Is this the end of China’s daigou era?

One after another, luxury brands are detoxing from “daigou,” personal shoppers who buy luxury goods overseas and resell them in China, fueling discount arbitrage. The shift has become unavoidable for any house seeking to preserve aspirational status and regain the right to sell at full retail price. Take Michael Kors. The label is putting itself through a kind of luxury rehab. On Capri Holdings’ latest earnings call, CEO John Idol outlined one of the most aggressive channel resets the brand has attempted in a decade: slashing promotions, turning off daigou-fueled volume in outlets, raising prices, and shifting assortments toward more fashion-forward styles. At the same time, the house is pouring money into full-price retail, from “residential-style” stores to its first in-store café concept, the Jet Set Lounge, which will be rolled out in flagships from New York to London and Beijing to Tokyo. The short-term damage is deliberate. Idol has made it clear the aim is to restore brand equity, lift average unit retail (AUR), and retrain consumers who have become used to buying Michael Kors at a discount. It is a story closely watched in China, where years of deep outlet markdowns and daigou arbitrage have hardwired expectations that “accessible luxury” should almost always be on sale. Increasingly, Michael Kors is not alone. From Estée Lauder and La Prairie to LVMH, global fashion and beauty groups are choosing to wean themselves off daigou and discount-led volume — even as travel retail sales slide and shareholders demand answers. The question now is whether this detox can stick in China’s structurally distorted pricing ecosystem. A year of pain and five years of re-education For brands accustomed to the high of daigou-driven volume, turning off the tap is far more than a pricing exercise. “In general, cutting down promotions when they have been anchored in consumers’ minds takes about one full year,” says Jacques Roizen, managing director of Digital Luxury Group. Consumers simply wait: they test the brand’s resolve, expecting promotions to return. “During that time, the brand suffers from much lower revenue, which most brands can’t afford,” Roizen adds. “It’s very easy on paper, but very difficult financially in reality, especially when the brand has to report to shareholders.” China’s retail rhythm makes that detox even harder. Years of e-commerce festival culture — from 6.18 and Double 11 (Singles’ Day) to platform-led “anniversary sales” — have conditioned shoppers to expect deep discounts at regular intervals. For beauty, where promotional cycles can run as many as 10 times annually, these patterns have become so embedded that travel retail has lost its historic price advantage. Roizen argues that this promotional saturation is now one of the main reasons Chinese consumers no longer feel compelled to buy overseas: mainland online prices often match or beat duty-free tags. According to Zarina Kanji, managing director for the U.K. and Europe at WPIC Marketing + Technologies, the full detox timeline is even more protracted. She has repeatedly observed that once a brand’s price structure is set by informal channels, re-establishing order requires nothing short of a complete system reset. That means cleaning up parallel supply, tightening distributor controls, normalizing seasonal pricing, and demonstrating full-price discipline for at least three to four seasons. She estimates this typically results in 24 to 36 months of revenue contraction. During that period, brands must bring consumers back into owned channels, implement globally aligned pricing, and recast themselves not as “accessible luxury,” a code word for perpetual promotion, but as elevated lifestyle brands with genuine value propositions. Linda Yu, general manager of influencer marketing and social media agency Red Ant Asia, goes further still. For her, detox is not just a one-to-two-year cycle but a three-to-five-year brand rehabilitation. Daigou pricing and deep discounts have created a “stubborn price anchor,” she says, and unwinding this requires at least two to three full product cycles before perception truly shifts. While average unit retail (AUR) may begin stabilizing within 18 to 24 months, the consumer’s mental recalibration, accepting the brand’s full price as legitimate, takes far longer. Luxury and beauty’s comedown from the daigou high Prestige beauty spent the better part of a decade drifting into dependence on daigou and duty-free intermediaries. That is now unwinding abruptly. Estée Lauder Companies has blamed persistent weakness in Asian travel retail for multiple profit warnings, restructuring rounds, and a sharp slowdown in its once-dominant skincare franchises. Korean and Hainan duty-free — long dominated by bulk buyers — have become liabilities rather than growth engines as Beijing and Seoul tighten enforcement. La Prairie, historically one of the most daigou-driven luxury skincare brands in Asia, recorded double-digit sales declines when gray-market volumes collapsed. Internally, Beiersdorf has acknowledged that daigou sales dropped as much as 87% in a single quarter, enough to flip the brand from growth to contraction. L’Oréal has similarly flagged the pressure, even as it seeks to protect mainland price integrity through cross-functional task forces linking China and travel retail teams. At LVMH, Bernard Arnault has publicly rejected the idea that daigou-led travel retail can coexist with brand equity. His CFO, Jean-Jacques Guiony, has been explicit that LVMH is actively eliminating parallel channels — even at the cost of lower short-term profits — to protect long-term brand capital. Yet Roizen cautions that the industry may be losing more than just discounted volume. Daigou, he says, have historically cultivated close customer relationships. “When the revenue volume they represent decreases, it can also be a sign the brand is losing relevancy in China,” he says. Detox exposes not only the distortions but the underlying demand that may or may not be there. The structural trap: Outlets, duty-free, and cross-border arbitrage The challenge for Michael Kors — and for every beauty and luxury group engaged in detox — is that they are operating within a retail system structurally predisposed to discounting. China’s outlet ecosystem has matured into a parallel retail universe, one that increasingly competes with full-price stores rather than complementing them. Yu says that outlets have, in many cases, become substitutes for flagship stores in consumers’ minds, making it exceedingly difficult for brands to elevate their image while maintaining heavy inventory exposure. Duty-free, particularly in Korea and Hainan, has created an official low-price anchor that directly conflicts with brands’ efforts to restore mainland pricing power. Kanji says that Chinese consumers have become extraordinarily price-literate: across Xiaohongshu (also known as RedNote), Douyin, and WeChat private groups, shoppers constantly benchmark mainland, duty-free, and daigou prices. One channel breaking discipline can undermine the entire pricing system. At the same time, cross-border e-commerce — originally intended to expand brand reach — has inadvertently institutionalized price leakage. Preferential taxation and logistical efficiency replicate many of the advantages daigou once held, while multilayer distribution systems allow unofficial discounting to reappear even when brands attempt to tighten control. In beauty, this has created a three-tiered price architecture: official retail, duty-free, and cross-border e-commerce. As long as the gap persists, detox remains challenging. What are the signs of a healthy detox from discounted luxury? In a climate where nearly every brand is experiencing contraction, investors and partners need ways to distinguish between a controlled detox and uncontrolled deterioration. Kanji says the clearest signs of a true brand rebuild include improvements in full-price sell-through, rising AUR in owned channels, and the return of younger, higher-value consumers who buy signature SKUs rather than simply hunt for promotions. She points to shifts in purchasing behavior across Tmall Luxury Pavilion and DTC channels — particularly when domestic full-price sales remain resilient even as cross-border prices rise. Yu says research should show improvements in attributes like desirability and uniqueness, while social listening should reveal a pivot from discount discourse to product, experience, and campaign-led engagement. Operationally, healthier inventory patterns, higher repurchase rates, and stronger cross-category purchasing signal that brands are cultivating a long-term, profitable customer base. The categories most vulnerable to detox are also the ones that relied most heavily on arbitrage: high-priced, standardized luxury skincare; premium beauty gift sets; and accessible luxury handbags that historically moved quickly across borders. Can experiential retail really rewire price perception? One of the most intriguing elements of Michael Kors’ strategy is its bet on experiential retail — spaces designed to slow shoppers down, enrich emotional connection, and shift perception toward full price. Idol describes the Jet Set Lounge as a lifestyle immersion experience intended to anchor a new era of premiumization. But Roizen is skeptical of how far offline experience alone can shift brand equity in a market dominated by e-commerce. Offline activations, he says, rarely achieve the reach required to counteract the perception shaped by online promotion calendars. Kanji and Yu, however, believe experiential retail can work if success is measured not by traffic spikes, but by behavioral change. They point to rising AUR in catchment areas, migration of consumers from third-party marketplaces to owned channels, longer dwell times that signal emotional engagement, and the emergence of organic social content that reinforces a premium narrative. Yu adds that genuine experiential success should deepen relationships: higher member conversion and tier upgrades, stronger loyalty behaviors post-visit, and advocacy on social platforms that reflects pride rather than bargain-driven urgency. Is the daigou era ending? Michael Kors’ detox arrives at a moment when investors, regulators, and consumers are all recalibrating what value means in fashion and beauty. The brand’s experiment — shuttering daigou channels, shrinking outlet promotions, elevating store experiences, and insisting on full-price discipline — will serve as a test case for whether Chinese consumers can be re-educated, and whether global brands have the stomach for multiyear pain in exchange for long-term pricing power. The daigou era is not ending, but its rules are being rewritten. Brands that commit to detoxing will emerge with stronger equity and cleaner margins. Those that relapse will continue facing what Kanji calls “mini collapses” of price power every 12 to 18 months.

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Is this the end of China’s daigou era?