蘑菇AV

Luxury brands rethink China approach as downturn drags on: Labels like Versace, Valentino, and Balenciaga are dialing back discounts, telegraphing exclusivity to wealthy shoppers.

China is a global leader in online shopping, with high digital buyer and retail ecommerce penetration. Shoppers are comfortable buying luxury goods online and embracing livestreaming commerce.

Luxury brands are grappling with downturns in the US and China, the largest markets for personal luxury goods, and will have to seize opportunities for growth from new markets and product innovation.

The insight: The US is mired in the 鈥渨orst housing market in almost 50 years,鈥� RH CEO Gary Friedman said during the company鈥檚 Q1 earnings call, as high housing costs and economic uncertainty chill demand. Our take: With the sluggish housing market showing few signs of improvement, retailers must lean into any pockets of opportunity they find. For RH, that鈥檚 burnishing its luxury credentials and pushing deeper into hospitality, while Wayfair is leaning on its diverse supplier base. The resilient pro market is another area companies should look to take advantage of as they try to ride out the downturn.

While confidence trended up in May thanks to the reduction in China tariffs, rising tensions between the US and China and the lack of trade deals could cause consumers to quickly rethink their getaway plans.

Many EU brands and retailers sell products manufactured in China or use materials from China. Even if such products are shipped via the EU, they are considered of Chinese origin for US Customs purposes鈥攁nd will be subject to tariffs on goods from China.

While the retailer is taking steps to diversify sourcing, one-fifth of its total inventory in 2024 originated in China鈥攊ncluding 27% of its private-label products. Macy鈥檚 expects the duties to deliver a hit of 20 to 40 basis points to its gross margin鈥攚hich includes the cost of inventory brought in when China tariffs were at 145%.

Chinese consumers鈥� travel spending softened during a recent holiday: That鈥檚 a clear sign that confidence is strained due to trade tensions with the US.

In our exclusive survey with ESW, data from shoppers in 18 countries reveals new twists in the path to purchase, the rising momentum of marketplaces, and the resilience of age-old fundamentals.

Burberry will cut 20% of global workforce as sales slump continues: The company鈥檚 ill-timed brand elevation push puts it in a difficult position to weather luxury headwinds.

Worldwide sales of personal luxury goods will only grow by 3.2% in 2024 to reach $429.15 billion, weighed down by slower growth in the US and China, according to an August 2024 蘑菇AV forecast.

Tapestry鈥檚 advantages: Accounting practices notwithstanding, Tapestry is confident that its product array, affordable price point, and brand building efforts position it to continue growing despite falling consumer confidence and declining interest in luxury spending.

Hugo Boss is adjusting to the macro landscape on the fly: The German fashion house is rerouting China-made goods to other markets and stockpiling in the US to blunt the impact of tariffs.

Gucci sales slid 25% in Q1: The brand鈥檚 struggles put parent company Kering in a tough spot as it attempts to navigate a slowdown in luxury goods spending.

The news: L鈥橭r茅al saw robust growth in Q1 despite signs of sluggishness in the US market and continued weakness in China. Like-for-like sales rose 3.5% YoY, surging past expectations for 1.3% growth. Strength in Europe and emerging markets like Brazil helped L鈥橭r茅al outperform the broader beauty sector.

2025 could be another tough year for luxury companies: LVMH鈥檚 rough Q1 reveals considerable challenges as US spending drops.

Prada鈥檚 Versace deal comes at a difficult time for the luxury industry: Tariffs are threatening brands鈥� access to US consumers, while recession fears could trigger more conservative tastes.

Connected cars have moved far beyond being a luxury offering to become the default standard for the automotive industry. This fundamental change in how consumers use their vehicles comes with significant implications for advertisers. The scale of transformation is considerable.

The news: Est茅e Lauder is boosting investment in India as it looks for pockets of growth to offset its poor performance in China and the US. The company is partnering with India鈥檚 government to boost local beauty brands. The program, an extension of its BEAUTY&YOU India initiative, offers founders grants, mentorship, and industry access.

Trump鈥檚 proposed tariffs could add to luxury鈥檚 troubles: The move would curb US consumers鈥� buying power and potentially dampen Chinese consumer sentiment further.

Global personal luxury sales will contract this year: That will be the first decline since the Great Recession as weak spending in China weighs on the broader market.

Prada nears 鈧�1.5 billion deal to acquire Versace: The move would give the luxury company broader appeal as spending cools.