World’s third-largest luxury goods company, Italian luxury giant Kering’s core brand Gucci recently announced the closure of its iconic stores located in Shanghai’s Reel Mall and the New World Daimaru Mall. This news has sparked widespread attention in the high-end consumer goods industry in China.
According to reports from Huaxia Times and China Business News, on February 17, Kering’s luxury brand Gucci closed its Reel Mall and New World Daimaru Mall stores in Shanghai, bringing the total number of the brand’s stores in Shanghai down to 7. This also means that on Nanjing West Road, known for its luxury goods shopping district, Gucci now has only one store left in Shanghai, located in the Hang Lung Plaza.
Kering stated that the main reasons for Gucci’s declining performance include weak consumer spending in the Chinese market, unexpected adjustments in brand transformation, and changes in consumer demands.
CEO Wu Daiqi of Shenzhen’s Thinki Company expressed that the gradual decline of high-end luxury brands is somewhat related to the overall economic environment and the decreasing importance of these brands among the new Chinese consumers.
In 2024, Gucci closed several core city stores including Dalian Times Square, Shenyang Zhuo Exhibition, and Taiyuan Wangfujing.
Gucci is an Italian luxury fashion brand offering products such as clothing, leather goods, shoes, watches, ties, scarves, and perfumes. Since 2010, Gucci has been rapidly expanding in China, with the number of stores reaching over 80 at one point.
The closure of Gucci’s Shanghai stores is just a microcosm of the current environment in China’s luxury goods consumption market. Not only Kering but other luxury giants are also facing challenges.
Recently, the world’s second-largest luxury goods company, Richemont’s e-commerce platform Yoox Net-a-Porter (YNAP), announced the official closure of all its online platforms in China on March 20, including Tmall stores, WeChat mini-program, Xiaohongshu, TikTok flagship store, company website, and app.
Furthermore, YNAP confirmed the termination of after-sales service on April 22, signaling its complete withdrawal from the Chinese market.
Moreover, LVMH, the world’s largest luxury goods company, recently released financial reports showing a marginal 1% year-on-year revenue increase in 2024, exceeding expectations. However, revenue in the Asian region, including China but excluding Japan, saw about an 11% decline.
On January 21, 2025, consulting firm Bain & Company released the “2024 China Luxury Market Report,” indicating an expected 18% to 20% decline in mainland China’s personal luxury goods market sales in 2024.
Bain pointed out that insufficient consumer confidence and cautious spending are the main reasons for the market decline in China. Even more resilient HNWI (High Net Worth Individuals) have become increasingly conservative in luxury goods consumption, preferring to “diversify risks” by investing their expenditure in a wider variety of value-retaining assets amidst the backdrop of economic downturn.