When Jacqueline Li heard about the closure of Galeries Lafayette in Beijing, she was astonished. However, in her opinion, this is a sign of changing Chinese purchasing habits. Since the Covid-19 pandemic, luxury no longer has the same appeal as it once did.
The closure of the branch this Wednesday comes against the backdrop of an economic downturn in the Asian country. The brand is an icon of French department store culture.
This is another example of how foreign luxury brands have lost their luster in China. In the 2010s they were still betting heavily on this market.
“Since the pandemic, people are paying more attention to their budget and looking for practical things,” says Jacqueline Li. She was at Galeries Lafayette on Tuesday, the penultimate day of opening. “We are no longer prone to the excesses of the past where you wanted a flashy logo. As a result, the demand for luxury has decreased,” adds the director of admissions at an international school.
While luxury consumption in Europe and the United States was driven by savings accumulated during the pandemic, Chinese consumers have become more frugal. The reasons for this are varied. The real estate market, in which millions of Chinese people invested their savings, is in crisis. In addition, middle class incomes are stagnating and youth unemployment remains high.
In 2025, the luxury market in China fell by three to five percent, after falling by 17 to 19 percent the previous year, according to the consulting firm Bain & Company.
The Covid effect
Before the pandemic, the middle class was enthusiastic about big brands. But with the economic downturn, “people have become much more rational,” explains Lisa Nan. She is editor-in-chief of Jing Daily, a website specializing in China’s luxury sector.
Covid has changed habits, even in Shanghai, China’s richest city.
“I feel more like saving now,” says 24-year-old July Xu as she strolls through the shops in the Xintiandi shopping district. “This particular time of the pandemic has made me realize how important it is to save something.”
“People used to think money would come easily as incomes increased every year. But during the pandemic, many suddenly lost their jobs,” recalls 61-year-old Hu Shuqing in front of a perfumery.
Some analysts remain optimistic. “There may be pent-up demand,” estimates Jelena Sokolova from Morningstar. “People have a lot of savings. If they are more confident about their financial situation, they could spend the money they have saved.”
But the big brands face another challenge: e-commerce. This has become so ubiquitous in China that everyone, from students to retirees, is now buying cheap clothes from the comfort of their sofa on their smartphone.
The selection is huge. It ranges from apps like Taobao or JD.com to live shopping offers on RedNote, a kind of Chinese Instagram, and Douyin, the Chinese version of TikTok.
At Galeries Lafayette, as employees pack mannequins, Jacqueline Li says the department store has relied too much on the traditional business model. This has existed in France for decades.
“However, the new generation of Chinese prefers to shop online. Many people born in the 1990s, 2000s and even 2010s absolutely do not identify with this type of shopping center,” she points out.
Many admit that they just come to look. “When I see an item of clothing that I like in the store, I immediately check what it costs online,” explains 46-year-old Yang Dunqin. He came to Galeries Lafayette for one last visit.
Over time, Chinese consumers have become “much more informed,” notes Jing Daily’s Lisa Nan. Young Chinese are less likely to chase large, traditional fashion houses. They prefer pop-up stores with stylish clothing and young, local luxury start-ups. Today they want above all to “show their personal taste”. When they buy luxury, they do so out of genuine connection and not “just to show off their status,” she emphasizes.
The closure of Galeries Lafayette leaves Yang Dunqin indifferent. “It just shows that the world is evolving,” he says firmly. “Times are changing.”
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