What: Luxury customers are evolving in China, with a renewed focus on second-hand and resale.

Why it is important: Are international department stores prepared for such a shift when Chinese tourists come back?

There are concerns about demand for luxury goods in Asia, particularly China, following Gucci's slump in sales and Kering's warning of a slowdown in the region. However, a closer look at the trends suggests that not all luxury groups will be affected equally, and there will be winners among European high-end houses and a growing crop of local rivals.

The booming second-hand luxury market in China, estimated to be worth over $8 billion, is a significant factor. Consumers are showing a preference for brands whose products retain their value, such as Hermès, Louis Vuitton, and Chanel, due to high demand and regular price increases.

Additionally, shopper preferences are shifting away from affordable, mass-market luxury toward less frequent but higher-end purchases, favouring classic products from a smaller number of brands. This trend benefited LVMH and Hermès, whose share prices fared better than others after Kering's warning.

Another challenge for European brands is the rise of homegrown luxury alternatives in China. Geopolitical tensions have created a more patriotic group of Chinese shoppers, leading to a preference for local producers, particularly among millennials. Chinese fashion and luxury brands like Shang Xia, Icicle, and Bosideng have been gaining popularity and shifting upmarket to cater to premium customers.

While luxury spending from the ultra-wealthy segment remains resilient, the middle-class Chinese shoppers have been the real driving force behind the growth in the past decade. As the economic slowdown in China persists, consumers will become more choosy and focused on resale values. Investors need to be more selective as well, considering these changing dynamics in the Asian luxury market.

China's luxury tastes are changing