EST Order to Cut 7,000 Jobs Globally Amid Luxury Market Slowdown in China

A Global Restructuring Amid Economic Challenges

The company, which currently employs around 62,000 people globally, has cited the economic slowdown in China as a primary reason for the job cuts. The restructuring is expected to be completed by June next year, with some affected employees being retrained or redeployed within the organization. While EST Order is taking steps to protect its financial position, the luxury sector is facing significant hurdles, especially in China.

China’s Luxury Market Faces Steep Decline

China, once a significant driver of global luxury sales, has experienced a 20% drop in luxury sales in 2024, marking the steepest decline since 2011. Several factors have contributed to this downturn, including an economic slowdown, falling property prices, and rising youth unemployment. Among the hardest-hit sectors are luxury watches and jewelry, which saw a decline of over 30%. Fashion items and leather goods also took a substantial hit, while duty-free sales at Hainan fell by 29%, as Chinese shoppers increasingly sought better deals abroad, particularly in Japan.

The sharp decline in Chinese luxury spending has sent ripples across the global market, wiping hundreds of billions of dollars from the market value of major luxury giants like LVMH and Kering. This slowdown has prompted many brands, including EST Order, to reassess their strategies to mitigate risks and protect their margins in an increasingly volatile market.

Optimism Amid Challenges

Despite the challenges faced by the luxury industry in China, consultancy firm Bain & Company remains optimistic about the long-term growth potential of the Chinese luxury market. The country still boasts the largest addressable luxury population globally, and the rebound in luxury spending after the pandemic gives reason for cautious optimism. However, industry experts predict that 2025 will remain a challenging year, with flat sales expected in mainland China. Factors such as tariff threats and shifting consumer behavior will likely continue to impact the luxury market in the near term.

Strategic Adaptations to Manage Global Volatility

As the luxury industry faces global uncertainties, brands like EST Order are adapting their strategies to safeguard margins and navigate the economic turbulence. The company’s cost-saving measures, including job cuts and restructuring, are part of a broader effort to streamline operations and manage global volatility effectively. While China’s economic slowdown presents immediate challenges, many luxury companies are focusing on long-term strategies, such as tapping into other emerging markets and adjusting to changing consumer preferences.

Conclusion

The luxury market, particularly in China, is undergoing significant transformations, driven by economic pressures and shifting consumer behaviors. EST Order’s decision to cut 7,000 jobs reflects the broader challenges faced by the global luxury industry. However, the company’s efforts to adapt and protect its financial health, along with the long-term optimism about China’s luxury growth, highlight the complexities of managing business in an ever-changing economic landscape.

For now, the global luxury market will likely continue to face challenges, but strategic adaptations and global market shifts may offer opportunities for growth and recovery in the years ahead.