China’s retail and retail property sectors are experiencing a wave of store closures by foreign and Hong Kong brands. “The series of closures come as a combined result of their outdated business models and profound changes in the macro-economic environment,” said Wang Tianshi, Analyst at the Shanghai-based LeadLeo Research Institute. “Compared with emerging mainland retailers, Hong Kong and foreign brands often remain under a ‘selling on the mainland’ phase, rather than a ‘creating for the mainland’ phase.”
Upscale Hong Kong department store chain Lane Crawford was expected to close its outlet in Chengdu, Sichuan province, after February 28. There was a core mismatch between the chain’s high-end business model and consumers’ rapidly evolving lifestyle, according to Wang. Multinational furniture retailer Ikea said seven mainland stores would cease operations from February 2, as the company shifted its focus on opening more than 10 small-format stores over a two-year period. As of December 31, German lingerie maker Triumph Group International had closed all its bricks-and-mortar stores on the mainland. Spanish retailer Zara Home closed its last two stores in Changsha, the capital of Hunan province, and in Hangzhou, Zhejiang province, in June and July 2025, respectively. Zara Home expected to continue operating shops in Beijing, Shanghai, Guangzhou and Shenzhen, while integrating online and offline retail operations. Its sister company, fast-fashion retailer Zara, last year shut down more than 10 mainland stores, mostly in second-tier cities, following store closures in previous years. Still, Zara opened some large-scale stores at prime locations in cities like Shanghai.
The closures underscored how these brands struggled to keep pace with China’s evolving market dynamics, in spite of efforts to strategically transform their retail operations in recent years. “The successive withdrawal of foreign and Hong Kong retail brands reflected a lack of local market awareness in organizational structure and a lag in decision-making efficiency,” LeadLeo’s Wang said. “Digital transparency has wiped out the information asymmetry edge that used to support multi-brand boutiques, and consumers are no longer willing to pay for channel premiums,” he said. “High rents and slow inventory turnover have squeezed these stores’ cash flow.”
In the first 11 months of 2025, online retail sales of physical goods in China climbed 5.7% year-on-year – outpacing the 4% growth in total retail sales of consumer goods – and accounted for 25.9% of the overall market, according to the National Bureau of Statistics (NBS). After next month’s store closures, Lane Crawford was expected to continue operating its stores at Beijing Seasons Place, Shanghai Times Square and its outlet at Bicester Village Shanghai. The retailer’s Chengdu store closure would follow the shutdown of its Beijing Yintai Center location in 2021, the South China Morning Post reports.
