Some luxury labels are retreating from China’s steep rally, trying to rebuild an exclusive image to attract wealthy shoppers whose spending remains less affected by the slowdown.
According to data consulting firm Re-Hub, products sold on Tmall, a major e-commerce platform in China, were discounted in the first quarter of this year, even at China’s largest annual online shopping festival in November. This is in stark contrast to the average discount for Alibaba Group, which the brand holds Tmall owned by the limited company in the same period the previous year.
Versace will become part of Prada Spa after a $1.4 billion acquisition, reducing its price on Tmall by an average of 3% in the first quarter, compared to 12% in 2024, with a discount not that steep.
Italian luxury home Valentino Fashion Group Spa also lowered the number of discounted products available on Tmall in January and completely lowered Markdown in February and March.
Given the slow market demand, avoiding discounts seems counterintuitive, marking a discount for China’s luxury brand strategy.
“It’s a transition from chasing transportation and short-term revenue to fostering long-term brand affinity,” said Re-Hub CEO Max Peiro. “This transition is not only operational, but fundamental. Brands are investing in relevance, desirability and advanced experiences to promote long-term loyalty.”
He added that discounts are now less effective in driving sales growth and risk damaging brand value. Even Hermes, Chanel and Louis Vuitton, which usually avoid online discounts, including the most unique haute couture companies, are stepping up efforts to maintain their exclusive images among the wealthier Chinese, including offering more VIP-only events and shopping experiences such as in-store museums.
As global fashion houses reshape their strategies in China, decades of luxury boom have ended with the continued property depression and post-anemia economic growth once a cost-conscious bargaining hunters emerge.
The country’s middle class – the backbone of the world’s luxury market – turned to the casual and cheap scammers of the luxury brands it used to crave, or simply couldn’t buy. Bain & Co. estimates that their pullback helped China’s luxury goods market sales drop by 20% last year. This is the leading brand shifting its focus to attracting wealthier Chinese who are still willing to splash out despite the increasing volatile mood of consumers.
Success in China is crucial for luxury brands, which face challenges in another largest market (US), as consumer sentiment fell to nearly five-year lows due to tariff uncertainty by Donald Trump.
Balenciaga, Versace, Valentino and Alibaba did not respond to requests for comment.
Jacques Roizen, managing director of Digital Luxury Group China Consulting Group, said the ever-changing pricing strategy also reflects the new understanding of TMALL by luxury brands and the key role it plays in shaping consumers’ perceptions of mainland brands.
As TMALL becomes increasingly important for sales, brand pricing on the platform can help Telegram’s broader China strategy shift. While super premium brands including Hermes and Chanel can still sell most of their sales from physical stores, the importance of online channels to low-end luxury labels is becoming increasingly important.
According to consulting firm Yaok Group, the e-commerce market accounts for 46% of China’s total luxury goods sales last year and is expected to surpass offline sales within three to five years.
As the product returns to full price, after the panic volume exceeded unsold stocks in last year’s deep TMALL discounts reflects last year’s pressure on some labels will increase how to unload excess stocks. Not all high-end brands are backing off sales – some, like Chloe of Richemont and Michael Kors of Capri Holdings Ltd., offer bets on Tmall similar to those offered in 2024.
Chloe and Michael Kors did not respond to requests for comment.
Nevertheless, by lowering prices on the platform, a growing number of luxury brands have made their Chinese pricing strategies more in line with the global approach – they cleared stocks through cautious, private sales activities, which only took a limited time each year, and there were few visible discounts for the public.
“While smaller discounts may put pressure on short-term inventory clearance capabilities, this shift ensures consistent brand information for all consumer touchpoints,” Royson said. “Brands that adapt to this strategy early may lead to market recovery.”
With the assistance of Claire Che.
This article was generated from the Automation News Agency feed without the text being modified.
