The global luxury market is projected to experience a slowdown in 2025 due to geopolitical tensions and economic uncertainties, marking potentially its most significant downturn in 15 years.
Overall, long-term prospects still remain positive according to a study by consulting firm Bain and Company.
But the new study, released on Thursday, warns that luxury sales, particularly vulnerable to uncertainty, are under mounting pressure as consumer confidence is dented by economic upheavals, geopolitical and trade tensions, currency fluctuations, and financial market volatility.
Authors of the study, conducted in partnership with the Altagamma Foundation which represents major Italian luxury brands, suggest these adversities could be the strongest the industry has faced in 15 years.
China and the United States, the sector’s most crucial markets, are seeing a decline in demand. This is attributed in the US to tariff-related fluctuations and in China to the cautious stance of the middle class.
After reaching €1.478 trillion in 2024, the market may slow down this year, particularly in personal luxury goods, such as fashion, leather goods, jewellery, and watches, which account for about a quarter of the total and are expected to decline by 2 to 5% under the most likely scenario.
"We had a relatively positive outlook at the end of 2024, but unfortunately, the start of 2025 showed a downturn of between -1 and -3%," explained Joëlle de Montgolfier, Head of Luxury at Bain and Company.
The study considers two other, less probable scenarios: an optimistic one with sales varying between -2 and +2%, and a pessimistic one with a significant drop in demand leading to sales decreasing by 5 to 9%.
