The personal luxury goods market is facing a significant downturn, with sales expected to drop 2% this year, making it one of the weakest on record, according to a report by consultancy Bain & Company.
Luxury goods sells declines 20-22% in China
According to ET, the report valued the market at $386 billion and forecasted a 20-22% sales decline in China, a key driver of luxury growth in recent years. “This is the first time the personal luxury goods industry has declined since the 2008-09 crisis, with the exception of the pandemic,” said Federica Levato, Bain partner.
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Meanwhile, the luxury sector’s current downturn has raised concerns among investors, with shares in major players like LVMH and Kering taking a hit. Global sales of luxury personal goods, including clothing, accessories, and beauty products, are expected to remain flat during the holiday season.
Notably, the shift towards higher pricing, coupled with weaker consumer confidence due to global economic uncertainty, has led many customers, especially younger ones, to forgo purchases. “The luxury consumer base has declined by 50 million over the last two years, from a total of approximately 400 million consumers,” Levato noted.
Luxury goods market to expect 0-4% in 2025
However, the outlet channel is outperforming, driven by shoppers seeking value. Bain predicts the market will grow 0-4% at constant exchange rates in 2025, supported by sales in Europe and the Americas, with China recovering in the second half.
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“The growth prospects for the market hinge partly on the strategies brands choose to pursue, including on pricing,” Levato added. In contrast, luxury spending on experiences, such as hospitality and dining, is expected to increase this year.
Further, the report highlights the impact of global economic uncertainty on the luxury market. However, Levato noted that Donald Trump’s victory in the U.S. presidential election has removed one uncertainty, and possible interest rate and tax cuts could boost American spending.
Looking ahead, the luxury industry’s performance in 2025 will depend on brands’ pricing strategies and the recovery of the Chinese market. As the market navigates this challenging period, brands must adapt to changing consumer behaviour and economic conditions.
