Against the backdrop of accelerating globalization and industrialization, traditional handicrafts embedded in specific socio-cultural contexts are facing critical challenges, including a decline in inheritors, shrinking market demand, and increasing disconnection from modern lifestyles. Promoting their integration into contemporary society while preserving cultural authenticity and ensuring their sustainable transmission and development has become a key issue in Intangible Cultural Heritage (ICH) revitalization. This study takes woodcarving in Qianjiang, Hubei Province, China, as a case study to explore transformation pathways for traditional handicrafts in the context of modern consumption. Questionnaire surveys were conducted to examine tourists’ preferences for cultural and creative products, and a user demand framework was constructed based on the three-level emotional model. The Analytic Hierarchy Process (AHP) and Decision-Making Trial and Evaluation Laboratory (DEMATEL) methods were employed to identify key influencing factors and their interrelationships. The results reveal significant differences among target groups in terms of cultural identity, emotional experience, and purchase intention. Based on these findings, a systematic framework of “demand identification–design concept–implementation strategy” is proposed to guide the sustainable design and development of traditional handicraft products. Furthermore, this study explores the integration of traditional craftsmanship with digital production to balance production efficiency and cultural expression. This research contributes to the theoretical development of ICH revitalization and provides practical insights for the cultivation of sustainable cultural and creative industries.