L Catterton’s $1.9 billion stake in Value Retail targets Chinese tourism

The Jing recording

L Catterton’s investment in Value Retail could help the group – and LVMH – capitalise on the upturn in Chinese outbound tourism while also benefiting from the boom in Chinese domestic tourism through Value Retail’s Shanghai and Suzhou locations.

In Europe, Value Retail’s stores are strategically located in key tourist hotspots such as Barcelona, ​​London, Milan and Paris, which are already very popular with Chinese tourists and ensure a steady flow of visitors. By increasing the attractiveness of these stores through L Catterton’s operational capabilities, LVMH will be able to better respond to the preferences and expectations of Chinese luxury shoppers.

A key aspect of this acquisition is the potential synergy with DFS, LVMH’s existing luxury travel retailer. DFS operates over 400 retail outlets worldwide, including major airports and downtown gallerias, strategically positioned to attract Chinese tourists. By aligning the offerings and experiences at value retail locations with DFS, LVMH has the opportunity to offer Chinese tourists a seamless luxury shopping experience.

For Hammerson, the sale of its stake in Value Retail is a critical step in its turnaround strategy. The deal provides Hammerson with significant liquidity and allows it to deleverage and reinvest in its key urban retail assets, such as the Bullring in Birmingham and Brent Cross in London. This concentration on key assets should lead to higher returns and operational efficiencies.

Looking at the bigger picture, L Catterton’s investment in Value Retail underlines the growing importance of experiential retail and, for foreign tourists, travel retail in the luxury sector. Value Retail stores such as Bicester Village, Fidenza Village and Shanghai Village offer a curated shopping experience that suits the tastes of Chinese shoppers who are increasingly turning to day-long shopping.

More importantly, however, L Catteron’s investment could theoretically help increase the visibility of LVMH portfolio brands in Value Retail’s stores – much to the chagrin of competitors Kering or Richemont.

The Jing Take covers the most important news and presents our editorial team’s analysis of the most important impacts on the luxury industry. In the regular column, we analyze everything from product discontinuations and mergers to heated debates emerging on Chinese social media.