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French luxury department store Galeries Lafayette closed its first flagship shop in China on Wednesday 27 May, thirteen years after it opened. The group said the decision was due to a decline in sales in recent years.
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While the luxury market experienced strong growth in the mid-2010s, boosted in particular by the rise of the middle class, Covid-19 and the severe property crisis marked a decisive turning point, abruptly curbing Chinese domestic consumption and forcing the sector to adapt to new economic realities.
“We have seen a decade of growth in the luxury sector in China. Over the years, the Chinese consumer has matured significantly. They are now more familiar with luxury consumption and brands. They have therefore become accustomed to this universe, and their tastes have become more refined and sophisticated,” explains Lisa Nan, an editor at Jing Daily.
“If you look at young consumers today, you can see that they may no longer be attracted solely by brands, but rather by immersive pop-up stores and the many marketing initiatives in China,” she adds.
Lisa Nan goes on to say that the French retailer had already announced its intention to review all its property assets in China. “I therefore think this decision had more to do with an internal strategic choice, as the locations of these sites were rather unfavourable,” she says, before adding: “As for the retail sector, it is indeed facing a major challenge in China, and that applies not only to Galeries Lafayette but also to Lane Crawford.”
Still a strong presence in China
On Tuesday, the day before the closure, a steady stream of shoppers wandered through to take advantage of the last offers, while staff packed up unsold goods and mannequins.
Qian Linlin, who works in finance and whose office is just a few steps from the Beijing flagship store, said she was surprised to learn that the mall she occasionally visited during her lunch breaks was about to close. “I had noticed there were not many customers, but I never imagined that one day it would suddenly close and be gone,” she said. “After it opened, it was an iconic building at the time, and all of us young people would come here to shop. All we are left with now are our memories.”
The six-storey, 48,000-square-metre emporium, located three kilometres west of the Forbidden City, was being cleared of its handbags, clothes, shoes and children’s toys ahead of its indefinite closure.
However, Galeries Lafayette is not pulling out of the Chinese capital for good. “Don’t be sad, this is not goodbye. See you soon, Beijing,” the French group wrote in a statement. On the contrary, it now plans to offer more functional stores, with a stronger focus on the selection of brands and products.
“Consumers’ expectations of the traditional department store model have changed considerably. Modern shoppers increasingly prioritise greater convenience, higher-quality service, more meaningful experiences and a stronger sense of well-being,” the group also said in a statement.
Galeries Lafayette also insists that this closure does not call into question its presence in China. Its stores in Shanghai, Shenzhen and the Special Administrative Region of Macao will continue to operate.