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Luxury retailers suffer the worst riots in Paris in 50 years

Dec 06, 2018

Europe's luxury goods market, which has been struggling to recover, has been clouded again in recent days.

A large "yellow vest" protest broke out in Paris on Saturday for the third time in nearly a month and the third time in nearly 50 years, Reuters reported.

Protesters gathered near landmarks such as the tourist shopping champs-elysees, the doulery garden and the arc DE triomphe and confronted riot police by throwing stones, destroying public buildings, burning luxury cars and smashing luxury boutiques. The incident is drawing global attention.

"On one side, there are glittering Christmas trees, colorful Christmas Windows and consumers carrying shopping bags near the Paris opera house, while the champs-elysees and the arc DE triomphe, only a few hundred meters away, have become the scene of clashes between 'yellow vests' demonstrators and riot police," French media Le Parisien said in a report.

As a result, a total of 19 subway stations in Paris were closed over the weekend, all pedestrian passways were equipped with security checkpoints, and galeries lafayette and PPR department stores were closed.

It was also reported that 30 luxury brand boutiques such as Chanel and Dior, located in the vicinity of the champs elysees avenue, were looted, smashed and looted. Dior alone lost more than 1 million euros, and the new apple flagship store was not spared.

Dior quickly sued protesters after the attack.

It is reported that the "yellow majia" protests against the cause of the protest and macron took office after the proposed VAT on fuel.

In order to implement the Paris climate agreement, macron hopes to promote people to use clean energy by raising the price of fuel. However, the rising oil price aggravates people's living costs and economic burden. In contrast with the general environment of lower global crude oil price, the life of the working class becomes increasingly tense, which gradually causes public dissatisfaction.

But the French President, francois macron, did not pay much attention to the protesters' protests at first. "today they are protesting against my tax on fuel, and tomorrow they can turn around and protest that air pollution is affecting the health of the next generation," he said ironically.

Such an attitude would have added fuel to the fire, sending otherwise peaceful protests spiraling out of control and macalong's approval rating plunging to 25 percent from 64.82 percent a year ago.

"I will always respect differences and listen to opposition, but I will never accept violence. Nothing can justify attacks on security forces, looting stores, burning public and private buildings," macron tweeted in response to the escalation.

Mr. Macron held an emergency security meeting on Sunday or considered declaring a state of emergency to avoid further escalation.

About 36,500 people have taken part in protests across France, according to Castaner, which released data at noon Saturday. So far, more than 400 people have been arrested and 133 seriously injured.

Bruno Le Maire, the finance minister, revealed that retail sales fell by 35% on November 17th, the first weekend of the protests, compared with a year earlier, and by 18% on November 24th.

The French government is to allow luxury fashion retailers to extend Sunday business hours ahead of the holiday in a bid to recoup losses.

Notable is, France is quite popular with Chinese tourists for a long time, the number of Chinese tourists reception the top spot in Europe, the analysis thinks, the "yellow waistcoat" event will very not easy for the French police to restore the confidence of Chinese consumers away again to reduce consumption, French fashion retail or so in trouble again.

According to figures released by the Paris municipal government, France received 2.2 million Chinese tourists in 2015, and the number of Chinese tourists dropped by 20 percent in 2016. Despite a significant improvement in the first few months of last year, France received 2.1 million Chinese tourists in 2017.

After the global financial crisis in 2008, the whole European economy was in a quagmire, and some European countries opened their doors to refugees, which added uncertainty to social security.

Since 2016, there have been more than 20 terrorist attacks, riots or robberies in Europe.

On March 22, 2016, a subway station near the headquarters of the European Union exploded after an explosion at the zaventem airport in Brussels, Belgium, raising the death toll to 35 and injuring at least 300.

At least 84 people were killed and 202 injured when a truck rammed into a crowd in the southern French coastal city of nice on July 14, 2016.

On July 22, 2016, a man shot dead nine people and wounded more than 30 others before killing himself at the shopping center in Munich, the capital of Bavaria.

On the night of July 24, 2016, an explosion occurred in the city of ansbach, Bavaria, Germany, killing the bomber and injuring 12 others, three of whom were seriously injured.

At noon on July 26, 2016, two people including the killer were killed in a shooting at a hospital in the steglitz district southwest of Berlin.

On August 15, 2016, an armed assault took place in the western German city of cologne, injuring one person.

At least 13 people were killed and 48 injured when a bus exploded on Talas avenue in front of the university gates in the Turkish city of kexeli on December 17, 2016.

The islamic state group claimed responsibility for a truck that rammed into a sidewalk at a Christmas market in a busy part of western Berlin on the night of December 19, 2016, killing 12 people and injuring dozens.

On December 19, 2016, a gunman sneaked into a mosque in the heart of the Swiss city of Zurich and opened fire at random on people praying, injuring at least three people.

On March 22, 2017, a terrorist attack near the British parliament building killed 5 people and injured more than 40, including the attacker himself.

On March 25, 2017, Cartier, a casino in monte carlo, France, was robbed by armed masked robbers, who stole several pieces of jewelry.

On April 3, 2017, more than 10 people, including the attackers, were killed and nearly 50 injured in an explosion on the st. Petersburg subway in Russia.

On April 7, 2017, at least 4 people were killed and 15 injured when a truck rammed into a crowd in the center of Stockholm, Sweden.

On April 20, 2017, the islamic state claimed responsibility for the attack on the champs elysees in Paris, France, which killed one policeman and wounded two others and killed the attacker.

On May 22, 2017, an explosion at the Manchester stadium killed at least 19 people and injured about 50 others.

On May 22, 2017, gunmen robbed Louis vuitton flagship store in the champs elysees in Paris.

On June 22, 2017, shots were heard from Notre Dame.

On November 5, 2017, Chinese tourists were attacked and robbed by tear gas in Paris. Nine shopping bags full of luxury goods were robbed.

Prada's flagship store in Via Della Spiga, milan, was robbed on December 14, 2017. Two unidentified thieves broke the window of the store and stole bags and jewelry worth more than 100,000 euros.

On August 18, 2018, the shop of Swiss wristwatch brand Audemars Piguet in Paris was robbed by two armed thieves, losing the watch value of about 1 million euros, the shop is only a few steps away from the champs elysees avenue;

On September 9, 2018, a man grabbed a suitcase in the Louis Vuitton flagship store on the champs-elysees in Paris in full view of the public, then threatened the public with a gun and took the opportunity to escape from the store. The bodyguard of LVMH chairman Bernard Arnault immediately chased him out of the store and arrested him and handed him over to the police.

Some analysts have pointed out that Europe's tourism industry has just seen a glimmer of hope or will go back to gloom, and the market has long predicted this. Fabrizio Ferraro, professor of strategic management at IESE business school in Barcelona, has admitted that the security problem in Europe is a concern for all sectors.

Luca Solca, a luxury-goods analyst at BNP paribas, warned in a report last year that the unrest would have a serious impact on the retail sector, especially the luxury-goods sector.

According to deloitte, nearly half of luxury spending takes place during travel, with 16 percent at airports.

Exane analysts point out that more than 70 percent of luxury sales in Italy and France come from foreigners, mainly Chinese buyers, compared with 50 percent in the United Kingdom and Switzerland, where buying luxury goods has become the main consumption behavior of Chinese tourists traveling abroad.

Ubs warned in the first half of this year that while China is now recognized as a potential market for luxury consumption, the pace of luxury consumption in the country is expected to slow sharply in the second half of this year, from 13 per cent in the first half to 7-8 per cent, with growth slowing to 4 or 5 per cent over the next few years.

According to a new report released by bain and the Italian luxury industry association, the global luxury market sales growth in 2018 narrowed to 5 percent to 1.2 trillion euros, while personal luxury sales rose 6 percent to 260 billion euros.

The report stresses that growth in the personal luxury market is likely to fluctuate in the short term due to factors such as socio-political, business policy and potential short-term recession.

Tiffany, the us luxury brand, also said in its new third-quarter results that comparable sales growth slowed to 3 per cent, falling short of analysts' expectations of 5.3 per cent, as Chinese tourists spent less in Europe and the us.

The shares of LVMH, Gucci parent kaiyun and hermes, the three luxury giants, have also underperformed since the second half of this year, with gains narrowing to units, due to concerns about the outlook for the luxury industry.

Dior, the French luxury brand, suffered a 2.9 percent drop in revenue to 464 million euros in the fourth quarter of fiscal 2016 and a 30.2 percent drop in operating profit to 74 million euros, hurt by a drop in visitors to Paris and Europe.

Richemont, Cartier's tourists-heavy parent, has also been hit by a sharp drop in Asian visitors, with real sales growth slowing to 6 per cent in the six months to September 30 and just 1 per cent in its European base.

Christian Blanckaert, former managing director of hermes, told le monde: "luxury is not a necessity at heart.

In the face of tragedy, luxury goods are extremely fragile and have no resistance.

An earlier analysis suggested that a sharp increase in overseas consumption of luxury goods in China is within reach, but only if catastrophic events are no longer frequent, otherwise the global luxury market will still be negatively affected by the downturn in tourism.

For the luxury industry, the impact of frequent security problems cannot be underestimated.

LVMH boss Bernard Arnault said in an interview with Japanese media last year that the night on the champs-elysees was too dangerous. "consumers would rather stay at home than go out for consumption because of the fear of being attacked," he said. The global retail environment will deteriorate again in the next decade, but the Chinese and Japanese markets will become more important.

Under such an environment, Federica Levato, a bain partner, believes that with the change of social concepts and the continuous establishment of cooperation between alibaba, jingdong and other e-commerce giants and luxury brands, Chinese consumers will be more willing to buy luxury goods in the local market.

Federica Levato further said that luxury consumers in China are still an important driving force for the growth of Louis Vuitton, Christian Dior and Moncler. Gucci, which is growing rapidly, revealed that about 45% of its Chinese consumers' purchasing behaviors are in the mainland market.

In an interview in October, kering executives also revealed that China's lower import tariffs, a soaring euro-yuan exchange rate and narrowing product spreads compared with other regions are all reasons why more Chinese consumers are buying luxury goods in their home countries.

Data show that in 2015, luxury goods prices in China were generally 60% or 70% higher than those in Europe, and now the average premium has shrunk to 25% or 30%.

British luxury brand Burberry also pointed out that in the earnings during the period of march and September, the brand in the asia-pacific region including China recorded single-digit growth, hermes is admitted to have more than one quarter the strong benefit from China market, so will open a website in mainland China business services, and more offline stores, the region is also parent richemont group in the first half of the main source of income.

In addition, the increase of luxury consumption in China is also related to the younger target customers.

Bain highlighted millennials and generation Z as the only drivers of global luxury sales growth in 2018.

Federica Levato pointed out that different from the previous generation of luxury consumers, the primary purpose of the younger generation when traveling abroad is not to buy cheap goods, but to travel for experience.

Another analysis shows that millennials are more willing to buy at home because they want to be satisfied in time than price differences.

Outside France, the "yellow vest" demonstrations spread to other European countries, including Belgium and Italy.

Some analysts believe the demonstration could happen again by the end of next week and continue to cause human and financial damage.

There is no doubt that luxury brands will eventually lose market share in Europe in other ways to make up for it, but the impact of the unstable security is far more than simply tourism retail, but the overall decline of shopping consumers in Europe will have an irreversible impact in the long run.

Olivier Rousteing, creative director of the French luxury brand Balmain, posted a post on Instagram attacking the "yellow vest" protesters for their shameless behavior and total disregard for French values.

LVMH shares have fallen more than 6 percent since the incident and are now valued at 133.7 billion euros, kering group is down nearly 2 percent at 51.2 billion euros and hermes shares are down about 3 percent at 51.7 billion euros.