Editor’s Note
The luxury sector, long a bastion of robust growth, is entering a period of pronounced uncertainty. As this analysis highlights, shifting consumer patterns in key markets and broader economic headwinds are prompting a fundamental reassessment of the industry’s trajectory.
For the first time in a long while, the luxury sector is experiencing a moment of uncertainty. After the boom of recent decades and the significant growth peak during the pandemic, it is now going through what some experts call a period of stabilization, others a regression, or even, for the most pessimistic, the bursting of a bubble.
The decline in consumption in China, the main growth engine, has weighed on the world’s leading groups, with France and Italy at the forefront. Economic uncertainty also weighs heavily, now aggravated by Donald Trump’s tariff war, while inflation and price increases have impacted more volatile demand.
Due to the sum of all these factors, 50 million consumers have vanished in the last two years, according to the annual luxury study by consultancy Bain & Company and the Italian Altagamma, one of Europe’s leading sector associations. The luxury clientele was 350 million in 2024, compared to 400 million in 2022. Spending reached 1.5 trillion euros in 2024, with a slight drop of 1%. These are the worst figures since the 2008 crisis. A few weeks ago, they revised their forecasts for 2025 downwards and anticipate a sales decline of between 2% and 5%.
Personal luxury goods (fashion, leather goods, jewelry), which are the heart of the sector, suffered their first contraction in 15 years, with a 2% decline in spending in 2024, to 363 billion euros, mainly due to falling demand from Generation Z (those born from 1997 onwards), who are more price-sensitive.
The ultra-wealthy clients concentrate 40% of the business volume of major brands, thus reinforcing the polarization of the sector.
Despite these two flatter years, if 2019, pre-Covid, is taken as a reference, the industry has grown 15% to date.
The sector currently faces its own contradictions: by definition it is exclusive, but it has become more accessible. In that process, part of the excellence that characterizes it, marked by its artisanal nature (the savoir-faire), has been lost. Before it was for a few; now it is for many. Timeless, it now follows trends. If before luxury was the ordinary for extraordinary people, now it is the extraordinary for ordinary people.
Between 2019 and 2023, unprecedented demand for luxury goods allowed the sector to grow by 5%, according to McKinsey & Company. Price increases accounted for more than 80% of growth in this period. For Ignacio Marcos, senior partner at the consultancy, “it is true that there are deceleration factors, such as Chinese demand, which consumes less, but there are areas that complement this consumption, such as the US, which is growing, and also Japan, with India as one of the emerging markets.”
Only one third of brands worldwide recorded business growth in 2004, compared to 95% in 2021 or 65% in 2023, according to Bain & Company. The impact is uneven, with some categories more affected, such as the aforementioned personal goods, more open to a price-sensitive average consumer, and others more resilient, which have maintained those values of exclusivity and inaccessibility and target the ultra-wealthy, who are more impervious to uncertainty.
The world’s largest giant in the sector, LVMH, the empire created by Frenchman Bernard Arnault in the eighties and which today has 90 brands, including Christian Dior or Louis Vuitton, saw its business volume fall by 2% in 2024, hit by lower Chinese demand, which represents 25% of its global sales.
Worse off was the second group, Kering (Gucci, Saint Laurent), founded by French billionaire François Pinault. Its business volume fell by 12%, dragged down by its most emblematic brand, the Italian Gucci.
