The global luxury market stabilized in 2025 following several years of volatility. Total luxury spending reached approximately €1.44 trillion, resulting in a flat to slightly negative year-on-year outcome at constant exchange rates, while remaining materially above 2019 levels. The data indicates a normalization phase rather than a cyclical downturn, as demand patterns, pricing dynamics, and customer behavior adjust after the post-pandemic surge.
This article is a high-level overview of the study conducted by Bain & Company: https://www.bain.com/insights/finding-a-new-longevity-for-luxury/
Demand and Spending Patterns
Luxury spending continued to shift away from goods toward experiences. Categories such as hospitality, fine dining, wellness, and travel delivered the strongest performance and accounted for all net market growth since 2023. This reflects sustained consumer prioritization of social, experiential, and personal well-being-related purchases over product ownership. By contrast, experience-based goods and several core product categories declined as entry-level demand weakened.
Personal luxury goods, the industry’s central segment, remained broadly stable at approximately €358 billion. Performance improved sequentially in the second half of the year, although the category remains under pressure. Repeated price increases since 2019 have reduced perceived value for many consumers, particularly aspirational buyers, contributing to lower purchase frequency and reduced participation.
Brand and Category Polarization
Market performance remained uneven across brands. Fewer than half of personal luxury goods brands achieved revenue growth in 2025. Specialist players performed materially better than diversified brands, while large global groups reported mixed results. Profitability declined further, with industry operating margins falling to approximately 15 to 16 percent, down from peak levels reached earlier in the decade. Margin pressure stemmed from higher costs, increased markdowns, tariffs, and operating leverage effects from slower top-line growth.
Category outcomes diverged significantly. Jewelry was the strongest performing category across regions, supported by sustained demand and product relevance. Eyewear continued to grow as an accessible category with strong appeal among younger consumers. Beauty was broadly stable, with fragrances leading growth within the segment. Leather goods and footwear declined sharply, reflecting price sensitivity, limited product renewal, and declining appeal among aspirational consumers.
Regional Performance
Regional trends showed increasing divergence. The Americas remained comparatively resilient, supported by domestic consumption and favorable currency effects. Europe experienced a mild contraction as tourism normalized and local demand softened. Mainland China declined again, although the pace of decline moderated in the second half of the year. Japan corrected following an exceptionally strong 2024, driven by inbound tourism. Emerging regions, including Southeast Asia, the Middle East, India, Latin America, and Africa, collectively represent the most significant source of future market expansion.
Distribution and Channel Dynamics
Value-oriented channels gained share in 2025. Outlet sales continued to outperform the broader market, while full-price physical retail faced declining footfall and increased promotional pressure. Online sales stabilized, with brand-owned platforms performing better than multibrand marketplaces. The secondhand luxury market expanded to approximately €50 billion, growing faster than the primary market and gaining relevance across both hard and soft luxury categories.
Customer Base Trends
The luxury market experienced a second consecutive year of customer contraction, losing approximately 20 million active consumers in 2025. Attrition was concentrated among aspirational buyers. High-spending clients maintained absolute spending levels and now account for close to half of total personal luxury goods sales. Generational spending patterns remained stable overall, with Millennials retaining the largest share and Gen Z demonstrating selective engagement combined with lower brand loyalty and higher expectations around authenticity and relevance.
Forward Outlook
The study projects a return to moderate growth in 2026, followed by a positive long-term outlook through 2035. Growth is expected to be more selective and uneven than in the past decade, favoring brands with strong product discipline, cost control, clear positioning, and consistent execution. Sustained performance will depend less on price increases and more on operational efficiency, product credibility, and customer retention.
Read the full report here: https://www.bain.com/insights/finding-a-new-longevity-for-luxury/
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Source: Bain & Company and Fondazione Altagamma, Luxury Goods Worldwide Market Study: Finding a New Longevity for Luxury, 2026.
