What: Chinese consumers' shift to second-hand luxury shopping amid economic slowdown is causing unprecedented price pressures and market transformation.

Why it is important: This shift represents a fundamental change in Chinese consumer behaviour that could permanently alter the global luxury market structure, as evidenced by the unprecedented 18-20% decline in China's luxury market and the rise of second-hand platforms offering up to 90% discounts.

China's luxury market is experiencing a significant transformation as consumers increasingly turn to second-hand shopping amidst economic challenges. The shift is particularly evident among middle-class consumers like Mandy Li, who exemplifies a growing trend of professionals adapting their shopping habits due to wage cuts and property devaluation. This change in consumer behavior is creating unprecedented price pressures, with some second-hand stores offering discounts of up to 90% on luxury items, compared to traditional industry standards of 30-40%. The trend is further amplified by deflationary pressures in the broader economy, with consumer prices falling 0.1% in May and businesses across sectors engaging in price wars. The impact on the second-hand luxury market is substantial, with annual growth rates exceeding 20% in 2023, though this growth has led to increased competition and deeper discounts. The transformation extends beyond mere cost savings, reflecting a fundamental shift in consumer psychology and market dynamics, as evidenced by the growing number of sellers while buyer numbers remain stable.

IADS Notes: Recent developments in China's luxury market reveal a profound transformation in consumer behavior and retail dynamics. In January 2025, China's luxury market experienced an unprecedented 18-20% decline, reflecting a fundamental shift in consumer preferences. This trend was first identified in June 2024 with the emergence of "luxury fatigue," as Chinese consumers increasingly favored discreet experiences over conspicuous consumption. The impact became particularly evident in April 2025, when the Haikou International Duty Free City reported a 16% revenue decline and 36% profit drop, despite government initiatives offering substantial tax-free allowances. This local challenge is part of a broader global trend, with December 2024 data showing the luxury sector experiencing a 2% decline to €363 billion and losing 50 million consumers over two years. However, the second-hand luxury market has emerged as a beneficiary of these changes, with March 2024 projections indicating potential growth to $350 billion by 2028, suggesting a fundamental restructuring of luxury retail dynamics rather than a temporary downturn.

Prices under pressure as Chinese luxury shoppers flood second-hand market