China's luxury sector steadies, but shifting buyer mindsets will dictate future growth

Luxury sales in China have stopped falling but remain flat, and brands must adapt to a consumer psyche that now values social validation and high-touch service over traditional heritage cues.

Bain’s data indicated an 8% contraction in Chinese luxury sales last year, but quarterly results this year suggest a pause in the decline, with brands such as Richemont and LVMH posting modest regional gains while Kering still lags. TD Cowen warns that the market is merely stabilising, with hard luxury like jewelry faring better than fashion items. A McKinsey-Business of Fashion survey of 2,000 affluent Chinese consumers found low enthusiasm and the slowest retail growth since 2022, highlighting a shift toward external validation and premium service.

In contrast, U.S. shoppers are turning inward, favoring brands that reflect personal values and opting for newer challengers. Chinese luxury houses are therefore emphasizing high-visibility logos, flagship stores and personalized appointments, exemplified by Louis Vuitton’s new Beijing flagship with an on-site café and Tiffany’s similar opening. The report advises brands to combine AI-driven tools with human-centric service to maintain confidence while preserving the tactile, immersive experience Chinese buyers expect.