The search for lower prices and the rise of the second-hand market are reshaping the fashion industry. This shift is hitting traditional brands, forcing a review of commercial strategies, and modifying the value that consumers assign to luxury labels.
The expansion of cheap clothing platforms (notably Chinese brands), the growth of local labels, and the boom in second-hand luxury are transforming the fashion industry. This change impacts consumption habits, the sales of major European labels, and the commercial rules of the West, which is seeking to limit the advance of ultra-fast fashion.
The global fashion industry is undergoing a transformation that goes beyond trends and runways. For decades, China was one of the main engines of Western luxury growth and a key piece of the global textile production chain, but it is now changing the rules of the business: consumers are buying fewer new items from traditional brands, seeking more economical alternatives, and turning both to domestic labels and the second-hand market.
At the same time, platforms like Shein and Temu have modified access to clothing through low prices, massive supply, and constant product renewal. This model puts pressure on traditional retailers, forces a review of the strategies of large chains, and has opened a regulatory front in Europe, where France has begun to apply specific charges against ultra-fast fashion.
The economic impact is already visible. According to Bain & Company, the Chinese personal luxury goods market fell between 3% and 5% in 2025, while the second-hand luxury segment grew between 15% and 20%. In parallel, large European companies are facing a more demanding market, with consumers reviewing their spending and questioning the price they pay for a brand.
Western luxury loses ground in China
For years, China was one of the main markets for major European fashion houses. The demand for high-end handbags, accessories, clothing, and jewelry boosted the revenues of groups like LVMH, owner of Louis Vuitton and Dior, and Hermès. In certain periods, the country accounted for nearly a third of global luxury spending.
That scenario has changed. The post-pandemic economic recovery lost steam, consumers became more cautious, and spending on high-priced goods stopped growing at the expected pace. The pressure also moved to physical stores: Louis Vuitton closed five locations in mainland China over the last two years, while Galeries Lafayette closed its Beijing branch in May 2026.
The companies' results reflect these difficulties. In October, LVMH attributed the drop in sales of its fashion and leather goods division during the third quarter to the slowdown in Chinese demand. Reuters also reported that the top ten European luxury companies had lost about $350 billion in market capitalization since the beginning of 2026.
The phenomenon is not exclusively a response to the rise of cheap clothing. The weakness of Chinese consumption, geopolitical tensions, inflation, and the lower willingness of some buyers to pay high prices also affect the sector. However, the transformation of buying habits adds pressure to a model that for years relied on the prestige of labels and the expansion of the Asian market.
Shein and Temu changed the cheap clothing business
The other front of the transformation is ultra-fast fashion. Its model combines e-commerce, low prices, a huge variety of products, and a speed of renewal that allows for a quick response to trends circulating on social media.
Shein became one of the main exponents of this strategy. According to Reuters, the platform offered more than two million items as of March 31, 2026, and added about 4,700 new clothing models per day. That scale allows for multiplying available options and capturing consumers who prioritize price and variety.
Temu, also of Chinese origin, competes with a proposal based on aggressive pricing and a wide range of products. Both platforms benefit from direct online sales and a business structure that reduces dependence on traditional physical store networks.
The growth of these companies modifies competition on two levels. On one hand, it attracts consumers who previously bought from conventional chains. On the other, it sets a price benchmark that is difficult for retailers to match, as they must face costs for rent, personnel, distribution, and store operations.
Large Western chains also compete in the accessible fashion segment, but not all operate with the same scale, catalog variety, or renewal speed. The pressure forces a review of production times, digital strategies, pricing policies, and customer relationships.
The expansion of the model also generates questions about the environmental impact of overproduction, the durability of garments, and the amount of textile waste. Those arguments have begun to move from the debate on responsible consumption to trade policy and regulation.
France opens a commercial front against ultra-fast fashion
Competitive pressure led Europe to discuss how to regulate a model based on large volumes of cheap products. France moved forward with legislation aimed at reducing the environmental impact of ultra-fast fashion and began applying charges on certain items sold by platforms like Shein and Temu.
Since September 2026, French charges have ranged from 0.25 euros for small products, such as socks, to 12 euros for a coat, with a cap of 50% of the pre-tax selling price. The calculation considers factors such as the quantity of products offered, their prices, and the possibility of repair. The scheme provides for increases starting in 2030.
The measure seeks to discourage overproduction and promote more durable garments. The French government maintains that the goal is to protect the environment and consumers against a model that, according to its critics, encourages frequent purchases of low-durability items.
However, the legislation opened a dispute with Beijing. The Chinese Ministry of Commerce accused France of applying discriminatory criteria against companies from its country and warned that the rule could conflict with World Trade Organization (WTO) rules. France rejected those accusations and defended the initiative as an environmental policy, not as a measure directed against China.
The conflict has a concrete economic dimension: any increase in marketing costs can be passed on to final prices, modify the competitiveness of platforms, and affect purchasing decisions. Shein had also warned that the charges could make its products more expensive for consumers.
The discussion also extends beyond France. The European Union plans to extend responsibility mechanisms for textile waste to all its member states before April 2028. The goal is for producers to contribute to financing the sorting, treatment, and recycling of discarded garments.
The rise of second-hand luxury changes consumption rules
While ultra-fast fashion gains ground among those seeking low prices, another segment is growing in China: used luxury goods. Handbags, belts, jewelry, and watches from recognized brands circulate increasingly through digital platforms, specialized shops, and large stores dedicated to resale.
The growth responds to a combination of economic and cultural factors. The slowdown in consumption leads buyers to seek better prices, but there is also a change in how luxury is understood: acquiring a piece from a prestigious brand at a lower cost can be more attractive than buying a new product at the official price.
In Shanghai, for example, spaces dedicated to the resale of high-end items attract young consumers interested in combining recognized brands with more controlled spending. The Chinese second-hand luxury market generated about 38.4 billion yuan in 2025, equivalent to approximately US$5.7 billion, according to the local consultancy Insight & Info Consulting. The firm projects that the volume will exceed 100 billion yuan—about US$14.9 billion—by 2030.
The phenomenon also presents a commercial opportunity. Luxury products that maintain their quality and resale value can remain attractive even when the market for new items weakens. For brands, resale represents both a challenge—because a portion of purchases shifts outside their official channels—and an opportunity to develop their own second-hand programs and strengthen relationships with their customers.
The trend is not limited to China. A report by The State of Fashion 2026, prepared by Business of Fashion and McKinsey, estimates that the global second-hand clothing market could grow two to three times faster than the new clothing market between 2025 and 2027. Almost six out of ten consumers surveyed globally stated that they would likely buy used items in 2026, a proportion that exceeds 70% in China.
Chinese brands also challenge Western prestige
The transformation is not limited to low-cost platforms or used products. Chinese brands are gaining space among consumers who seek local alternatives and proposals they consider closer to their cultural preferences.
For years, European labels functioned as status symbols for a part of the Chinese market. Now, economic slowdown and generational change favor a more pragmatic evaluation of purchases: price, quality, brand identity, and the relationship between cost and value acquire greater relevance.
The advance of local firms introduces a different competition than that of Shein and Temu. Instead of disputing only price, some brands seek to build identity, design, and recognition within their own market. For Western companies, that means China is no longer just a sales destination, but also a market in which they must compete with new players for the attention and loyalty of consumers.
The pressure becomes especially relevant for European companies that had projected a recovery in their sales based on a rebound in Asian consumption. The combination of weaker demand, greater price sensitivity, and more visible local competitors forces a review of growth forecasts.
What changes for the global fashion business
The transformation of the Chinese market has consequences for the entire industry. Western brands must adapt to consumers who compare prices, look for used products, and no longer consider it essential to always buy a new garment. At the same time, accessible fashion chains face digital competition that accelerates catalog renewal and reduces differentiation margins.
European regulation adds another variable: companies will have to incorporate environmental costs and waste management obligations into their business decisions. In the case of low-cost platforms, charges and new rules can modify the final price and profitability of certain products. For traditional retailers, however, the scope of those measures will depend on how the criteria are defined and which operators are affected.
The industry also faces a discussion about brand value. In the luxury segment, prestige alone no longer guarantees that the consumer will accept any price. In the mass market, the abundance of cheap options makes it more difficult to sustain customer loyalty. And in the second-hand market, the possibility of recovering part of the value of a purchase transforms clothing into a good that can circulate for a longer time.
China occupies a central place in this reconfiguration because it brings together several phenomena: it is a decisive market for major brands, a textile production powerhouse, the origin of global e-commerce platforms, and a growth scenario for the resale of luxury products.
The result is an industry that is beginning to abandon a scheme dominated by the constant expansion of new garment consumption. Between the search for lower prices, the growth of the second-hand market, and new environmental requirements, the fashion business faces a commercial transformation that forces Western brands to review both their sales strategy and the way they build value for their customers.
