China and luxury: what does the future hold?
China and luxury: what does the future hold?
Long a growth driver for the major luxury houses, China now seems to be turning the page on its golden age in this sector. The market, which once accounted for nearly a third of the world's luxury goods, is in sharp decline, with sales expected to fall by 20-22% by 2024, according to Bain & Co..
Despite this difficult context, it would be premature to draw a definitive line under China. The big names in luxury goods, such as Chanel and Louis Vuitton, are continuing to invest, aware that this remains a strategic market. But to adapt to the changing Chinese consumer and cope with this slowdown, companies need to rethink their strategies. Calling on luxury interim management can prove decisive.
"The Chinese economy is not doing well. It puts a lot of pressure on young people," explains Sylvia, a Chinese woman in her thirties interviewed by Les Echos newspaper.
Since the Covid-19 pandemic, China has been facing a sharp economic slowdown. Faced with this difficult context, priorities are changing: health, travel and experiences now take precedence over the purchase of ostentatious products.
Joëlle de Montgolfier (Bain & Co) points out that luxury goods have lost 50 million consumers worldwide over the last two years, mainly millennials and Gen Z, whose purchasing power has been weakened by unemployment.
The real estate crisis plays a central role. David Dubois, professor at Insead, points out that over 70% of Chinese household savings are invested in property.
Falling property prices have profoundly altered their sense of financial security, limiting their appetite for luxury purchases.
Another key factor is the rise of "luxury shaming", amplified by the government's "shared prosperity" program. Today, displaying external signs of wealth is frowned upon and even outlawed in certain professional circles. "An internal memo from an investment bank in Beijing recommends: "No longer dress ostentatiously, either in the company or on meetings.
According to an article in the Journal du Luxethis phenomenon reflects a profound socio-cultural shift: it's no longer just an economic issue, but a rejection of values associated with excess and individualism. Chinese consumers now prefer more discreet, personalized experiences, and value quality and meaning over displays of wealth.
China's persistently high prices accentuate this disenchantment. Martin Crépy, senior partner at Simon Kucher, points out that "it-bags" can cost up to 30% more than in Europe. As a result, some Chinese customers are turning to other countries, notably Japan, or to the second-hand market.
As luxury expert Joël Hazan points out: "Chinese customers haven't abandoned luxury for all that. They have made it clear that the way in which many players have addressed them no longer corresponds to their aspirations." Investments are therefore continuing, as in the case of the Moncler Genius innovation hub in Shanghai, or the numerous openings planned at Bulgari, Tiffany & Co and Hermès.
In this complex context, marked by more selective and reasoned consumption, interim interim management becomes a strategic lever. Our experts Sophie and Emma, Delville Management's referents for the luxury sector, support companies in developing appropriate action plans, for example to :
With the rise of "luxury shame", it's becoming relevant to work on more discreet ranges, with a storytelling that promotes know-how and rather than ostentation. A specialized interim manager can steer these strategic adjustments and help reposition the offering.
Faced with a more selective Chinese clientele, innovation becomes a real lever of distinction. An interim manager can steer projects around blockchain, NFT or connected objects to reinforce transparency, authenticity, brand image and provide a differentiating customer experience. The result is a new era for luxury, more in tune with the market's digital expectations.
Since some Chinese customers now shop abroad, particularly in Japan, experienced managers can orchestrate the opening of stores in more dynamic areas, or readjust existing locations to maximize profitability.
Price disparities between China and other markets penalize local sales. An interim manager can help you overhaul your sales policy to reduce these disparities and make local purchasing more attractive.
Faced with more unpredictable demand, an interim manager adjusts the supply chain and S&OP to better align inventories and sales, in order to reduce unsold stock.
An interim manager can help you overhaul your sales policy and work to enrich the customer experience with personalized or exclusive services, to restore the desire to consume locally.
In a market where visibility remains low and recovery uncertain before 2026, an interim manager ensures business continuity and prepares the company for the next phases of growth.