Bernstein’s take on China’s ‘K-shaped’ luxury market in Q3

What happened China’s luxury market is entering a more uneven phase. Softer consumer sentiment is weighing on several major brands, while affluent shoppers continue to support the sector’s highest end, according to analysis from Bernstein released yesterday. Luxury brands have faced weaker demand in China during the third quarter of 2026, Bernstein wrote. Data the firm published earlier this month showed sales at a sample of mainland China luxury mall sales fell 12 percent year-on-year in July, after broadly flat growth in the first quarter and low-single-digit growth in the second. Those declines differ significantly by brand. A K-shaped market is one where segments split after a downturn, with some recovering while others keep sliding. Charted, the two paths resemble the arms of the letter “K” — one rising, one falling. Bernstein uses the term for China’s luxury market: the wealthiest shoppers keep buying while everyone below them retreats. Outerwear giant Moncler is expected to see some weakness in China during 3Q26, although Bernstein says company commentary suggests its performance should remain relatively resilient compared with peers. Spending in China clusters around major holidays and shopping festivals, Bernstein noted, which makes the third quarter the market’s smallest for luxury. The rest of Asia is expected to hold up better. Brunello Cucinelli presents a steadier picture. Bernstein predicts that Italian label will see organic sales growth in the low teens for 3Q26, led by retail, with Asia expected to remain broadly stable despite a challenging comparison with the same period last year. China represents around 13.5 percent of Cucinelli’s sales, and the company continues to invest in the market, including the opening of Casa Cucinelli Shanghai this fall and the relocation of its Plaza 66 boutique. Hermès faces softer Chinese demand. Bernstein has lowered its forecasts for the maison’s 2026 growth, although it continues to see opportunities among high-end consumers and maintains an outperform rating for the maison. Its latest secondary-market tracker found core Birkin and Kelly resale premiums holding at around 1.4 times retail between 2Q26 and 3Q26, though it cautions that the data comes from a limited European auction sample. The Jing Take Mainland China remains one of luxury’s most important consumer markets, but the post-pandemic boom has given way to caution. Slower growth and weaker consumer confidence, after years of steep price increases, have changed the calculation for aspirational shoppers. Demand is narrowing to wealthier buyers. The clearest response has come from Hermès, which is pushing further into the high end. Bernstein points to higher-ticket categories and more VIP-focused service; the house will also stage its first haute couture show in January 2027. That Birkin and Kelly premiums are holding near 1.4 times retail suggests the scarcity model still works. But that leaves a choice. With aspirational shoppers pulling back, luxury houses must decide whether to chase them with lower entry prices or commit further to their wealthiest customers. Gucci has taken the first route, cutting prices by 20% to 30%. Rec reading: Gucci cuts prices, but will Chinese shoppers return? One shift is producing different answers. Hermès is climbing further toward its wealthiest clients, while Cucinelli keeps building in China on the bet that its top end has room left. For the global luxury industry, the question is increasingly not whether Chinese consumers will spend, but which Chinese consumers will spend, where they will spend it, and what they still consider worth paying a premium for. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

Bernstein’s take on China’s ‘K-shaped’ luxury market in Q3

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Bernstein’s take on China’s ‘K-shaped’ luxury market in Q3

How 2026 welcomed ‘Too Cool’ back