Why luxury brands are exiting China’s lower-tier cities

What happened Luxury businesses are retreating from China’s lower-tier cities. In recent months, brands such as Tiffany, Dolce & Gabbana, Ferragamo, and Loewe have shuttered stores in cities like Kunming, Lanzhou, Taiyuan, and Guiyang. Cartier exited Guiyang’s Lixing Center in April, while speculation is growing that Louis Vuitton, Gucci and Burberry may also withdraw from the same mall, though their stores remain open for now. China luxury market contracting These closures follow years of aggressive expansion during China’s pandemic-era luxury boom, when brands moved quickly into second and third-tier cities to capture rising spending. But that growth has now ground to a halt. According to Bain’s China Luxury Report released in January, the market contracted by 18% to 20% in 2024, returning to 2020 levels, and is expected to remain flat through 2025. While top-tier cities such as Shanghai, Beijing, Guangzhou, and Shenzhen remain relatively stable, lower-tier markets are bearing the brunt of the slowdown. Mall traffic is inconsistent, brand loyalty is lower, and operational costs remain high. In response, retailers are consolidating their footprints and reallocating resources to flagship investment in core cities. Recently, Gucci and Balenciaga opened new stores in Guangzhou K11, and Louis Vuitton expanded in Shanghai and Hong Kong with large-scale, multi-category flagships. The Jing Take This is not the first time global luxury brands have pulled back from China’s lower-tier cities. A decade ago, during a major consumption boom, brands flooded into second- and third-tier markets, opening boutiques in cities like Wenzhou, Dalian, and Shenyang. As international travel became more accessible and price disparities widened, Chinese shoppers began favoring overseas purchases in places like Hong Kong and Europe. Many of these local boutiques quietly closed. Today’s retreat follows a similar pattern, only now the macro backdrop is more challenging. Consumers are not just buying less; their priorities are changing. A recent survey from the Shanghai Advanced Institute of Finance and Charles Schwab found that only 28.6% of newly affluent Chinese now list luxury shopping as a financial goal, down from over 50% five years ago. Concerns about healthcare, aging parents, and economic volatility have overtaken discretionary spending. Luxury flagships rise, lower-tier stores fall Luxury labels are responding with a more cautious and strategic retail model. Rather than opening new locations outright, many now test lower-tier markets with atrium pop-ups. Store investment is being concentrated in premium locations in Beijing, Shanghai, Guangzhou, and Chengdu, cities with bigger high-net-worth populations and more stable footfall. As China’s luxury market plateaus, the era of rapid retail expansion is over. Businesses are shifting from footprint growth to footprint quality. They are seeking fewer but more profitable stores, and focusing on long-term brand equity over short-term reach. 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.

Why luxury firms are exiting China’s lower-tier cities (again)

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Why luxury firms are exiting China’s lower-tier cities (again)