In the Paris boutique of a Swiss luxury watchmaker, a Chinese customer anxiously discusses a credit card payment with her bank. After hours of back and forth, it finally goes through – to everyone’s relief.
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“Things like this rarely happened before,” a salesperson at the store said, explaining how the card of the female customer was repeatedly declined as she tried to purchase a €25,000 (US$29,126) watch.
The salesperson has also noticed a decline in spending by Chinese customers, ceding their throne to clients from the United States and the Middle East.
“Now, many Chinese clients tend to shop at more accessible brands nearby and come here only to have a look. Even if they do make a purchase, they are more likely to buy cheaper models at €30,000 (US$34,953) to €40,000 (US$46,606),” the salesperson said.
China’s economic slowdown and changing consumer habits have pushed the European luxury goods industry into unfamiliar territory. The Chinese market has stopped growing while its consumers have become more selective, with many now turning to domestic brands.
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Faced with this new reality, European brands were attempting new strategies in the crucial market, according to industry insiders and analysts.
“A main challenge is to manage the macroeconomic and revenue effects of the smaller growth rate, although the current stabilisation at around five per cent remains appreciable compared to many other parts of the world,” said Pascal Moran, executive president of the Federation de la Haute Couture et de la Mode (FHCM).