China’s Luxury Market Enters a “New Normal”: What Flat Growth in 2025 Means for the Industry

After years of extraordinary growth, China’s luxury market is entering a new phase. The rapid expansion that once positioned China as the global engine of luxury goods sales has slowed, with 2025 expected to bring flat year-over-year growth. This stabilization—dubbed the “new normal”—poses pressing questions for luxury brands, consumers, and the industry at large. What does this shift mean for the future, and how can companies adapt to thrive in this evolving landscape?

From Boom to Brake: What Has Changed?

China’s luxury market stumbled in 2024, with sales dropping a steep 18%-20%, according to Bain & Company. A confluence of economic challenges has been at the root of this decline. Persistent property crises, slowing economic growth, and rising concerns over employment security have dented consumer confidence, particularly in discretionary spending.

As Bruno Lannes, Partner at Bain & Co. and head of its Consumer Products, Retail, and Luxury practice for Greater China, explained, “2024 was a big setback compared to expectations.” While Lannes anticipates a recovery beginning in late 2025, the days of double-digit growth appear to be over.

Industry Leaders: Hits and Misses

The slowdown has impacted most brands, but some have weathered the storm better than others. Richemont, the parent company of Cartier, managed to achieve 10% revenue growth globally in late 2024. However, the company still experienced an 18% sales decline in China, underlining the ongoing challenges in the market.

The downturn has not been limited to mainland China. Global sales to Chinese shoppers dropped by 7% in 2024, as diminished purchasing power extended to overseas luxury spending. Even Hainan, China’s once-thriving duty-free destination, saw sales plunge by 29%, losing ground to competitive e-commerce platforms like Tmall and Douyin, which offer luxury items at compelling prices and unmatched convenience.

Despite these shifts, top-tier luxury consumers—who made up 45% of total sales in 2024—remain a bright spot. This affluent segment tends to be less impacted by broader economic challenges and continues to represent significant purchasing power.

Green Shoots Amid Headwinds

There are reasons for cautious optimism. Measures rolled out by Chinese authorities in late 2024 aimed at boosting consumer spending showed early signs of success. While these efforts have yet to spark a full market rebound, they offer a foundation for long-term stabilization.

Looking ahead, experts highlight China’s untapped potential: luxury goods penetration in the country remains low compared to more mature markets, creating room for measured growth. However, the shift from rapid market share acquisition to sustained, meaningful engagement will require brands to rethink their strategies.

Adapting to the “New Normal”

For businesses accustomed to exponential growth, the transition to flatter sales demands a recalibrated approach. The luxury market in China is evolving, and brands must keep pace by understanding shifting consumer behaviors, economic realities, and digital trends. Key areas for focus include:

Credit: Yiling Pan

– Digital Dominance: With platforms like Tmall and Douyin reshaping the shopping landscape, e-commerce will remain a crucial battleground. Brands must invest in delivering seamless digital experiences that align with consumers’ expectations.
– Regional Strategy: Cities beyond top-tier hubs like Shanghai and Beijing are emerging as critical markets. A tailored regional approach can unlock new opportunities in less saturated areas.
– Customer Loyalty: In an era of slower growth, nurturing long-term relationships with affluent buyers will prove vital. Enhancing the in-store experience and building personalized connections can deepen brand affinity.

Embracing Change as Opportunity

While flat growth may appear disappointing for a market once defined by its dynamism, stabilization is not a setback—it is an inflection point. Brands have the chance to move beyond chasing rapid gains and instead focus on creating sustainable practices and meaningful connections with their consumers.

As the luxury market evolves, the brands that succeed will be those willing to adapt to new realities while maintaining their aspirational allure. China’s “new normal” is a call to innovate, refine, and prepare for what comes next. The country remains one of the most influential players in global luxury—and the world will continue to watch its trajectory closely.