Gucci’s China shock reverberates across the luxury landscape
- French group Kering SA lost US$9 billion of market value after warning of a slump in China sales this quarter
- A separate report shows Swiss watch exports to China, a leading destination for high-end timepieces, tumbled last month
French group Kering SA saw US$9 billion wiped off its market value after warning that sales of the Italian label’s products in China have slumped this quarter. The slowdown is also starting to show up in other corners of the luxury industry.
A separate report showed Swiss watch exports to the country – a leading destination for high-end timepieces – tumbled last month. Analysts, meanwhile, are predicting China’s luxury demand will cool further this year.
The spate of sobering news provides the latest evidence that an anticipated surge in spending by well-heeled Chinese freed from the world’s strictest Covid-19 lockdowns is failing to materialise. While some luxury companies are managing the fallout better than others, the rest could be forced to rethink how they do business in China, starting with Kering.
“I haven’t bought any Gucci bags myself for years,” said Wu Xiaofang, a 34-year-old banker living in Shanghai who was once so enamoured with the brand she bought three bags during a trip to Italy in 2016. “The new designs are bad.”
02:09
China’s young abandon consumerism in favour of fulfilling experiences
Wu is among a generation of Chinese luxury shoppers that has grown more selective about where to spend its cash. Rising unemployment and a property downturn have hurt consumer confidence, while deflationary pressures are fuelling concern about growth in one of the world’s largest consumer markets.
