Editor’s Note
This analysis highlights a sobering shift in the luxury sector, with major brands reporting significant revenue declines. The data suggests a broader market recalibration beyond isolated challenges.
Luxury brands are discreetly putting away their bottles of Taittinger, as their financial results fall far short of targets. Gucci’s revenue plummeted by 26%. Versace is experiencing a nearly as severe bloodbath with a 21.2% drop, while Burberry fares slightly better at 17%. Even Bernard Arnault’s empire is showing signs of weakness, with LVMH down 4%. Prada performs best among the worst performers with a modest 2% decline. Unsurprisingly, Hermès continues to gallop ahead of all others with a 7% gain.
As analysts pore over their screens trying to predict what happened and what will happen, Julius Baer’s Global Wealth and Lifestyle Report 2025 suggests an innovative idea. Wealthy individuals are not spending less because they are short on money. They are simply bored. Value for money has surpassed heritage and innovation as the top priority for Europeans.
They are trading material goods for memories. Before, a promotion meant a new car. Today, it’s a culinary trip to Italy. Luxury is evolving from a material symbol to a holistic lifestyle, with affluent individuals now seeking more emotion than the re-launch of the Chanel on The Pavement collection.
McKinsey’s State of the Consumer 2025 report points in the same direction: over a third of global consumers are cutting spending in some categories to indulge in others. In total, 19% of consumers plan to reduce non-discretionary spending to be able to spend more freely elsewhere. Even among consumers worried about inflation, over a third still plan to splurge, but these big spenders are mainly found in Brazil, China, and the United Arab Emirates.
Apparently, luxury brands that thought they would automatically benefit from discretionary spending have followed the same path as Anna Wintour’s Vogue editor-in-chief title.
Julius Baer data shows spending remains high in the Middle East, Asia-Pacific, and Latin America, while Europe and North America have become more conservative. Even within these regions, some categories outperform others.
Business class flights show dramatic regional variations. London saw prices rise by 28.3%, while Milan recorded a 16.4% drop. Mexico experienced a dizzying 86.6% increase, while Hong Kong saw a 10.6% decline. Zurich climbed 15.3%, but Singapore showed only 6.4% growth. These disparities are explained by evolving corporate policies. This creates opportunities for luxury brands, which can partner with travel experiences rather than fighting for a share of the consumer’s wallet.
According to Julius Baer, the theme of “health as wealth” remains relevant, with survey respondents showing near-universal interest in longevity. Wealthy individuals increasingly view health spending as an investment. Luxury brands that position themselves to leverage this trend through wellness partnerships, longevity-focused products, or health-related services can benefit from this spending reallocation.
While luxury spending in Europe prioritizes value for money, consumers in the Middle East increased spending in several categories: 65% spent more on hotels, 62% on high-end jewelry, 60% on fine wines, 58% on high-end women’s handbags, and 57% on high-end watches.
In the Asia-Pacific region, 65% of luxury consumers are increasing health spending, 64% spending on smartphones, 63% on jewelry, and 55% on fine dining. Global luxury brands present in this region should consider investing in unique culinary experiences organized in collaboration with famous chefs, where their best clients are invited to remember that the good life also includes a Montblanc pen.
Luxury consumers continue to passionately seek luxury, but they have simply redirected their spending towards areas that feel more meaningful, personal, and interesting to them. Brands sticking to their current strategy are the ones losing relevance quarter after quarter. Consumers have changed, and the industry is only beginning to realize how far behind it has fallen.
Some luxury brands confuse global reach with geographic relevance.