Tiffany & Co., one of the world’s most iconic luxury jewellery brands, has recently downsized its flagship store in Shanghai by 50%.

This decision reflects the growing challenges faced by luxury brands in China. Traditionally a thriving market, China is now grappling with economic uncertainty and changing consumer behaviours.

The store, located in Hong Kong Plaza and opened in 2019, was integral to Tiffany’s presence in the Chinese market. However, this downsizing is part of a wider strategy responding to shrinking luxury spending across the region.

Tiffany’s decision mirrors struggles within its parent company, LVMH.

The company, in fact, saw a 3% revenue drop in its watches and jewellery segment. Additionally, it registered a 19% decline in profit from recurring operations in the first half of the year.

As luxury brands adapt to changing market conditions, Tiffany’s downsizing presents interesting strategic reflections.

Challenges Facing Tiffany & Co. in China

The Chinese economy, once a vital engine for global luxury consumption, is now experiencing a marked slowdown. This is nothing new in economics term and we had already discussed, in a previous article, how this is a much broader phenomenon in Asia.

However, this slowdown compels brands such as Tiffany & Co. to re-evaluate their strategies in the market.

One of the reasons can be linked to the changing consumer landscape, which we keep on discussing and presenting in our reports.
In fact, younger consumers, particularly Millennials and Gen Z, are shifting their preferences towards experiences rather than material goods.

This cultural shift has reduced demand for traditional luxury items like jewellery.

Moreover, the trend toward understated displays of wealth further weakens the demand for brands like Tiffany.

As we also analyse in our latest reports, the rise of e-commerce platforms such as JD.com and Alibaba, along with the preference of Chinese brands is transforming how Chinese consumers shop for luxury items.

The convenience of online shopping, often at discounted prices, reduces the necessity of visiting physical stores. Additionally, grey market shopping, where consumers buy luxury goods abroad to avoid domestic markups, is reducing foot traffic in stores like Tiffany’s in Shanghai.

Internally, Tiffany has faced challenges like employee turnover, driven by lower commissions due to slowing sales.

Some staff have migrated to competitors, making it difficult for Tiffany to maintain a competitive edge. Moreover, Tiffany’s failure to meet LVMH’s ambitious sales targets further complicates its operations.

Strategic Responses by Luxury Brands

To combat these challenges, luxury brands have adopted various strategies.

Some, like Chanel, continue to expand their store networks in China, banking on long-term market recovery. Meanwhile, others like Tiffany & Co. are scaling back operations and adopting more conservative approaches to maintain profitability.

A popular strategy among brands is reducing the size of flagship stores while opting for smaller, more personalised retail spaces. This allows them to lower operational costs while creating exclusive shopping experiences for high-value customers.
Brands like Louis Vuitton have launched pop-up stores and limited-edition product lines to maintain exclusivity while adapting to current market conditions.

Digital expansion is also critical. With the rise of e-commerce, brands are investing heavily in online platforms to deliver digital experiences that reflect their luxury status. Louis Vuitton’s livestream events and collaborations with JD.com and Little Red Book engage tech-savvy consumers.

Localising product offerings has become a key strategy, with brands tailoring collections to Chinese tastes, such as creating items for Chinese New Year or collaborating with local designers.
This localisation strategy helps international brands compete with the rise of domestic brands.

Social media and influencer marketing also play crucial roles. Platforms like WeChat, Weibo, and Little Red Book enable brands to connect directly with younger consumers.
Collaborating with Key Opinion Leaders (KOLs) enhances visibility and credibility, as shown by Burberry’s livestreaming and influencer partnerships.

Sustainability is another area where brands are focusing. Younger consumers are increasingly drawn to eco-friendly collections, and brands like Gucci are leading the charge in showcasing social responsibility. Customer loyalty is further reinforced through personalised services and exclusive access to products, as seen in Hermès and Cartier.

The Rise of Slow Fashion

As luxury brands grapple with the challenges of greenwashing and high production costs, the slow fashion movement is emerging as a viable alternative to traditional luxury consumption.

Slow fashion emphasises sustainability, longevity, and ethical production, encouraging consumers to purchase fewer, high-quality items that last longer and significantly reduce environmental impact.

By prioritising craftsmanship and responsible sourcing, slow fashion aims to counteract the wasteful practices of fast fashion and foster a more mindful approach to clothing consumption.

The year 2024 has witnessed a notable rise in circular fashion, which promotes the reuse, recycling, and up-cycling of garments.

This shift towards circularity is a direct response to the growing consumer demand for solutions to textile waste and environmental degradation. Circular fashion not only extends the life-cycle of clothing but also minimises the need for new resources, thereby reducing overall environmental footprints. Innovative brands are leading this movement by designing garments with end-of-life considerations in mind, such as modular designs that can be easily repaired or recycled.

Additionally, slow fashion brands are increasingly integrating blockchain technology to enhance supply chain transparency.

The intersection of these trends reflects a broader cultural shift towards more responsible and informed consumerism.

Trends and Metrics in Slow Fashion

Slow fashion is gaining momentum, especially among Generation Z and millennials who are increasingly prioritising ethical and sustainable products. As we highlight in our report “Blockchain and the Luxury Market”, these consumers are willing to pay a premium for brands that promote sustainability.

Moreover, brands are leveraging artificial intelligence (AI) in production processes to reduce waste, optimise resources, and ensure ethical practices. For example, AI is being used to minimise fabric wastage during design, aligning with the core values of slow fashion.

In Europe, particularly in Germany and Scandinavia, stricter environmental regulations and heightened consumer awareness are driving the slow fashion movement.
In the Asia-Pacific region, countries like Japan and South Korea are also seeing growing interest in sustainable consumption, driven by government policies and cultural shifts.

The Textile Exchange’s 2023 Sustainability Report revealed a 10% increase in the adoption of organic cotton, driven by slow fashion brands’ commitment to using sustainable materials. Additionally, certifications such as GOTS (Global Organic Textile Standard) and Fair Trade Certified help consumers identify genuinely sustainable products.

Slow Fashion: a rising phenomenon

Slow fashion is gaining traction, especially among Gen Z and millennials who prioritize ethical and sustainable products. As we highlight in our report “Blockchain in the Luxury Market” these consumers are willing to pay more for brands promoting sustainability.

In Europe, stricter regulations and consumer awareness, particularly in Germany and Scandinavia, are driving the movement. In Asia-Pacific, countries like Japan and South Korea are also seeing increased interest, driven by policies and cultural shifts.

The 2023 Textile Exchange Sustainability Report revealed a 10% rise in organic cotton adoption, with slow fashion brands committed to sustainable materials.

<

Certifications like GOTS and Fair Trade Certified help consumers identify genuinely sustainable products.

Slow Fashion: The Challenges

No phenomenon comes without challenges. For Slow Fashion, a significant challenge is the high cost associated with production.

Slow fashion, infact faces challenges like greenwashing. High production costs, due to ethical labour practices and sustainable materials, also limit the scalability of slow fashion, making it difficult to compete with fast fashion’s lower prices.

However, second-hand and rental fashion platforms like Depop, ThredUp, and Rent the Runway offer luxury yet affordable alternatives. and promote a circular economy.

These trends, along with innovations in biodegradable fabrics and zero-waste designs, could help overcome some challenges and push the slow fashion industry, and within it the slow high fashion industry, toward greater sustainability.

Future of Slow Fashion: Trends, Innovations & Challenges

The future of slow fashion hinges on consumer education, scalable production, and affordability. As eco-consciousness rises, more people are choosing brands that align with sustainability. Advocacy groups and brands play a key role in educating consumers, while circular fashion—focused on recycling, upcycling, and second-hand markets—gains mainstream traction.

Technology, particularly AI and blockchain, is driving slow fashion forward. AI reduces waste by optimising production, and blockchain enhances supply chain transparency, ensuring verified sustainability. European regulations are also pushing brands to adopt eco-friendly practices, fostering a shift toward a circular economy.

While fast fashion persists, the luxury sector is leading sustainable innovation, with bespoke tailoring, made-to-order collections, and repair services gaining popularity. However, balancing affordability and ethical production remains crucial for scaling slow fashion across the mass market.

Key Takeaways

Tiffany & Co.’s decision to reduce its Shanghai store size highlights challenges in China’s luxury market, such as economic slowdowns, changing consumer preferences, and rising e-commerce competition. Meanwhile, slow fashion is gaining momentum, with sustainability and ethics becoming central concerns.
Both luxury and slow fashion brands must adapt, leveraging technology and regulations to meet growing demand for eco-friendly practices.

For SMEs, this shift offers opportunities. By adopting blockchain and sustainable models, they can stand out to eco-conscious consumers. Embracing e-commerce, social media, and influencer marketing can also help SMEs expand globally, following the example of brands like Louis Vuitton and Burberry.