Shanghai (China) | AFP With China's economy still struggling to recover from the pandemic, even global fashion icons are starting to feel the pinch as consumers turn to the second-hand market or buy from new emerging domestic brands.
The Chinese were once major buyers of Western luxury brands, accounting for about a third of global spending and bringing in billions of dollars for companies like LVMH and Hermès.
But the squeeze on consumer spending has forced these companies to rethink their strategies. LVMH has closed five stores in mainland China over the past two years, including a chocolate boutique, while Galeries Lafayette closed its flagship Beijing location in May.
“Before, people compared who had spent the most,” recalled dance teacher Yuan, in a new commercial space in central Shanghai filled with luxury bags, belts and jewelry — all secondhand. "But now everyone compares who got the best deal and spent the least," said the 24-year-old at the two-story, warehouse-style store in China's financial hub.
After plunging by up to 19% in 2024, mainland China's personal luxury market shrank by another 3% to 5% in 2025, according to consultancy Bain & Company.
LVMH recently attributed the drop in organic sales of its fashion and leather goods division in the third quarter to "slowing demand in China", a decline that is expected to be repeated in the results of its competitors.
Meanwhile, China's second-hand luxury market will soar by between 15% and 20% by 2025, according to Bain & Company.
Chinese sector consultancy Insight & Info Consulting estimates that total sales will have reached 38.4 billion yuan (R$29.07 billion) in 2025 and predicts that they could exceed 100 billion yuan (R$75.74 billion) by 2030.
At the new Super Zhuanzhuan store in Shanghai, customers must wear black gloves to prevent oil from their fingers from coming into contact with the products.
Customer Phoebe Ma, 24, commented that when her mother's generation was young, China "wasn't that developed" and, at first, people only knew about a few luxury brands.
“Consequently, a deep-rooted conviction was created that, yes, Louis Vuitton was the best and most prestigious of all,” declared the self-employed professional.
"I just think the [LV] monogram is outdated. It suits my mother's generation, but Gen Z prefers to buy fashionable Korean brands," he said.
"WORK HARD TO STAY RELEVANT"
Chen Luo, head of Chinese consumer research at Bank of America, said buyers were no longer associating luxury exclusively with social status and were instead valuing "self-identity, differentiation, experience, quality, emotional value and cultural relevance."
"In addition, Chinese retail is very driven by the digital environment and social media, and China's digital ecosystem is also quite unique," commented Luo. "Foreign brands need to work hard to remain relevant in this context."
Adding to the difficulties faced by Western brands are growing cultural and legal tensions.
LVMH recently won a lawsuit against Chinese beverage chain Molly Tea for trademark infringement over its use of a four-petal floral pattern similar to the French company's monogram.
But the lawsuit sparked a backlash online after Chinese users and state media noted that the motif was rooted in traditional patterns from ancient China. “It seems a little absurd,” said Echo Wang, 31, who works in marketing.
"Molly Tea may be doing well in China, but it is far from having the global projection of Louis Vuitton... I think some people considered the process inadequate," he said.
LVMH management called its intellectual property "an absolutely essential asset" but admitted that the controversy "had a negative impact."
Analysts point out that China remains vital to the global luxury industry. "In our assessment, China will continue to be an important market, although it may cease to be a growth engine in the next two or three years," said Luo.
"Luxury spending typically recovers in line with the economy, as the wealthier class is generally among the first to benefit from economic recovery."
