Luxury stores in Europe grapple with decline in Chinese tourist patronage

Luxury stores in Europe grapple with decline in Chinese tourist patronage

In the wake of the absence of Chinese tourists, European luxury retailers are adapting their strategies to target local and emerging markets, enhance digital and eCommerce experiences, and deepen customer engagement through exclusivity and authenticity.

Key strategies include targeting local affluent consumers and emerging luxury markets such as the UAE, India, Brazil, and parts of Africa. These regions are seeing a boom in luxury eCommerce, supported by mobile-first shopping experiences and region-specific marketing campaigns in local languages.

To meet rising local customer expectations for convenience and exclusivity, luxury retailers are enhancing their eCommerce fulfillment. This includes offering concierge-style services like same-day or two-hour delivery, premium packaging, and discreet shipping. These services aim to replace the in-store prestige that Chinese tourists once contributed to.

In response to evolving local customer preferences, luxury brands are refocusing their brand messaging away from aspirational mass appeal towards authenticity, craftsmanship, and meaningful experiences. These elements resonate more deeply with local luxury shoppers who now demand sustainability, innovation, and emotional connection over heritage alone.

New service models, such as certified pre-owned luxury goods, rentals, and subscriptions, are being offered to provide accessible luxury options that maintain brand equity while appealing to these changing preferences.

Strengthening digital touchpoints and micro-influencer collaborations tailored to specific local luxury consumers is also a key strategy. This replaces the global, tourist-centric campaigns that previously targeted Chinese travelers.

Adjusting pricing and product strategies to cater to local income sensitivities and cost-conscious consumer trends is another essential aspect of the adaptation. Luxury brands are focusing on premium but sustainable growth rather than volume-driven approaches, amid economic headwinds in Europe.

Overall, the absence of Chinese tourists has accelerated European luxury brands' shift towards hyper-localization, digital innovation, and experience-driven retail. The aim is to sustainably engage well-informed local high-net-worth individuals and capitalise on emerging affluent customers in new regions.

Despite these adaptations, concerns about a possible decline in appetite for designer brands and plans by goods companies to implement further price hikes to protect margins persist. The strength of the US market will be a key focus for any signs of weakness in the luxury industry.

Industry analysts forecast that overall organic sales growth in the luxury industry will be around 11%, half the pace of the previous quarter. Chinese tourists' share of global luxury spend is expected to take until 2025 to reach pre-Covid levels. Chinese shoppers are not expected to return to high streets in the same numbers as in 2019, but will likely shop in China instead.

Sales at Burberry and Richemont were pushed down more than 30% due to closures, as reported in July. Weak second-quarter GDP data from China sparked concerns about the industry outlook in the country. Closures in China have caused industry sales to drop by as much as 40%, according to Barclays estimates.

However, high-end French and Italian fashion houses have seen strong post-pandemic demand for designer labels, with shoppers eager to spend confinement savings. The US has become the largest luxury market, attracting new investments from European brands.

Despite the challenges, European luxury retailers are demonstrating resilience and innovation in adapting to the changing landscape, ensuring their continued success in the global luxury market.

[1] Source: McKinsey & Company [2] Source: Financial Times [3] Source: Bloomberg [4] Source: The Business of Fashion

1. European luxury retailers are adapting their strategies to target local and emerging markets like the UAE, India, Brazil, and parts of Africa, as a response to the absence of Chinese tourists.
2. To cater to rising local customer expectations, luxury brands are refocusing their brand messaging towards authenticity, craftsmanship, and meaningful experiences, rather than maintaining a global, tourist-centric appeal.
3. New service models, such as certified pre-owned luxury goods, rentals, and subscriptions, are being offered to provide accessible luxury options that maintain brand equity while appealing to these changing preferences.
4. These regions are seeing a boom in luxury eCommerce, supported by mobile-first shopping experiences and region-specific marketing campaigns in local languages.
5. Adjusting pricing and product strategies to cater to local income sensitivities and cost-conscious consumer trends is another essential aspect of the adaptation, as luxury brands focus on premium but sustainable growth.
6. The absence of Chinese tourists has accelerated European luxury brands' shift towards hyper-localization, digital innovation, and experience-driven retail, aiming to sustainably engage well-informed local high-net-worth individuals and capitalize on emerging affluent customers in new regions.

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