Global luxury market likely to suffer in 2025

The global luxury goods market is expected to slow in 2025, hampered by geopolitical conditions and economic uncertainty, with the risk of experiencing its worst turbulence in 15 years, but the long-term outlook remains positive, according to a study by consulting firm Bain and Company.

Luxury sales, "sensitive to uncertainty, are under increasing pressure, with luxury consumer confidence being undermined by economic upheaval, geopolitical and trade tensions, currency fluctuations and financial market volatility," warns the study published Thursday.

For the authors of this study, conducted in partnership with the Altagamma Foundation, which brings together the biggest names in Italian luxury, these headwinds could well be the strongest the industry has faced in 15 years. China and the United States, the sector's most important markets, are experiencing a decline in demand, caused in the United States by fluctuations related to customs tariffs and in China by the wait-and-see attitude of the middle class, the study estimates.

After reaching 1,387 billion francs in 2024, the growth of this market could slow this year, particularly sales of personal luxury items (fashion and leather goods, jewelry, watches), which represent around a quarter of the total and could decline by 2 to 5% "depending on the most likely scenario." "We had a relatively positive outlook for the last quarter of 2024, and unfortunately, the beginning of 2025 was down," explains Joëlle de Montgolfier, speaking of "market normalization."

The study considers two other scenarios, deemed less likely: one optimistic, which would see sales evolve between -2 and +2%, and the other pessimistic, with a drop in demand and, as a result, sales that would decrease by 5 to 9%. "We are in a phase of great doubt about the added value of luxury, its desirability, its ability to convince customers that it is at the right price for what it offers. And the luxury industry itself (the groups in the sector, editor's note) has some doubts when we see this game of musical chairs of creative directions," analyzes Joëlle de Montgolfier.

In the long term, the Bain and Company/Altgamma study estimates that "fundamentals and prospects remain good," arguing that over the next five years, more than 300 million new consumers, half of them from Generation Z (born between the late 1990s and early 2010) and Alpha (born after 2010), will enter the market.