Luxury brands have a new headache in China: Stingy shoppers are returning their goods, erasing up to 75% of their sales value

Key Facts

But within days, some brands saw up to 75% of that sales value vaporize as consumers returned or cancelled purchases in droves, people familiar with the matter said, asking not to be identified discussing private data.
This unusually high rate of returns — well above the 20% to 30% that consultancy Sanford C. Bernstein considers normal in the global luxury industry — has persisted since China exited Covid Zero more than a year ago, and is sparking a re-evaluation of the way some fashion labels do business in the world’s second-largest economy.
The trend worsened in the first quarter of this year, as Tmall return and cancellation rates for Italian luxury house Brunello Cucinelli SpA soared to 69% from 59% in the same period a year ago, according to people familiar with the matter.
“Global luxury brands have continued to launch and invest in the flagship stores on Tmall as a cornerstone of their China market strategy.”