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French luxury department store Galeries Lafayette closed its first flagship store in China on Wednesday, 27 May, thirteen years after it opened. The retailer cited falling sales in recent years as the reason for the closure.
While the luxury market experienced strong growth in the mid-2010s, notably thanks to the rise of the middle class, the Covid-19 pandemic and China’s property crisis proved to be a turning point, abruptly curbing China’s 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 a great deal. They now understand luxury consumption and brands much better. They have become familiar with this world, and their tastes have become more refined and sophisticated,” explains Lisa Nan, an editor at Jing Daily.
“If we look at today’s young consumers, we 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 reassess its entire property portfolio in China. “I therefore think this decision had more to do with an internal choice, as the locations of those sites were fairly unfavourable,” she says, before adding: “As for the retail sector, it is true that it faces a major challenge in China, and this applies not only to Galeries Lafayette but also to Lane Crawford.”
Presence in China remains strong
On Tuesday, the day before the closure, a steady stream of customers wandered through to take advantage of the final offers, while employees packed up unsold goods and mannequins.
Qian Linlin, who works in finance and whose office is just a few steps from the Beijing flagship, said she had been surprised to learn that the department store she occasionally visited during her lunch breaks was closing. “I noticed there were not many customers, but I never imagined that one day it would suddenly close and leave,” she said. “When it first opened, it was an iconic building, and all of us young people came here to shop. All we can do now is hold on to those memories.”
This 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 before closing its doors indefinitely.
However, Galeries Lafayette is not permanently leaving the Chinese capital. “Don’t be sad, this is not a farewell. See you soon, Beijing,” the French group wrote in a statement. On the contrary, the retailer now intends 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 favour greater convenience, higher-quality service, more meaningful experiences and a stronger sense of wellbeing,” the group also wrote in a statement.
Galeries Lafayette also stresses that this closure does not call into question its presence in China. The stores in Shanghai, Shenzhen and the special administrative region of Macao will remain open.