From Bags to Baristas: Luxury Brands Are Opening Cafés in China

Photo by THE CHINA NOW

Luxury brands are making a notable pivot in China. As consumer confidence weakens and high-end spending slows, major international fashion groups are turning to a new kind of presence on the ground: cafés.

China’s personal luxury market shrank by 18 percent in 2023, and forecasts for 2025 point to flat or modest growth at best. That’s a sharp contrast to the post-pandemic rebound that once drove global optimism. At the same time, leading luxury groups are reporting declining performance in China: LVMH’s sales in Asia (excluding Japan) dropped 11 percent in the first quarter of 2024. Richemont and Burberry also posted single-digit declines in the mainland and broader region.

This cooling market is prompting global brands to rethink how they connect with Chinese consumers.

Fashion Meets Coffee

In recent months, multiple fashion giants have opened upscale cafés inside or alongside their flagship stores in major Chinese cities.

In Shanghai, LVMH launched “The Louis,” a striking three-story boat-shaped concept space that includes both a café and fine dining area. Celine, also under LVMH, opened a garden-themed café nearby. Armani introduced a 350-square-meter café in its Beijing location at China World Mall. Spanish retailer Zara unveiled its first-ever Asia-based café, “Zacaffè,” inside a 2,500-square-meter flagship store in Nanjing.

Spanish retailer Zara unveiled its first-ever Asia-based café, “Zacaffè,” inside a 2,500-square-meter flagship store in Nanjing.

While some brands have previously experimented with lifestyle pop-ups and collaborative food concepts, the recent wave marks a more permanent and integrated approach. These cafés are not positioned as new profit centers but as retail strategies—ways to transform luxury spaces into immersive environments where consumers linger, engage, and return.

Lower Stakes, Higher Visibility

Unlike luxury goods, which may only be purchased once or twice a year, a branded coffee or dessert is accessible weekly, if not daily. That repeatability allows brands to build consistent consumer touchpoints at relatively low operational cost.

As retail foot traffic becomes more selective and online shopping remains strong, in-store cafés give brands an added reason to draw customers in—and to extend their time inside. These physical locations become experiential spaces, not just sales floors.

Cafés also support another goal: social relevance. Branded drinks, stylish interiors, and carefully curated menus are highly shareable on Chinese social media platforms. In a competitive environment where visibility is key, a co-branded latte can reach more people than a billboard.

Experiential Strategy Expands

This isn’t limited to coffee. In Shanghai, Prada has opened “Mi Shang,” an upscale restaurant designed to reflect the brand’s aesthetic. Louis Vuitton operates “The Hall” in Chengdu, a full-service dining experience set inside a restored cultural site. These locations emphasize that brands are now investing in full-scale experiential destinations—places where retail, lifestyle, and design converge.

With the Chinese market becoming more mature and selective, luxury groups are rethinking how value is perceived. More than a product, the experience of interacting with a brand—whether over lunch or coffee—is becoming a core part of its relevance strategy.

The Road Ahead

The rise of in-store cafés is not a trend born of abundance, but of necessity. In an environment marked by slower GDP growth, high youth unemployment, and ongoing property market pressures, luxury consumption has become more cautious.

Yet instead of retreating, global fashion houses are embedding themselves into everyday life in smaller, more sustainable ways. Their response to weak demand is not silence—but visibility through experience.

In doing so, they’re redefining what luxury means in China today: not just ownership, but atmosphere, memory, and shareability.