Global luxury is pivoting from a decade of hyper‑growth to a tighter, more value‑driven cycle where profitability, product quality, and client relationships matter more than chasing every possible shopper. For brands, the Bain & Company “new longevity” playbook is about serving fewer, more committed customers better—while expanding into new regions, categories, and experiences without losing their core identity.
Market and margin reality check
Overall luxury spending in 2025 stayed roughly flat at about €1.44 trillion, only 1% to 3% below 2024 at current exchange rates and still 12% to 14% above 2019 levels. Personal luxury goods are forecast to reach around €358 billion, a mild 2% erosion versus 2024 that looks more like normalization than collapse.
Behind the topline, profit pressure is real: operating margins have slipped to about 15% to 16%, down from a record 21% in 2022, wiping out roughly 20% of the industry profit pool over the past two years. Discounts now represent 35% to 40% of industry revenues, and stock levels are 3 to 4 percentage points higher than in 2019, forcing brands into a constant tug‑of‑war between clearing inventory and protecting image.
Where the money is moving
Luxury experiences—from high‑end hospitality to fine dining—grew about 3% in 2025, making them the only consistent growth engine since 2023 as consumers pivot toward wellness, self‑reward, and social connection. By contrast, experience‑based goods like cars, yachts, and fine art shrank about 5%, showing how entry‑level and aspirational spending is under strain.
In personal goods, jewelry and “small indulgences” such as eyewear and beauty are the standout winners, with jewelry up 4% to 6% to about €32 billion and eyewear growing 2% to 4% to around €17 billion. Leather goods and shoes, hit by 50% to 70% bag price hikes since 2019 and fewer hero launches, are down 5% to 7% to roughly €74 billion and €24 billion respectively.
A smaller, tougher luxury customer base
About 20 million consumers exited the luxury market in 2025, taking the active client base to roughly 330 million from 400 million in 2022, back to around its 2013 size. Only 40% to 45% of the addressable luxury population actually bought personal luxury goods in 2025, down from about 60% in 2022, as aspirational shoppers pulled back or traded down.
At the top end, big spenders are more critical than ever: customers who buy more than €20,000 a year now account for just over 46% of total personal luxury spend, up from 30% in 2019. Yet satisfaction is shaky, with 70% of consumers unhappy with today’s in‑store experience and 90% feeling service is basically the same across brands, leaving huge room for differentiation through genuine clienteling.
Region and channel shake‑up
Europe remains the largest personal luxury market at about €108 billion, but it slipped 1% to 3% in 2025 as tourism cooled and aspirational locals held back. The Americas reached roughly €101 billion, up 0% to 2%, with accessible luxury brands outpacing the field and a weaker dollar boosting domestic purchases.
The next growth wave is coming from emerging regions in Southeast Asia, Latin America, the Middle East, India, and Africa, which together now represent about €40 billion to €45 billion in luxury sales—roughly the size of Mainland China’s 2025 market. Distribution is also tilting toward value: outlets grew 1% to 3%, online stabilized at about 21% of sales, and monobrand openings fell 15% to 20% versus 2022, even as average flagship size jumped more than 30%.
Secondhand, AI and the longevity playbook
Pre‑owned luxury reached around €50 billion in 2025, growing 4% to 6%, with hard luxury (watches and jewelry) making up about 83% of sales, and AI‑powered authentication plus digital passports boosting trust. This is pushing brands to integrate resale into their ecosystem, from certified pre‑owned watches to archived capsule drops, rather than leaving value and storytelling to third‑party platforms.
Looking ahead, overall luxury (goods plus experiences) is expected to grow 4% to 6% annually to between €2.2 trillion and €2.7 trillion by 2035, while personal luxury goods could reach €525 billion to €640 billion. To capture that, Bain & Company says brands must double down on creativity, craftsmanship, price integrity, and tech‑enabled precision—trading scale at any cost for sharper positioning, better assortments, empowered front‑line teams, and a long‑term view of brand equity.
