Gucci’s China shock reverberates across the luxury landscape
slowdown among Chinese shoppers have dogged the luxury industry for the better part of a year. Last week the scale of the problem hit home for one of fashion’s biggest but most exposed brands, Gucci.
French group Kering SA saw $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 lockdowns is failing to materialize. 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 enamored with the brand she bought three bags during a trip to Italy in 2016. “The new designs are bad.”
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 fueling
