蘑菇AV

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.

The luxury sector is facing a 鈥渃hallenging鈥� and 鈥渟omewhat unprecedented鈥� environment, Prada Group chairman Patrizio Bertelli said鈥攃ausing even once-hot brands like the company鈥檚 namesake label to lose momentum. Luxury companies for the most part view the current downturn as a cyclical blip in an otherwise robust industry. But the prolonged slump is revealing structural challenges鈥攏amely, heavier reliance on American and Chinese consumers, as well as a tendency to lean on price hikes rather than innovation to drive sales.

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

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.

Michael Kors owner Capri credited a sequential improvement in demand for its better-than-expected quarter and upgraded FY forecast. In an otherwise difficult quarter for luxury, Capri鈥檚 bullishness stands out. But it has a lot of work to do to revive its brands鈥攑articularly Michael Kors, which, following the sale of Versace, now accounts for nearly 70% of revenues.

Ralph Lauren posted higher-than-expected quarterly results and raised its full-year revenue outlook, though it warned that tariffs could pressure consumer spending in the second half. Amid economic uncertainty, Ralph Lauren鈥檚 performance highlights the resilience of brands that sit at the intersection of aspiration and accessibility. The company appears better positioned than some of its luxury peers to weather volatility. Its quarterly results offer a blueprint for its retail peers, showing the value of a diversified supply chain and brand equity over aggressive discounting and heavy dependence on a single market.

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.

The insight: The gulf between top-tier luxury brands like Brunello Cucinelli and the rest of the market is widening as ultra-wealthy consumers become the primary growth driver for the industry. Our take: Luxury brands have to work harder than ever to win over cautious consumers. While many are chasing the money by recalibrating their assortments鈥攁nd price points鈥攖o woo high net worth individuals, this strategy could backfire by making brands even less appealing to the aspirational shoppers who still account for the majority of luxury sales.

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.

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.

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.

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%.

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.

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.

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.

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.

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.

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.