What: Luxury brands in China are shifting from rapid expansion to immersive, personalised experiences and innovative store formats to deepen customer engagement and maintain market share.

Why it is important: The shift highlights how brands are adapting to a challenging market by prioritizing engagement and differentiation, consistent with recent market analyses.

Luxury brands in China are recalibrating their strategies, moving away from rapid expansion to focus on deeper customer engagement and improved sales per store. This transition is marked by a surge in immersive, personalised experiences—such as exclusive events, innovative store formats, and culturally integrated retail concepts—designed to attract and retain high-value clients. The market’s transformation is underscored by a significant decline in overall luxury sales, with an 18-20% drop in 2024 and flat sales now considered the ‘new normal.’ Despite these challenges, brands like Louis Vuitton are setting new standards for experiential retail, as seen in the launch of “The Louis” in Shanghai, which blends retail, hospitality, and cultural elements to create a destination experience. Multibrand retailers such as Dongliang are also embracing experiential and culturally relevant spaces, reflecting the broader trend of entertainment-driven retail environments. The evolution of the market is further characterised by digital integration, sustainability, and the rise of lower-tier cities as luxury powerhouses, demanding brands innovate and optimise to gain market share in a flat landscape.

IADS Notes: Recent market data from January 2025 confirms the end of exponential growth in China’s luxury sector, with flat sales and a pronounced shift toward top-tier consumer engagement. The March 2025 BoF report highlights the rise of lower-tier cities and the need for cultural adaptation, while January 2025 and June 2025 sources document the industry’s pivot to experiential, entertainment-focused retail. Dongliang’s Shanghai concept in November 2024 exemplifies how brands are responding by creating unique, immersive environments, aligning with the broader trend of integrating culture, technology, and hospitality to sustain relevance and drive performance.

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