French luxury department store Galeries Lafayette closed its first flagship store in China on Wednesday 27 May, thirteen years after it opened. The retailer explains the move by pointing to falling sales in recent years.
While the luxury market experienced strong growth in the mid-2010s, notably thanks to the rise of the middle class, the Covid-19 pandemic and the severe property crisis marked a decisive turning point, abruptly curbing China’s domestic consumption and forcing the sector to adapt to new economic realities.
“We have seen a decade of growth in the luxury sector in China. Over the years, the Chinese consumer has matured a great deal. They now understand luxury consumption and brands much better. They have become familiar with this world, and their tastes have become more refined and sophisticated,” explains Lisa Nan, an editor at Jing Daily.
“If we look at today’s young consumers, we can see that they may no longer be attracted solely by brands, but rather by immersive pop-up stores and the many marketing initiatives in China,” she adds.
Lisa Nan goes on to say that the French retailer had already announced its intention to reassess its entire property portfolio in China. “I therefore think this decision had more to do with an internal choice, as the locations of those sites were fairly unfavourable,” she says, before adding: “As for the retail sector, it is true that it faces a major challenge in China, and this applies not only to Galeries Lafayette but also to Lane Crawford.”
