Chinese shoppers are shifting their spending habits as economic pressures grow. Mandy Li, who works in the energy sector, stopped buying new luxury handbags after a 10% pay cut and a big drop in her family’s property value. She now shops at second-hand luxury stores instead.“I’m cutting down on large expenditures,” 28-year-old Li told Reuters, while exploring Beijing’s Super Zhuanzhuan second-hand luxury items store that opened in May.“The economy is definitely in a downturn,” she continued. “My family’s wealth has shrunk by a lot” due to the property crisis China has been grappling with since 2021,” she added.The shift in spending habits reflects deeper economic troubles. Consumer prices in China fell 0.1% in May compared to a year ago, raising fears that deflation may become entrenched. Price wars have broken out across sectors like cars, coffee, and e-commerce amid weak demand and overcapacity.New enterprises target budget-conscious consumers, offering 3 yuan breakfast deals and frequent supermarket sales. However, economists worry about the sustainability of price wars, as business closures and job losses could intensify deflation.The second-hand luxury sector grew over 20% in 2023, according to an industry report by Zhiyan Consulting from last year.This expansion has increased available items, reflected in substantial discounts. New establishments like Super Zhuanzhuan offer up to 90% reductions, compared to previous industry standards of 30-40%. The major second-hand marketplaces, including Xianyu, Feiyu, Ponhu and Plum, have also begun offering steep markdowns of 70% or higher on their merchandise.“In the current economic environment we are seeing more existing luxury consumers shifting to the second-hand market,” Lisa Zhang, an expert with Daxue Consulting, a market research and strategy firm focusing on China told Reuters.At Super Zhuanzhuan, a Coach Christie handbag originally priced at 3,260 yuan sells for 219 yuan, whilst a Givenchy G Cube necklace’s price dropped from 2,200 yuan to 187 yuan.
