In October of this year LVMH put out a press statement that it was projecting a marketing slowdown for the luxury handbag market. The French company, better known as Louis Vuitton, stated that it was realized a slowdown in its own luxury goods division which was due to an overall market softness.
Louis Vuitton’s projects may have been biased by the fact that it was suffering its own internal problems at the time with the loss of Marc Jacobs. That in itself caused immediate worries about LVMH’s performance among market analysts watching the industry.
However, with regards to the luxury handbag market in general, Louis Vuitton’s statement probably rang a bell or two the wrong way. For example, in April 2013 the Fung Group posted the opposite view, with a large report focusing on the booming growth of luxury good sales in China. Yet by June, signs started to appear early that a slowdown was occurring. Reports from a reliable spending market, the United Arab Emirates, were noting a decrease in retail sales that was beginning to cause concerns and review. By September even China’s spending was dropping from a high of 30% growth the previous year to a new September projection of 12%, a cut of more than half of previous sales estimates and due to a crunch on Chinese corruption by local authorities.
As of December 2013, Louis Vuitton’s predictions seem to be coming true, but in hindsight the shift to brakes now seems obvious in the coming. China’s overall goods market slowed to a crawl of 2 percent growth in 2013 from 30 percent in 2012, and 2014 is not expected to do much better now. No surprise, many handbag makers have started looking at plans to scale back, just as Asia expansion was looking hot and hotter. Instead, the party might have just ended abruptly.
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