Global luxury market risks facing its worst turbulence in 15 years

Paris - The global luxury market was expected to slow down in 2025, hampered by the geopolitical context and economic uncertainties, with the risk of experiencing its worst turbulence in 15 years. However, the long-term outlook remained positive, according to a study by consulting firm Bain & Company.

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

For the authors of this study, carried out in partnership with the Fondazione Altagamma, 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 US, the most important markets for the sector, experienced a drop in demand, caused in the US by fluctuations linked to tariffs and in China by the wait-and-see attitude of the middle class, the study estimated.

"We are in a rather unusual period of turbulence and volatility, whether economic, geopolitical, etc. Global luxury spending grew significantly after Covid… we are now seeing a return to normal," Joëlle de Montgolfier, director of the luxury division at Bain & Company, told AFP. "There continues to be an appetite for luxury in the world, we are not in a market that is collapsing, far from it," she qualified.

Sales down 2 to 5 percent

After 1,478 billion euros in 2024, the development of this market could slow down this year, and in particular sales of personal luxury goods (fashion and leather goods, jewellery, watches), which represent about a quarter of the total and could fall by 2 to 5 percent "according to the most probable scenario".

"We had a relatively positive outlook in the last quarter of 2024, and unfortunately, the beginning of 2025 came out down," explained de Montgolfier, speaking of "market normalisation".

The study considered two other scenarios, deemed less probable: one, optimistic, which would see sales change between -2 and +2 percent, and the other, pessimistic, with a fall in demand and consequently sales decreasing by 5 to 9 percent.

"We are in a major phase of 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 luxury itself (the groups in the sector, editor's note) has some doubts when we see this game of musical chairs of creative directors," analysed de Montgolfier.

In recent months, several major houses have indeed changed artistic direction, with the arrival of Matthieu Blazy at Chanel, Jonathan Anderson at Dior, Demna at Gucci, and so on.

"Everyone knows that they have to renew themselves a little, reintroduce novelty, innovation, etc. But at the same time, now that we've rotated everyone, we don't really know what degree of renewal we're going to end up with," de Montgolfier pointed out.

"By the time all the creative and artistic directors are in place, start producing their first collection… it is probably not in the 2025 financial year that we will see the materialisation of these efforts and their conversion in terms of growth," she estimated.

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

Combined with a rise in global incomes and intergenerational wealth transfers, the potential luxury clientele should grow, Bain & Company concluded.(AFP)