Global luxury is holding its ground in 2025, but the market luxury brands thought they knew is being rewritten in real time. A new Bain & Company and Altagamma study shows that spending is stabilizing, even as consumers pivot sharply toward experiences, value channels and new regional hubs—and margins sink back to levels last seen in 2009.
- Global spending stabilizes, but growth cools
- From conspicuous consumption to “experiential indulgence”
- Categories: jewelry and eyewear lead, shoes and leather lag
- Polarized shoppers and a shrinking luxury customer base
- Regions: Middle East and “fresh markets” outpace China and Europe
- Channel shake-up and margin pressure
- Profitability back to 2009 levels
- What does this reset mean for brands?
Global spending stabilizes, but growth cools
The study projects global luxury spending at about €1.44 trillion in 2025, essentially flat versus last year (roughly between -1% and +1% at constant exchange rates). That relative stability comes despite persistent economic and geopolitical uncertainty, suggesting demand at the top end remains structurally strong even as mid-tier shoppers pull back.
Within that total, personal luxury goods—the core fashion, leather goods, watches, jewelry, beauty and accessories categories—are forecast at around €358 billion in 2025, down about 2% at current exchange rates compared with €364 billion in 2024 and €369 billion in 2023, indicating a mature, pause phase after the post-pandemic boom. Ultra-wealthy customers are still supporting demand for high-end pieces, while aspirational consumers are becoming more cautious, especially in discretionary categories.
From conspicuous consumption to “experiential indulgence”
The headline story in this year’s report is a “tectonic shift” from products to experiences. Consumers are increasingly choosing luxury hospitality, cruises, fine dining, travel activities and wellness-led experiences over buying additional high-ticket goods such as luxury cars, classic leather goods or formal apparel.
Bain and Altagamma frame this as a move away from traditional “conspicuous consumption” toward experiences tied to wellness, connection and self-reward as new status symbols. Experiential categories like gourmet dining are said to be booming in Asia, the Middle East and resort hubs, while “new frontiers” such as safaris and elite sports travel are helping to redefine what modern luxury looks like for younger, experience-hungry travelers.
Categories: jewelry and eyewear lead, shoes and leather lag
At the category level, jewelry is currently the standout within personal luxury goods, with projected growth of about 4–6% in 2025, helped by its emotional value, perceived investment qualities and the rise of customizable designs. Eyewear is also performing well, with expected growth of around 2–4%, supported by design innovation, versatility and deeper digital integration.
Beauty is described as broadly stable, but fragrances remain the most dynamic beauty subcategory, especially where brands lean into AI-enabled personalization and more tailored propositions. Meanwhile, watches are seeing sharper polarization between high-end pieces and the rest of the market, leather goods are said to be under pressure without clear new “hero” bags, and shoes are lagging amid price sensitivity and sportswear competition, even as bold, statement styles show pockets of recovery.
Polarized shoppers and a shrinking luxury customer base
One of the most striking datapoints in the study is the reported contraction of the global luxury consumer base from about 400 million people in 2022 to around 340 million in 2025. Between 2024 and 2025, new customer acquisition is estimated to have fallen by about 5%, and the share of “active” luxury shoppers within the addressable base has dropped from roughly 60% in 2022 to around 40–45% this year.
Spending is fragmenting as buyers make fewer purchases, shift to smaller indulgences and markdown channels, and redirect budgets toward experiences, accessible alternatives and resale platforms.
At the top, “big spenders” increased their share of the personal luxury goods market from about 30% (approximately €88 billion) in 2019 to about 45% (around €165 billion) in 2024, but this share is now flattening at roughly 46–47% in 2025, suggesting a ceiling even at the very high end.
Regions: Middle East and “fresh markets” outpace China and Europe
Geographically, the report describes 2025 as a year of “global recalibration”, with uneven regional performance and new growth centers emerging. Spending in China is expected to decline by about 3–5% at constant exchange rates this year, as shoppers lean toward local, more accessible brands and experience-led categories, while Japan is cooling after a strong 2024 because of softer tourism.
Europe is projected to dip by roughly 1–3% in 2025, pressured by weaker tourist flows and a strong euro, whereas the Americas are forecast to post modest growth of around 0–2%, supported by renewed domestic demand in the US and growing luxury footprints in Mexico and Brazil. The Middle East stands out as the strongest regional performer, with expected growth of about 4–6%, powered by robust tourism and high-spend clients in hubs like Dubai and Abu Dhabi, as well as ongoing demand in Saudi Arabia.
Beyond the core regions, Bain and Altagamma describe the Middle East, Latin America, Southeast Asia, India and Africa combined as a roughly €45 billion luxury market in 2025, now similar in scale to Mainland China. From Gen Z’s embrace of accessible luxury in Southeast Asia to India’s rising middle class and new local players across African markets, these “fresh markets” are positioned as central to the next phase of luxury growth.
Channel shake-up and margin pressure
On the distribution side, outlet stores are said to be outperforming as price-sensitive consumers chase value and accessible luxury entry points. Online channels remain broadly stable, but monobrand stores have reportedly seen about 25,000 square meters of selling space removed in the past six months, while US department stores have cut around 10% of space since 2024.
Bain and Altagamma argue that brands now need to rationalize their physical footprint in favor of fewer, larger flagship locations designed for immersion, emotion and personalization rather than pure scale. That means channel strategies are moving away from blanket expansion towards more curated, high-impact formats that can support storytelling and experiential activations.
Profitability back to 2009 levels
Despite flat-to-stable top-line spending, profitability is moving the other way. The study states that EBIT margins for selected personal luxury goods brands peaked at around 23% in 2012 but are expected to fall to about 15–16% in 2025, in line with 2009 levels. Higher operating costs, currency effects and slowing sales growth have contributed to what Bain and Altagamma estimate as a roughly €100 billion loss in total enterprise value over the last twelve months.
To protect margins without eroding brand equity, the report points to a need for “performance discipline” and AI-enabled efficiency, from pricing and allocation to clienteling and inventory management. At the same time, brands are branching into adjacent, lower-entry categories—from food and dining to wellness—in an effort to keep aspirational consumers engaged while justifying elevated price structures.
What does this reset mean for brands?
For retailers and brands reading this through Jeanel Alvarado’s perspective, the Bain–Altagamma snapshot suggests luxury is entering a quality-over-quantity era. The growth story is shifting from chasing volume—whether through incessant price hikes, store proliferation or logo-driven product pushes—to building precision, ethics and intimacy into the model, with “entertainment, emotion and ethics” framed as the new levers of value.
Looking ahead, the study still projects 4–6% average annual growth in personal luxury goods through 2035, implying a market of roughly €525–625 billion for personal luxury items and €2.2–2.7 trillion in total luxury spending by that point, supported by an expanding consumer base in emerging regions and a durable appetite for premium experiences.
The brands that are most likely to win into the next decade will be those that can defend margins through smarter operations while convincing a more selective, fragmented shopper base that their price–value equation truly adds up.
