As reported in our Global Luxury Retail Outlook 2025, China remained the global leader in luxury retail expansion last year, accounting for 40% of all new store openings – a 10% year-on-year increase.

However, after a period of economic volatility, consumer sentiment in China remains cautious, resulting in luxury brands taking a more strategic, opportunity-focused approach to growth in the region. A significant driver behind this shift in consumer sentiment is the decline in residential property values – particularly in Tier 1 cities, where prices have dropped by 20–30% from their peak. With real estate accounting for an estimated 60-70% of household wealth in China, this downturn has had a profound impact on discretionary spend.

The stock market’s underperformance has compounded the issue, eroding the “feel-good factor” that once fuelled luxury consumption. Instead, uncertainty has led to a rise in precautionary savings. While this pullback isn’t uniform across all sectors, it’s particularly visible in high-ticket discretionary categories, including luxury goods.

HOW IS CONSUMPTION SHIFTING FROM PRODUCTS TO EXPERIENCES?

As spending slows, the nature of consumption in China is evolving, with experience-based luxury segments growing at a phenomenal rate. This means an increased appetite – particularly among younger, affluent consumers – for immersive brand experiences such as curated events, atelier tours, and private shopping sessions that offer more than just the product itself.

Importantly, this change is shaping where and how luxury is consumed, with many Chinese consumers also looking abroad for these elevated experiences. With the Chinese yuan remaining relatively strong against the Japanese yen (which has depreciated by around 30% over five years), Japan has emerged as a major beneficiary of this shift in luxury consumption. In 2024, Japan welcomed a record 37 million international visitors, many of them Chinese tourists drawn by favourable exchange rates. Global Blue data revealed a significant surge in tax-free luxury spending, with approximately 75% of market growth coming from the rise in the number of tax-free luxury shoppers.

HOW IS THE DOMESTIC MARKET EVOLVING TO MEET EXPECTATIONS?

In response to economic headwinds, China’s top-tier malls are reinventing themselves. A huge percentage of luxury sales in China are concentrated in just 15 shopping centres across the top 10 cities. These malls are not struggling with vacancies; instead, they’re focused on deepening engagement with their most valuable customers.

More strategically, they’re investing in hyper-personalised experiences for High Net Worth Individuals – particularly the top 5% of spenders, known as VICs (Very Important Clients). These consumers are being offered exclusive experiences, such as private visits to European ateliers, access to brand archives, and the opportunity to purchase limited-edition items. These are experiences money alone can’t buy – and that’s precisely the point.

Another emerging trend is the Salon Privé: private, appointment-only lounges located in discreet areas of malls, often near VIP drop-offs. These spaces offer one-on-one service in a serene, exclusive environment, away from the bustle of the main retail floor. Slowly but steadily, these lounges are being rolled out by the top brands across China and the broader Asia-Pacific region.

HOW DOES THE FUTURE LOOK FOR THE LUXURY SECTOR IN CHINA?

While macroeconomic pressures have tempered consumer confidence, China’s luxury retail sector is far from stagnant. Instead, it’s evolving – leaning into personalisation, exclusivity, and experience to maintain its edge. The question now is not whether Chinese consumers will return to luxury, but how brands and landlords can meet them where they are: more discerning, more global, and more experience-driven than ever.

FURTHER INFORMATION

Contact Nick Bradstreet

Savills Prime Global Retail Team