Less luxury, more clicks: savvy Chinese consumers are shopping smarter

Beijing - Jacqueline Li was astonished to learn of the closure of Galeries Lafayette in Beijing. She believes it signals a change in Chinese shopping habits. Since the Covid-19 pandemic, luxury no longer holds the same appeal as it once did.

The closure of the iconic French department store this Wednesday occurs against a backdrop of economic gloom in the country. This is another illustration of how foreign luxury brands have lost their lustre in China, a market they relied on so heavily throughout the 2010s.

“Since the pandemic, people are paying more attention to their budgets and looking for practicality,” states Jacqueline Li, who was at Galeries Lafayette on Tuesday, its penultimate day of trading.

“We are no longer indulging in the excesses of the past, where a flashy logo was a must-have. Consequently, the demand for luxury has fallen,” adds the admissions manager from an international school. While luxury consumption in Europe and the US was buoyed by savings accumulated during the pandemic, Chinese consumers have become more frugal.

The reasons? The property market, where millions of Chinese had invested their savings, is in crisis; middle-class incomes are stagnating; and youth unemployment remains high. In 2025, the luxury market in China declined by 3 to 5 percent, after falling by 17 to 19 percent the previous year, according to the firm Bain & Company.

Covid effect

Before the pandemic, the middle class was fond of major brands. With the economic slowdown, “people are much more rational,” explains Lisa Nan, editor-in-chief of Jing Daily, a website specialising in China's luxury sector.

Covid has changed habits, even in Shanghai, China's wealthiest city. “I am more inclined to save now,” confides July Xu, 24, as she browses the shops in the Xintiandi commercial district. “Living through such a unique period made me realise that saving is essential.”

“Previously, people thought money came easily, with incomes rising every year. During the pandemic, however, many suddenly lost their jobs,” recalls Hu Shuqing, 61, interviewed outside a perfume boutique. Some analysts remain optimistic.

“There may be pent-up demand,” suggests Jelena Sokolova from the firm Morningstar. “People have significant savings and when they feel more secure about their financial situation, they could spend the money they have accumulated.”

Major brands face another challenge: e-commerce. It has become so ubiquitous in China that everyone, from students to retirees, now buys affordable clothing on their smartphone from the comfort of their sofa.

"Absolutely not"

They are spoilt for choice, from apps like Taobao and JD.com to live-streamed promotions on RedNote (China's equivalent of Instagram) and Douyin (the Chinese version of TikTok). At Galeries Lafayette, while employees were packing away mannequins, Jacqueline Li commented that the store had relied too heavily on “the traditional business model that has existed in France for decades.”

“The new generation of Chinese consumers prefers to shop online. Many people born in the 1990s, 2000s and even 2010s do not identify with this type of shopping centre at all,” she emphasised.

Many admit to visiting stores only to browse products. “When I see an item of clothing I like in a store, I immediately check its price online,” explains Yang Dunqin, 46, who was paying a final visit to Galeries Lafayette. Over time, the Chinese consumer has become “much more savvy,” notes Lisa Nan from Jing Daily.

Young Chinese consumers are less focused on established heritage houses. They prefer pop-up boutiques with stylish clothing and emerging local luxury brands. They now primarily want to “express their personal taste.” If they do purchase luxury goods, it is out of genuine affinity and not “just to display their status,” she highlights.

Yang Dunqin is indifferent to the closure of Galeries Lafayette. “It just shows that the world is moving on,” he concludes. “Times are changing.”