Louis Vuitton Mulls 1st Duty-Free Store In China's Hainan

Louis Vuitton is considering opening its first duty-free store in China on the emerging luxury island hub of Hainan, according to two sources, in a move that would mark a new approach for the world's largest luxury label.

Photo Insert: A Louis Vuitton storefront in the US

The brand, which is the main profit engine of French luxury giant LVMH, is known for maintaining an iron grip on distribution and famously never offering discounts on its leather monogrammed bags.

Yet executives are looking at the possibility of opening a duty-free shop in the Haitang Bay shopping center in Sanya through an agreement with the mall's state-owned operator, China Duty Free Group, the sources said, Sophie Yu, Mimosa Spencer, and Silvia Aloisi reported for Reuters.

The plan, which would help Louis Vuitton capitalize on pent-up demand for luxury goods by Chinese shoppers - the sector's most avid consumers - was unveiled by brand executives at an early September presentation in Shanghai, according to a person who attended it.

Louis Vuitton declined to comment when asked about plans for a duty-free shop in Hainan, which has boomed as a high-end shopping destination during the COVID-19 pandemic with Chinese consumers unable to travel abroad.

China Duty Free Group, the largest duty-free operator in the country, did not reply to a request for comment. Some European and US brands including Kering-owned Gucci and Ferragamo – both of which are highly exposed to travel retail compared to peers – sell products in the shopping center, and there are signs of growing interest from high-end watch and jewelry labels.

The global duty-free industry was worth $86 billion in 2019, before the pandemic knocked the figure down by nearly half, to $45 billion in 2020, according to Generation Research, a provider of travel retail and duty-free shopping statistics.

WEEKLY FEATURE : MVP Group Keeps Lights On During Pandemic