Luxury Conquered China—Then China Learned About Luxury—The GUCCI Case

In 2019, McKinsey estimated that Chinese consumers would account for 65% of global luxury growth. Seven years later, Luca de Meo (CEO of Kering) admits that Gucci treated that market as a place to seek easy growth. The Chinese customer hasn’t disappeared—what has changed is what it takes to win them over.

On April 16, 2026, Luca de Meo, who had been at the helm of Kering for just a few months, used an expression you rarely hear during an investor day. Gucci, he said, had treated China almost like “a bit of a trash bin”: a market where to seek easy growth, with stores in the wrong locations, a retail experience that had become outdated, and an overreliance on outlet stores. The problem was far from minor. Gucci had closed out 2025 with 6 billion euros in revenue, down 22% from the previous year; in the Asia-Pacific region, retail sales had fallen by 25%, in a region that still accounted for 30% of the brand’s revenue.

De Meo’s statement seems to highlight, above all, a mistake on Gucci’s part. When viewed alongside the reports McKinsey has published on Chinese consumers over the past seven years, it reveals something even more interesting: the market that had made that easy growth possible no longer exists.

In 2019, McKinsey described China as the engine of global luxury growth. Chinese consumer spending was projected to reach 1.2 trillion renminbi by 2025—nearly double the level at that time—with 65% of the sector’s global growth attributed to Chinese demand. The expansion of the upper-middle class was driving millions of new customers toward Western handbags, shoes, jewelry, and watches; in another study from the same year, McKinsey estimated that nearly three-quarters of new global spending would come from China.

But the most important factor wasn’t how much they were buying. It was who was buying.

A significant portion of those consumers had only recently entered the luxury market. Among the generations born in the 1980s and 1990s, McKinsey classified “luxury newcomers” and “status surfers” as accounting for 70% of the young market. For the former, the brand carried decisive weight; more generally, the report described luxury as a form of social capital: not just something to wear, but a way to communicate success, belonging, and social differentiation.

For Western brands, it was an almost perfect combination. Incomes were rising, the customer base was growing, and familiarity with luxury was increasing. Every new affluent family represented a potential entry into the market; every new city with sufficient wealth justified a boutique; every consumer buying their first handbag had years of potential purchases ahead of them.

At a stage like this, distribution and growth can easily become conflated. More stores mean greater access to demand; greater visibility strengthens brand recognition; and the logo reduces the perceived risk for customers approaching the category for the first time. There was no real need to take customers away from competitors—new ones were constantly coming in.

Then the industry added another lever. Between 2019 and 2023, the global luxury market grew by an average of 5% per year, but McKinsey estimates that about 80% of that growth came from price increases and only 20% from volume. During the same period, China accounted for about 40% of global growth in luxury goods. The mechanism worked both ways: greater demand on one hand, higher prices on the other.

In 2026, McKinsey refocused its attention on the Chinese consumer. China remains one of the fastest-growing markets through 2030, so there has been no structural shift that would turn consumers away from luxury. What has changed are the criteria by which customers assign value. In the new “State of Luxury” report, based on a survey of more than 2,000 consumers in China and the United States, emotional connection to the brand surpasses status among the key factors determining desirability; quality and craftsmanship remain essential, but now essentially represent the entry-level price point. To ensure a purchase at that price

In 2026, McKinsey returned its focus to the Chinese consumer. China remains one of the markets poised for the fastest growth through 2030, so there is no structural shift away from luxury. What has changed is the criteria by which customers assign value. In the new “State of Luxury” report, based on a survey of over 2,000 consumers in China and the United States, the emotional connection to the brand surpasses status as one of the main factors determining desirability; quality and craftsmanship remain essential, but they now essentially represent the entry-level price point. To secure a full-price purchase, an immediate desire is required.

It’s a more radical shift than it seems. In 2019, the major advantage of Western fashion houses was that they were already the go-to choice for consumers who were just learning the codes of luxury. By 2026, that consumer is familiar with them; they can distinguish between the product and the brand. They compare alternatives. They evaluate the price. They seek out information before entering a boutique. And above all, as de Meo himself acknowledged, they distinguish between what they consider good and what they consider mediocre in terms of quality, design, and experience, rather than simply buying because an item bears a logo.

This does not mean that major brands have lost their edge. In fact, McKinsey notes an important difference compared to the United States: in China, established fashion houses retain greater strength thanks to brand trust, recognition, and authority. The name still matters. It’s just no longer enough.

And this is where de Meo’s assessment of Gucci becomes harsher.

In the past, growth depended on attracting new consumers to the category. Today, it depends increasingly on the ability to win over consumers who are already familiar with the category.

For this reason, attributing the challenges facing the luxury sector in China solely to the economic slowdown risks being merely a consolation. Declining confidence, the real estate crisis, and weak consumer spending have certainly reduced demand. But they do not explain why some brands are better able than others to maintain their desirability and full-price positioning. And above all, they do not explain why Kering is focusing specifically on distribution, customer experience, and customer relationships rather than simply waiting for an economic recovery.

De Meo maintains that restoring Gucci to a position of strength in China will take months, perhaps a year. The initial figures for 2026 show an improvement, but the strategic point comes before the turnaround: Gucci must not try to recapture the Chinese market of 2019. It must learn to sell to the market of 2026.

Seven years ago, the Western luxury sector could look to China as the largest pool of new customers in its history. It opened stores, raised prices, and turned brand awareness and distribution into growth.

It worked because, as the luxury houses conquered China, millions of Chinese consumers were learning to buy luxury goods.

Now they’ve learned.

And the problem for Gucci—and for those who built their growth on the same assumption—is that a customer who knows the product better is also a much harder customer to convince.