Global Luxury Industry Shrinks as Middle Class Spending Power Drops (AI Translation)
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文｜财新周刊 冯奕铭 包云红
By Caixin Weekly's Feng Yiming and Bao Yunhong
木门隔断缓缓拉开，身着当季新品、身材高挑的模特从内室缓缓走出，受邀而来的客人一边喝香槟，一边聆听销售讲解新品的材质、设计。近年来，奢侈品牌门店举办类似小型时装秀的现场视频频频出现在抖音、小红书等社交媒体上。
The wooden partition slowly slides open, and tall models dressed in the latest seasonal collections gracefully emerge from the inner room. Invited guests sip champagne while listening to sales representatives explain the materials and designs of the new offerings. In recent years, live videos of intimate fashion shows held at luxury brand stores have frequently appeared on social media platforms such as Douyin and Xiaohongshu.
经常购买奢侈品的刘雨感觉，过去一年各品牌举办上述这种VIC（Very Important Client）活动的频次明显增多，参与的客户门槛也有下降。“我一年在门店消费10万元左右，之前这种活动通常只邀请年消费在50万元以上的顾客。今年3月，我在一周内连续收到了国贸LV、香奈儿门店的邀请。”
Liu Yu, a frequent luxury shopper, has observed a significant increase in the frequency of VIC (Very Important Client) events hosted by various brands over the past year, accompanied by a noticeable lowering of participation thresholds. "I spend around 100,000 yuan a year at stores, but these events used to generally only invite clients spending over 500,000 yuan annually. This March, I received consecutive invitations from the LV and Chanel stores at China World Trade Center within a single week," she said.
从事时尚行业、同是奢侈品消费者的Weber也有类似感觉：“品牌办活动过于密集，且销售更加激进，有的门店甚至会邀请一些卖仿制品的人，他们可能会一次购买多件‘正版商品’来（为生产仿制品）打版，但是品牌真正的顾客会怎么想？”
Weber, who works in the fashion industry and is himself a luxury goods consumer, shares a similar sentiment: "Brands are hosting events too frequently, and their sales tactics have become more aggressive. Some stores even invite individuals who produce counterfeit goods; these people might purchase several 'authentic items' at once to use as templates for their counterfeit production. But how would the brand's real customers perceive this?"
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- China's luxury market faces a downturn, with a projected 18–20% decline in mainland sales for 2024 and shifting consumer preferences amidst economic pressures. Brands like LVMH and Richemont report significant revenue drops in the Asia-Pacific region.
- Middle-class and younger consumer spending is shrinking, while affluent consumers value exclusivity and investment potential in luxury goods. Secondary markets, such as "vintage" luxury goods, are gaining traction.
- Affordable luxury brands are adapting strategies, expanding into lower-tier cities, and reassessing pricing. Digitalization and targeted physical store experiences remain priorities for long-term growth in China.
The luxury market in China is facing significant shifts in consumer behavior, driven by economic factors, generational preferences, and changing global dynamics. Luxury brands, which have thrived in China for over three decades, now face declining sales and market challenges. This summary highlights key insights into the luxury sector's current state and future prospects.
**Emerging Trends in Luxury Shopping**
Luxury brands have increasingly hosted VIC (Very Important Client) events with lowered participation thresholds to boost engagement. Frequent shopper Liu Yu observed this since her spending qualifies for these once-exclusive gatherings. However, aggressive marketing strategies have diluted exclusivity, attracting consumers for counterfeit production, raising concerns about the brand’s perceived value [para. 1][para. 2].
**Economic Pressures and Global Dynamics**
The luxury sector's decline is underscored by Bain & Company’s 2024 *China Luxury Market Report*, which projects a revenue drop of 18%–20% year-over-year. Chinese shoppers are increasingly turning to overseas markets, including Japan, where favorable currency rates and supply attract luxury consumers. Bain predicts approximately 40% of Chinese luxury spending will occur abroad in 2024 [para. 3][para. 5].
**Changing Consumer Profiles and Preferences**
The shrinking middle class, economic uncertainties, unemployment, and cautious spending have led to reduced luxury consumption. Even affluent consumers have scaled back. Information transparency and evolving generational values challenge brands that use exclusivity and scarcity to drive demand. Younger consumers increasingly ‘demystify’ luxury, focusing on practicality and digital options [para. 6].
**Global Contraction in Luxury Markets**
Chinese consumers account for a significant portion of global luxury spending, with 40%-60% of purchases happening overseas. However, global luxury markets are experiencing similar contractions. With China’s demand dropping, industry leaders note the lack of another market with comparable scale and purchasing power to offset this decline [para. 9][para. 11].
**Performance by Category and Key Players**
Luxury sectors like jewelry, watches, leather goods, and apparel have seen steep declines. Jewelry sales are estimated to drop 25%-30%, while the watch market faces a sharper fall of 28%-33% in 2024 due to rationalized purchasing and decreasing secondary market values. Major players such as LVMH experienced 1% growth in 2024, while Kering’s Gucci saw global sales decline by 21%. In contrast, Prada’s Miu Miu brand almost doubled its revenue with unique market positioning [para. 13][para. 15].
**Affordable Luxury Faces Challenges**
Affordable luxury brands struggle in a polarized market. Although certain players like COACH and Moncler report growth in lower-tier cities and digital channels, others like Michael Kors face substantial declines. The ambiguous positioning and inconsistent pricing strategies of affordable luxury brands contribute to their challenges [para. 16][para. 17].
**Navigating the Digital Shift**
Luxury brands are adapting to digitalization, but maintaining stable online user engagement remains tough. Although e-commerce platforms and mini-programs exist, brands prioritize bringing consumers back to physical stores to preserve exclusivity and brand identity. The executive consensus emphasizes patience and targeted strategies to balance online and offline presence [para. 23][para. 27].
**Investment and Expansion Amid Market Uncertainty**
Despite challenges, luxury brands are reaffirming long-term commitment to the Chinese market. Strategies include continued investments in digitalization, expanding into lower-tier cities, and diversifying product offerings, like Louis Vuitton’s entry into beauty products. Improved customer relationship management, tailored experiences, and better digital targeting are identified as future imperatives for growth [para. 30][para. 32][para. 36].
**Secondary Market as an Indicator**
The secondary luxury market is growing, with many consumers now evaluating value retention in second-hand goods. Brands with strong value retention strengthen consumer trust and loyalty, while those with significant depreciation risk losing potential buyers [para. 38].
The luxury sector's future relies on its ability to adapt to changing consumer demands, economic conditions, and digital evolution. Brands must strike a delicate balance between exclusivity, affordability, and innovation to remain relevant in this evolving market.
- Douyin
抖音 - The article mentions that luxury brands are leveraging platforms like Douyin (TikTok) to showcase small-scale fashion shows, reflecting a shift in marketing and consumer engagement strategies as they navigate declining sales in China's luxury market.
- Xiaohongshu
小红书 - The article mentions that Xiaohongshu, along with Douyin, frequently showcases videos of luxury brand events, like small-scale fashion shows in stores. These events highlight new collections and engage customers with presentations on materials and design. Social media platforms, including Xiaohongshu, play a role in amplifying luxury retail strategies and customer interactions in China.
- Louis Vuitton
路易威登 - Louis Vuitton has faced challenges in China's slowing luxury market, with its 2024 revenue in the Asia-Pacific region (excluding Japan) declining by approximately 10.1%. Despite market contractions, LV continues to focus on strategic expansions and innovation, recently announcing the launch of its beauty product line, La Beauté Louis Vuitton, with renowned makeup artist Pat McGrath as its creative director. The brand signals long-term commitment to China, exploring new consumer segments and maintaining its presence in emerging urban markets.
- Chanel
香奈儿 - The article mentions Chanel’s increased VIC event frequency and engagement with lower-spending clients. Chanel also allegedly plans to open its first store in a Chinese prefecture-level city, Wuxi, in partnership with Hang Lung Properties, as reported by *Wuxi Daily*. Additionally, the data highlights Chanel’s proactive strategies to adapt to the evolving Chinese luxury market.
- Bain & Company
贝恩公司 - Bain & Company is a consulting firm mentioned in the article for its "2024 China Luxury Market Report." It highlights a projected 18%-20% sales decline in China's luxury market for 2024 and denotes a shift in its report theme from "recovery and transition" in 2023 to "Navigating Against Headwinds, Through Cycles" for 2024. Bain emphasizes factors influencing consumer confidence, structural changes, and the global impact of Chinese luxury consumption decline amidst an 18% contraction in the domestic market.
- Zegna
杰尼亚 - The article mentions Zegna as one of the first luxury brands to open a store in mainland China in the early 1990s. It highlights the significant growth and evolution of luxury brand presence in China over the past 30 years, though it notes the current challenges faced by the luxury market in the region, including shifting consumer behavior and economic trends.
- AlixPartners
艾睿铂 - AlixPartners is a consulting firm with expertise in consumer goods and retail. According to the article, AlixPartners' partner and Greater China Managing Director, Hu Ling, analyzed that shrinking household assets and unemployment among the middle class are limiting consumption capacity in China. The firm highlighted the increasing caution of consumers in spending and noted that despite potential economic challenges, the resilience and purchasing power of China's consumer base remain a critical factor in the luxury market's future.
- Ruder Finn
罗德传播集团 - The article mentions Ruder Finn Group through Gao Ming, its Senior Vice President and Managing Director for Luxury Practice in Greater China. Gao Ming analyzed the impact of the shrinking middle class on luxury consumption, noting that many middle-class consumers may still have purchasing power but are reluctant to spend. The group specializes in communications and consulting, providing insights into luxury market trends and strategies in China.
- JLL
仲量联行 - JLL (Jones Lang LaSalle) is mentioned in the article with insights from Zhu Jianhui, JLL China's Head of Retail Property & Consumer Research. Zhu highlights the challenges for luxury consumption in China amidst economic shifts, stating that luxury remains tied to broader consumption cycles and generational changes. He suggests that luxury brands should adapt rather than passively await market recovery.
- Kearney
科尔尼 - Kearney is a management consulting company mentioned in the article for its analysis of the luxury market. Kearney Greater China Partner Ma Jintao suggests that luxury sales could recover in late 2025, depending on factors like consumer confidence, purchasing power, and economic stability, including real estate and stock market recovery.
- Digital Luxury Group
DLG - Digital Luxury Group (DLG) is highlighted in the article as a provider of digital marketing services for luxury brands. Its managing partner and board member, Pablo Mauron, emphasized that China's middle class remains a key growth driver for luxury consumption. He also noted the impact of AI-driven innovation on the economy, potentially benefiting the middle class in the midterm. Additionally, Mauron mentioned global attention on China's luxury market decline, noting Chinese consumers' significant share in overseas luxury spending.
- LVMH
路威酩轩集团 - LVMH, the world's largest luxury group, experienced a challenging 2024 with overall revenue growth of just 1% and a notable 11% decline in sales in the Asia-Pacific region (excluding Japan). Its watches and jewelry division saw a 2% sales decline, impacted by store renovations, marketing expenses, and currency fluctuations. CEO Bernard Arnault anticipates LVMH's operations in China will return to normal within two years, emphasizing a strategic focus on maintaining brand desirability rather than high growth rates.
- Richemont
历峰集团 - Richemont, the Swiss luxury group owning brands like Cartier and Van Cleef & Arpels, saw a 7% decline in sales in the Asia-Pacific region in Q4 2024, with a significant 18% drop in Greater China. Its overall sales in the region declined by 15% for Q2 to Q4 2024. Richemont’s watch brands like Vacheron Constantin and IWC were also affected, reflecting weakened demand amid China’s shrinking luxury goods market and changing consumer behavior.
- Cartier
卡地亚 - Cartier, a luxury brand under Richemont Group, faced declining performance in 2024. Richemont's latest financial report highlighted a 7% drop in sales across the Asia-Pacific region, primarily impacted by an 18% decrease in Greater China. This was part of a broader trend, with consumers increasingly cautious in purchasing high-end items like jewelry, partly due to weakening secondary market prices. Despite this, Cartier remains a prominent brand amidst the changing dynamics of the luxury sector in China.
- Van Cleef & Arpels
梵克雅宝 - Van Cleef & Arpels, under the Swiss luxury group Richemont, experienced a sales decline in 2024. Richemont's latest quarterly report showed a 7% drop in Asia-Pacific sales, with a significant 18% decrease in Greater China. The overall luxury market downturn, changing consumer behavior, and increased caution in spending have impacted the brand's performance, alongside broader challenges in the jewelry and watch sectors.
- Vacheron Constantin
江诗丹顿 - The article mentions that Vacheron Constantin, owned by Richemont Group, experienced declining sales in 2024. Richemont's Q4 financials showed a 7% drop in sales in the Asia-Pacific region, with a sharper 18% decline in Greater China, amid a broader deceleration in luxury watch demand.
- IWC Schaffhausen
万国表 - IWC Schaffhausen, owned by the Swiss luxury group Richemont, faced challenges in 2024 due to the declining Chinese luxury market. Along with other Richemont-owned watch brands like Vacheron Constantin, IWC experienced sales declines, contributing to the group's 18% drop in Greater China sales during the year's fourth quarter. This reflects a broader trend of cautious consumer spending on luxury watches, impacted by more rational purchasing behavior and declining price trends in the secondary market.
- Laopu Gold
老铺黄金 - Laopu Gold, a Chinese jewelry company, has benefited from rising gold prices and shifted its strategy to resemble luxury brands by emphasizing cultural value and craftsmanship, introducing "ancient gold techniques." With high-end designs and stores in upscale locations, it appeals to consumers seeking stability and identity through luxury. Laopu Gold offers a robust resale system, with well-maintained products reselling at 70-80% of current value. In 2024, its revenue grew 167.5%, achieving significant market success.
- Tiffany & Co.
蒂芙尼 - The article does not provide specific information about Tiffany & Co. However, it mentions trends in the luxury sector, including a shift in consumer preferences toward items with better investment and emotional value, impacting jewelry brands broadly. It highlights that some Chinese consumers are favoring gold products with stronger resale value over traditional jewelry like diamonds, which may affect brands like Tiffany & Co. that primarily focus on diamonds and other precious gems.
- Hermès
爱马仕 - Hermès displayed resilience amid the luxury market downturn, with global sales growing 14.7% in 2024 and a 7% rise in Asia-Pacific sales. Despite slower growth compared to 2023, the brand's strong appeal, exclusivity, and iconic elements helped it remain stable. Hermès focuses on Very Important Clients (VICs) and retains consumer desirability while being less affected by the shrinking middle class. Its strategy remains centered on maintaining brand exclusivity and fostering customer loyalty.
- Dior
迪奥 - The article mentions Dior under LVMH's fashion and leather goods segment, which saw a 1% overall revenue decline in 2024. In the Asia-Pacific region (excluding Japan), revenue dropped by approximately 10.1%. Dior's performance is grouped alongside other LVMH brands like Louis Vuitton and Fendi, reflecting the challenges the luxury market faced in China during the period.
- Fendi
芬迪 - The article mentions Fendi as part of LVMH's fashion and leather goods division. In 2024, this department, which includes brands such as Louis Vuitton, Dior, and Fendi, experienced a 1% revenue decline, with a roughly 10.1% drop in the Asia-Pacific market.
- Kering
开云集团 - Kering, owner of Gucci, Saint Laurent, and Bottega Veneta, faced sales challenges in 2024. Gucci and Saint Laurent's global sales dropped 21% and 9%, respectively, while Bottega Veneta's grew 6%. In Asia-Pacific, sales fell 32%, 21%, and 7% for these brands, respectively. The group expressed a long-term commitment to the Chinese market, despite challenges, as it continues to navigate a shifting luxury landscape.
- Gucci
古驰 - The article states that Gucci's global sales fell 21% in 2024, with sales in the Asia-Pacific region, including China, dropping by 32%. Gucci's parent company, Kering, faced declining revenues for its key brands, highlighting challenges in adapting to shifting consumer behaviors in the Chinese luxury market.
- Saint Laurent
圣罗兰 - The article states that Saint Laurent, owned by Kering Group, experienced a 9% decline in global sales in 2024, with a significant 21% drop in the Asia-Pacific market. This demonstrates challenges for the brand amidst the overall luxury market slowdown, particularly in China.
- Bottega Veneta
葆蝶家 - Bottega Veneta, under Kering, saw its global sales grow by 6% in 2024, while its sales in the Asia-Pacific market, including China, declined by 7%. The brand showed resilience compared to Gucci and Yves Saint Laurent, which experienced sharper declines, reflecting Bottega Veneta’s relatively steadier performance amidst a challenging luxury market.
- Prada Group
普拉达集团 - The article highlights that Prada Group's 2024 performance was mainly driven by Miu Miu, which achieved a 93.2% revenue increase, while the main Prada brand saw a 4.2% growth. The group's total revenue increased by 17%, with a 13.1% rise in the Asia-Pacific market. The company attributes Miu Miu's growth to its irreverent and subversive aesthetic, helping strengthen its market positioning.
- Miu Miu
缪缪 - Miu Miu, part of the Prada Group, saw remarkable growth in 2024, with revenue surging by 93.2%. Its "irreverent and subversive" aesthetic gained significant attention, strengthening its market position. The brand's performance significantly contributed to the Prada Group's overall revenue growth of 17%, including a 13.1% increase in the Asia-Pacific market.
- Prada
普拉达 - The article notes that Prada Group's 2024 performance was primarily driven by Miu Miu, which saw a 93.2% revenue increase. Meanwhile, the main Prada brand achieved a 4.2% revenue growth, contributing to the group's total 17% revenue increase, with a 13.1% increase in the Asia-Pacific market. Miu Miu’s "irreverent and subversive" aesthetic strengthened its market position.
- Loewe
罗意威 - The article mentions Loewe as one of the luxury brands frequently raising prices since 2020, part of a trend among brands like Hermès, Louis Vuitton, and Chanel to adjust prices up to twice a year. However, no detailed financial or performance analysis specific to Loewe was provided in the piece.
- Celine
思琳 - The article briefly mentions CELINE as one of the luxury brands that frequently raised prices since 2020, alongside others like Hermès and Chanel. However, it does not provide specific financial or market performance details about CELINE.
- Coach
蔻驰 - Coach has performed well in the Chinese market, achieving low single-digit growth in 2024, driven by improved foot traffic and positive digital trends. It has expanded into lower-tier cities like Daqing and Baoji and plans further store openings in places like Shenzhen, Guangzhou, and Dongguan over the next 3–5 years. Additionally, Coach is exploring new retail formats, such as Coach Coffee and multi-business concept stores like Coach Apartment, aiming to connect with more consumers.
- Ralph Lauren
拉夫劳伦 - Ralph Lauren’s revenue grew 11% in Q4 2024, with significant growth in China exceeding 20%, marking 18 consecutive quarters of growth. This success is attributed to high-quality new customer acquisition, strong comparable sales, opening new full-price stores, and expanding on emerging platforms like Douyin, including participating in major marketing events like Singles' Day live streams.
- Moncler
盟可睐 - Moncler performed well in 2024, with an 8% revenue growth in Q4. The brand achieved steady double-digit growth in China, which supported its overall performance. Moncler credited its recovery in China to strong local demand.
- Tapestry, Inc.
Tapestry集团 - Tapestry, Inc., the parent company of brands like COACH, Kate Spade, and Stuart Weitzman, reported mixed performances. In 2024, COACH saw low single-digit growth in China, while Kate Spade and Stuart Weitzman experienced revenue drops of 10% and 16%, respectively. Tapestry plans significant expansions in China over the next 3-5 years, including new stores and innovative retail formats like COACH cafés and themed stores. It also sold Stuart Weitzman to Caleres for $1.05 million.
- Kate Spade
凯特·丝蓓 - Kate Spade, part of Tapestry Group, experienced a 10% decline in revenue during Q4 2024. Tapestry cited this decline alongside a 16% drop for Stuart Weitzman, contrasting with better performance in other brands like Coach. The group attributed its challenges partly to varying regional market strengths, with mixed results in China and globally.
- Stuart Weitzman
思缇韦曼 - Stuart Weitzman, a brand under the Tapestry Group, faced challenges in 2024 with a 16% revenue decline in the fourth quarter. On February 19, 2025, Tapestry sold Stuart Weitzman to U.S. footwear company Caleres for $105 million in cash as part of restructuring amidst broader group challenges.
- Caleres
Caleres - Caleres, a U.S. footwear group, purchased the brand Stuart Weitzman from Tapestry Group for $1.05 million in cash in 2024, as noted in the article.
- Capri Holdings
Capri控股 - Capri Holdings, which owns brands like Michael Kors, Versace, and Jimmy Choo, has experienced declining performance. Its revenue fell 7.9% for FY2024, with a significant 13.68% decline in the last three quarters and a $537 million net loss. Michael Kors' revenue in Asia dropped 33.9%. Amid challenges, Capri planned strategic adjustments, including selling Versace to Prada for $1.375 billion, while facing the cancellation of an acquisition by Tapestry due to regulatory concerns.
- Michael Kors
迈克高仕 - Michael Kors, under Capri Holdings, saw a 14% global revenue decline in 2024, with a significant sales drop of 33.9% in Asia. Capri Holdings' overall performance weakened, prompting the sale of Versace to Prada, reflecting struggles in the premium brand segment. The article highlights challenges for Michael Kors, suggesting difficulties in navigating a polarized luxury market and declining consumer interest amid economic adjustments.
- Versace
范思哲 - Versace, under Capri Holdings, experienced a 2024 revenue decline of 13.68%, with Asia revenues dropping 33.9%. Capri announced the sale of Versace to Prada Group for $13.75 billion, aiming to refocus on its core brand, Michael Kors. This reflects broader challenges within the light luxury sector amidst market shifts and consumer preference changes in China.
- Jimmy Choo
吉米周 - According to the article, Jimmy Choo, part of Capri Holdings, faced declining performance in 2024, with its revenue dropping alongside other Capri brands. Capri Holdings' revenue fell 13.68% in the year’s latter quarters, and Jimmy Choo experienced significant challenges as Capri’s overall business struggled.
- Burberry
博柏利 - Burberry's China President Zhang Yunxin emphasized China's pivotal role in the global luxury industry. The brand plans to increase local investments, introducing products and services tailored to Chinese consumers. Despite the industry's overall slowdown, Burberry maintains its commitment to the Chinese market, aiming to strengthen engagement and connections with local consumers.
- Dolce & Gabbana
杜嘉班纳 - Dolce & Gabbana has participated in the China International Import Expo (CIIE) for five consecutive years. Its global CEO, Alfonso Dolce, expressed plans to expand the brand’s operations in China and deepen engagement with Chinese consumers.
- Hang Lung Group
恒隆集团 - Hang Lung Group, owning multiple high-end malls, faced declines in 2024 with rental income down 6.45% and net profit dropping 14.26%. Mainland China property rental income fell 5.44%, marking its first decline in 24 years. Significant decreases were noted in luxury retail spending, particularly in Shanghai, where tenant retail sales in its flagship malls dropped by approximately 20%, attributed to reduced single purchases, entry-level luxury hesitance, and increased overseas shopping, especially in Japan.
- QuestMobile
QuestMobile - QuestMobile is a data analytics provider mentioned in the article, which tracks the performance of luxury brands' online platforms. It highlighted fluctuations in the 2024 monthly active user (MAU) numbers for luxury brand mini-programs like Hermès, Gucci, and Louis Vuitton, with Hermès ranging from 12,000 to 924,000, Gucci from 20,000 to 120,000, and Louis Vuitton around 1 million. This data underscores the challenges luxury brands face in maintaining stable engagement via online channels.
- Re-Hub
Re-Hub - Re-Hub is a luxury goods data platform. According to its CEO Max Peiro, the platform monitors the performance of products in the secondary market, helping brands assess their value retention and influence. Peiro notes that while the primary luxury market faces challenges, the secondary market continues to see double-digit growth. He highlights that secondhand luxury is becoming a lifestyle trend, particularly in China's lower-tier cities, with consumers valuing investment potential and resale value.
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