Balenciaga, Versace, Valentino, and their contemporaries are shifting strategies to highlight exclusivity and draw steady expenditures from affluent customers.
Several high-end brands are reducing deep discounts in China with the aim of restoring their exclusive image to attract affluent customers whose purchasing power remains less affected by economic downturns.
None of the items offered by Kering’s Balenciaga on Tmall, China’s leading ecommerce site, saw discounts in the initial three months of this year – not even during the country’s largest yearly online shopping event in November – as reported by data analytics firm Re-Hub. This represents a significant shift from the brand’s typical discount rate of around 41 percent on Alibaba Group Holding’s Tmall for the corresponding times last year.
Versace, set to become part of Prada after a US$1.4 billion acquisition, cut prices for an average of just 3 per cent of its products on Tmall in the first quarter, compared with 12 per cent in 2024 – and the discounts were not as steep.
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Italian luxury house Valentino Fashion Group also offered fewer discounts on Tmall in January, and pulled markdowns entirely in February and March.
The trend, which appears counterintuitive given sluggish demand, marks an about-turn in luxury labels’ strategy in China.
“It’s transitioning from focusing solely on attracting traffic and generating quick income to building lasting brand attachment,” stated Max Peiro, CEO of Re-Hub. “This change isn’t just about operations—it goes right down to the core. Companies are now concentrating on becoming more relevant, desirable, and offering top-tier experiences to cultivate enduring customer devotion.”
He mentioned that discount strategies were becoming less effective for boosting sales growth and could potentially diminish the brand’s perceived value. Even high-end luxury brands known for avoiding online promotions—such as Hermes, Chanel, and Louis Vuitton—are now intensifying their efforts to preserve an aura of exclusivity among affluent Chinese consumers. This includes hosting more VIP-exclusive events and providing enhanced shopping experiences such as in-store museums.
The shift away from discounts occurs as international fashion brands revamp their approaches in China. The prolonged period of luxury spending fueled by the middle class is winding down due to ongoing issues with real estate and sluggish economic recovery following the pandemic, which has transformed previously free-spending Chinese consumers into more price-sensitive bargain seekers.
The nation’s middle class, which has long been a cornerstone of the global luxury market, is now gravitating towards more casual wear like athleisure and less expensive imitations of high-end designer labels they once coveted, or simply delaying purchases entirely. This shift contributed to as much as a 20 percent decline in China’s luxury goods sales last year, as reported by Bain & Co. Consequently, many brands are refocusing their efforts on attracting richer Chinese consumers who remain inclined to make extravagant buys even amid growing doubts about economic prospects.
The success in China is vital for luxury brands, as they also encounter difficulties in their biggest market elsewhere—the U.S., where consumer confidence has dropped to nearly a five-year minimum. An index tracking prominent European luxury companies’ stock prices has declined by 7.4 percent year-to-date.
Balenciaga, Versace, Valentino, and Alibaba did not reply to requests for their comments.
Tmall’s changing role
Jacques Roizen, the managing director for China consulting at Digital Luxury Group, noted that the shifting pricing approach was also an indication of luxury brands’ fresh insight into Tmall and its significant impact on molding consumer opinions.
As Tmall grows increasingly crucial for sales, brands’ pricing on this platform may signal broader changes in their China strategies. Although high-end brands like Hermès and Chanel continue to generate most of their revenue through brick-and-mortar shops, online channels are becoming progressively significant for less premium luxury labels.
Last year, the e-commerce sector made up 46 percent of China’s overall luxury goods sales, and it is anticipated to overtake traditional retail within the next three to five years, as reported by consulting firm Yaok Group.
When products revert to their original prices, there will be increasing pressure on certain labels regarding strategies for managing surplus stock. Last year’s significant Tmall discounts were partly driven by fears about leftover inventory. However, not every luxury brand is reducing its reliance on sales. For instance, Richemont’s Chloe and Capri Holdings’ Michael Kors continue to provide markdowns on Tmall comparable to what was offered throughout 2024.
Chloe and Michael Kors did not reply to requests for their comments.
Nevertheless, by restricting price reductions on the platform, many luxury brands are aligning their pricing strategies in China with those used globally. This involves managing inventory through exclusive, private sale events held only a few times annually, minimizing overt public discounts.
Although modest discounts might influence short-term stock liquidation abilities, transitioning to this approach guarantees a uniform brand narrative throughout every customer interaction point,” stated Roizen. “Companies that embrace this strategy promptly are poised to spearhead the market rebound.
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The article initially appeared on the South China Morning Post (www.scmp.com), which is the premier source for news coverage of China and Asia.
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