity and limited characteristics, which can stimulate consumers' desire to buy and social sharing motivation. Even those who do not often buy luxury goods or have never bought luxury goods can achieve "psychological compensation" for luxury consumption through a low threshold - this effect originally refers to a person who tries to eliminate this frustration when feeling frustrated in order to gain psychological comfort. In the field of consumption, it means that the younger generation of consumers tend to experience the satisfaction of crossing consumer classes through consumption within a reasonable range.

This kind of "psychological compensation" has become the key to the booming luxury goods "poor man's business", but it is not without risks.

On the surface, the canvas bags are only given away and not sold, but in fact, they are marked with prices. At first, if you buy a book for 290 yuan, you can get a bag for free. Later, because it was too popular, you can only get one canvas bag if you buy two books. In addition, each person can only get one bag at most after queuing up. If you want to get a bag of other colors, you can only queue up again and spend more money.

Soon, along with the resentment and anger generated by the queues, questions about "targeting the wallets of the poor" and "raising prices to rip off leeks" flooded LV. Today, a similar scene is happening again at the LV chocolate store.

When you can still enter the store after queuing, many netizens who arrived to wait were so thirsty that their mouths were dry due to the heat, but they found that during the queue, apart from the security guards maintaining order, LV did not provide any service at all. "For a luxury brand, they don’t even give out bottles of water when you are queuing... There are seats in the hot pot restaurant, and they give out snacks when you are hungry and iced lemonade when you are thirsty."

If there are too many people, not only will there be no extra services, but there will be deductions. Xiaohongshu blogger "Xiao Xin Life Notes" said that after buying chocolate at LV, "I was completely de-mystified." After entering, the salesperson's 10-second introduction was obviously a formality, and the price list handed over looked quite simple and not luxurious, "even more casual than a flyer on the street."

▲ The purchase price list of LV chocolate, with unit prices ranging from 240 yuan to 3,200 yuan. Photo/provided by the interviewee

After buying the items, Xiao Xin originally planned to take a few more photos in the store before leaving, but there were too many people waiting outside and waiting to come in to buy. After only five minutes in the store, he had to leave under the urging of the store clerk. In the end, he even felt that he had spent 240 yuan on a meal.

Whose money do luxury goods want to make by crossing borders?

During the entire purchase process, what Xiaoxin was most dissatisfied with was LV's twisted attitude, "They want to make money from ordinary people, but they have this attitude." This point resonated with many netizens. So far, the LV chocolate review video of "Xiaoxin's Life" has received more than 80,000 likes.

But there are also some people who think that if you think spending 240 yuan to queue up to buy chocolate is not worth it, it only shows that you are not LV's target audience.

Under posts and videos showing people buying LV chocolates, you can often see comments like this: "LV has started to target us poor people's money." And under these comments, many netizens who consider themselves "real poor people" follow up with comments: "I don't think 240 yuan is cheap..."

The chocolate store that opened this time was first opened in Paris in 2022. For a long time, LV chocolate has been regarded as a special French souvenir by tourists. This year, chocolate stores have landed in Singapore and Shanghai, creating many hot topics for LV.

But this is not the starting point of LV's cross-border catering. As early as 2020, LV's first restaurant in the world, Sugalabo V, and its first coffee shop, Le Café V, opened in Osaka, Japan. A year later, LV's Tokyo Ginza Namiki-dori store launched limited-edition chocolates for its opening, which triggered a check-in craze.

In addition to LV, there are many other big brands that have plunged into the catering industry. Hermès, Chanel, and Dior have all opened cafes, and Burberry has also made its own afternoon tea. In addition to personally expanding the catering business, luxury brands are also keen to collaborate with other catering brands. Every once in a while, "young people's first luxury item" will be on the hot search.

The question is, whose money do luxury brands want to make by crossing over to the catering industry?

For most LV regulars, LV chocolate is not something that requires queuing up in the hottest weather. It is just chocolate, no different in essence from a Dove bag or a box of Ferrero Rocher that you put into your shopping cart when you go shopping in a supermarket. After an old LV customer bought a bag worth more than 30,000 yuan at the LV store in Taikoo Li, Qiantan, the salesperson asked her if she wanted to take a look at the chocolates, so she went in directly.

Maimai is in the clothing trading business and spends hundreds of thousands of dollars a year at LV. After getting an invitation letter from the exclusive sales consultant, she also came to the store on a 37-degree afternoon - the difference is that she does not need to endure the torture of queuing in the scorching heat and can go directly into the store.

When talking about the chocolate shop's change back to a reservation system, she felt it was not difficult to understand, "Shanghai is so hot, and everyone is tired of queuing. If someone faints from heat stroke, LV really can't bear the responsibility." The day maimai went there, there were few people in the store. Apart from her and her husband, there was only one other customer who came in with a baby stroller.

Carrying a black Hermès Birkin 25 and wearing a slim-fitting white French suspender dress, she and her husband walked into the store under the guidance of several store clerks. A shopping guide accompanied them and introduced the products. After the purchase, a store clerk took photos for them. Appointments, purchase limits, and queues are all issues that ordinary workers complain about, but they are not a problem for LV's traditional customers.

For young people who want to buy luxury goods at a low price, even if they succeed in buying the chocolate, they will feel a sense of mismatch: "This is not really theirs." Some people bought the chocolate home but couldn't bear to eat it, and the ten-day shelf life was about to expire. Others think that queuing for an hour or two on a hot day is a typical example of "having to endure hardship" and advise themselves to "don't force yourself to fit into a circle you can't fit into."

▲ A 240-yuan milk chocolate bar costs 48 yuan for one bite. Photo/ Provided by the interviewee

It seems that this is a wrong encounter between LV and working people, but by taking this cross-border step, it is obviously not just targeting traditional customers.

Today, luxury companies' main business of selling fine leather goods and fashion is facing challenges. According to the financial report, in the first half of 2024, LVMH Group's revenue and net profit both fell, especially in the Asian market (excluding Japan), led by China, where sales revenue fell by 10% year-on-year. At the same time, Bernstein's latest report shows that the growth rate of domestic luxury consumption in China is lower than expected. Since the beginning of this year, the passenger flow of domestic luxury shopping malls has been declining by single digits, and luxury sales have fallen by double digits during the same period.

In this context, luxury brands represented by LV need to find new growth possibilities.

At the new store launch event, LVMH Group Managing Director Frédéric Arnault mentioned that in the future, customized products will be launched with Chinese characteristics, such as a special Spring Festival edition. He also added that it is important to share the joy brought by exquisite chocolate, "because the most important ingredient of a piece of chocolate is love."

Although happiness and love sound abstract, many people buy luxury chocolates in anticipation of an extraordinary high-end experience. Whether they eat it themselves or give it as a gift to others, they do so in order to gain some emotional value.

The Chinese market was once one of the markets with the greatest growth potential for the luxury industry, but in an era of tightening consumption, it has become a major trend for the middle class to abandon luxury goods and look for affordable alternatives. Rather than asking users to spend real money to buy increasingly expensive luxury bags and fashions, many luxury brands have reached a consensus on developing various novel scenarios and creating more exclusive experiences for users.

Before tasting LV chocolate, Jessie had also gained satisfaction by participating in other luxury events. She had drunk Burberry coffee in Shanghai Zhongshan Park, tasted kumquat juice at the Cartier Theme Exhibition Center, and had ice cream at the Van Cleef & Arpels Experience Space.

Under these posts, she always receives many interested comments: "Is there any sister event today?" "I went to the store today and the clerk said it was sold out (crying)". In her opinion, sharing these unique experiences can arouse the interest of netizens because "it doesn't cost a lot of money, but the style is firmly grasped."

In Shanghai Qiantan, LV's chocolate shop has become a famous check-in spot. What the next business strategy will be and whether it will be open to everyone in the future remains to be seen. It is also unknown how much profit the cross-border business can bring and how much it can help performance. Just like a box of chocolates, consumers don't know what the next one will taste like.

(The interviewees in this article are pseudonyms.)

References:

1. "LV's Cheapest Item" Makes Young People Queue in the Hot Sun", Vista Hydrogen Business

2. "LV canvas bag priced at 580 yuan, luxury goods are targeting the wallets of the poor", True Story Research Room

3. "Long queues to buy, LV for 240 yuan, low-priced luxury goods are selling like hot cakes", Chief Advertising Observer

4. "China's high-end consumer market cools down, and the global luxury industry enters winter", FORTUNE

5. "Middle class starts to stop buying luxury goods", fixed focus

6. "Luxury joint ventures take advantage of young people's psychology of substitution and create "luxury goods" that young people can afford", INSITE Asset Management

(The article is original by Daily People, any infringement will be investigated)

news

Buying LV for 240 yuan, who is paying for the “poor man’s business” of luxury goods?

Introduction

My contact information