The closure of France's Galeries Lafayette in the Chinese capital on Wednesday takes place against the backdrop of a sluggish post-pandemic economy and shifting consumption practices. It is the latest sign foreign luxury brands might not retain the pull -- and the cashflow -- that they counted on in the world's second largest economy in the 2010s. "I think people's spending habits after the pandemic may be more cost-effective and practical," Li told AFP, on a pilgrimage to the Galeries on its penultimate day of operations.
A woman poses for pictures next to a Lululemon shop in Shanghai © Hector RETAMAL / AFP
"It's no longer as over-the-top as before, like needing to have an impressive logo. So you'll see that (demand for) luxury goods has fallen," the international school admissions officer said. While luxury consumption in Europe and the United States has been driven by pandemic-era savings, Chinese consumers have spent more frugally as the post-Covid recovery has stuttered. The property market, into which millions had poured their savings, is struggling to recover from a long-running crisis, while middle class incomes have stagnated and youth unemployment remains high.Last month, consumer spending grew at the slowest pace in more than three years, official data showed.In 2025, the luxury market in China declined three to five percent, after plummeting 17 to 19 percent the year before, according to consultancy Bain & Company. Pandemic hangoverBefore the pandemic, China's burgeoning middle class produced plenty of first-time high-end buyers, said Lisa Nan, editor at Jing Daily, a publication that focuses on China's luxury market. Now, "because of the economic downturn, people are much more rational and they have to navigate through this difficult period", she said. Even in financial hub Shanghai's swanky shopping districts, buyers still viscerally feel the uncertainty of the Covid pandemic. "I find myself wanting to save money even more now," said 24-year-old July Xu, who was browsing the stores in upmarket Xintiandi with her friends.
