Labubu Store Next to Prada and Tiffany? The Real Reason It's Gaining Top Recognition in China

'Emotional Spending' Trend Rises Amid Slowing Consumption in China
Pop Mart and Mixue Gain Popularity

The trend of 'Emotional Spending' is spreading in China, the world's largest luxury goods market. As the country's economic downturn drags on, consumers are shifting their spending patterns away from expensive luxury goods and toward smaller satisfactions and emotional value. New emotion-driven brands are rapidly replacing traditional luxury brands.

Photo of Pop Mart store. Pop Mart website

On November 10 (local time), the South China Morning Post (SCMP) reported that a Pop Mart store is set to open in the space previously occupied by a luxury boutique on the first floor of a shopping center in Wuhan, China.

According to the report, the Pop Mart store, famous for its Labubu figurines, is scheduled to open early next year. On the same floor, luxury jewelry brand Tiffany & Co. and Italian luxury brand Prada have stores side by side. The outlet noted, "In the past, the first floor was exclusively occupied by luxury brands," and added, "The entry of a figurine brand is seen as a symbol of changing consumer trends."

Figurine brands such as Jellycat and Top Toy are expanding their presence in major commercial districts across China. Jackie Zhu, Head of Research at JLL China, said, "Consumers are now seeking emotional satisfaction rather than functional satisfaction," adding, "Trendy collectible figurines are a prime example of products that provide emotional fulfillment." He also noted that milk tea, perfumes, outdoor gear, climbing gyms, and the expansion of indoor green spaces are all part of this 'emotional spending' trend.

Prolonged Economic Downturn in China... 'Emotional Spending' Trend Prioritizes Emotional Value

China's consumer sentiment has weakened as its growth momentum has slowed since the pandemic. The real estate slump and ongoing employment instability have continued. According to the National Bureau of Statistics of China, the retail sales growth rate in September this year was 3%, a significant drop from the double-digit growth rates that had been maintained for 20 years prior to the pandemic.

Global consulting firm Bain & Company analyzed that China's luxury market peaked at 471 billion yuan (about 96 trillion won) in 2021, but fell by 20% to 380 billion yuan (77.66 trillion won) last year. A further decline of 2-5% is expected this year.

In contrast, brands emphasizing emotional value are continuing to grow. Pop Mart's third-quarter sales this year rose by about 245% year-on-year, while beverage company Mixue increased by 39% in the same period.

Labubu. Pop Mart Homepage

The slowdown in consumption has dealt a direct blow to large shopping malls. Apparel stores, which have traditionally borne high rents, are under significant pressure. According to JLL, the average vacancy rate in shopping malls across China rose from less than 8% in 2019 to 10.5% in September this year. In first-tier cities such as Beijing, Shanghai, Guangzhou, and Shenzhen, the rate increased from 7.3% at the end of last year to 8.3% this year. The average daily rent per square meter also dropped by about 6%, from 25.60 yuan in the first half of 2019 to 24.16 yuan in the first half of this year.

Anson Bailey of KPMG China pointed out, "The pace of new commercial property development in China has slowed to 25% of the 2021 level."

As a result, shopping malls in China are reducing apparel stores and increasing the presence of brands that stimulate 'emotional spending,' such as figurines, outdoor gear, gold jewelry, and electric vehicles. They are also redesigning their spaces to focus on 'emotional satisfaction,' for example, by increasing the inflow of natural light and expanding indoor greenery.

Hong Kong real estate developer Hang Lung Properties announced that rental income from commercial assets in China for the first half of 2025 is expected to decrease by 2% year-on-year to 3.19 billion Hong Kong dollars (about 596.8 billion won). In a letter to shareholders, Hang Lung Properties Chairman Adriel Chan stated, "Chinese households still maintain high levels of assets," but explained, "Only the forms of consumption have changed." He added, "A new consumption paradigm that values not only monetary worth but also emotional value has emerged."

Chairman Chan cited Pop Mart, Mixue, and Laopu Gold as the three leading brands representing this new consumer trend, and said, "Hang Lung is actively attracting these brands to our shopping malls in China."