Shift in Chinese Consumer Behavior Poses Challenges for Luxury Brands

CNChina|

Luxury brands such as LVMH and Kering are grappling with a significant decline in demand from Chinese consumers, who are shifting their spending habits toward high-end real estate and experiential purchases rather than traditional luxury goods. According to recent analysis by Fortune, the once-loyal affluent shoppers in China have increasingly distanced themselves from brands that made substantial investments in the market as their needs evolve.

The change comes in the wake of a pandemic-induced economic slowdown, which led to financial pressures and a new consumer mentality favoring practicality over ostentation. In 2024, Kering's stock fell by 39.4%, while LVMH recorded its poorest performance since the financial crisis. Marie Driscoll, a luxury retail equity analyst, noted that rising prices without corresponding innovation have alienated consumers.

As many upscale brands struggle to adapt, a reported 50 million Chinese consumers have turned away from the luxury segment. Experts indicate that as property ownership emerges as a primary status symbol and experiences become more valued, luxury fashion houses face mounting pressure to rethink their strategies.

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