What: The New York Times reviews the situation of luxury in the country.

Why it is important: China is not anymore the global growth engine for the industry, but this is only a temporary setback as it is expected that 40% of luxury shoppers will be Chinese by 2030.

2022 has been a difficult year for luxury retail in China, as shown by the new project Taikoo Li Qiantan in Shanghai, which opened on 120,000 sqm at the end of 2021, but stood mostly empty throughout the year, due to mass lockdowns. According to the New York Times and Blomberg, China’s luxury goods market share might have been halved in 2022 due to store closures and customers’ reticence to come back once they reopened.

Only brands such as Hermes or Moncler posted growth in the country, the rest did not experiment the expected V-shaped recovery. While during the pandemic brands focused on opening new locations in second and their tier cities, as well as in Hainan, the New York Times reports that they now redirect their investments in the US, which is growing faster.

As a consequence, there is now a wait and see attitude in China, as, even though no one challenges the fact that the country still remains an important part of the business, players lack visibility on when the market will take off again. As Bain states it, “over dependence on China is risky, but not as risky of not being there at all”.

In China, Luxury shopping faces headwinds