Consumers’ worldwide spending across the luxury industry is set to reach €1.44 trillion in 2025, remaining broadly flat compared with last year (between 1% up and 1% down at constant exchange rates), with a gradually improving outlook expected to extend into next year, according to the annual Bain Altagamma Luxury Goods Worldwide Market Study.

But the expected stability in overall luxury spending this year masks significant structural shifts beneath the surface, as consumers increasingly choose experiences over new luxury possessions, the study reports. It highlights a persistent global trend towards “experiential indulgence” rather than the traditional “conspicuous consumption” that once defined status, with consumers pivoting towards wellness, connection and self-reward.

What the study describes as a “tectonic shift” towards luxury experiences such as hospitality, cruises and fine dining, and away from traditional luxury goods including automotive, is propelling growth across the wider luxury market and reshaping the industry.

The global market for personal luxury goods is expected to remain broadly stable this year, with a forecast 2025 value of €358 billion (compared with €369 billion in 2023 and €364 billion in 2024) – a decline of around 2% at current exchange rates and flat at constant rates. This reflects market maturity rather than renewed momentum following the post pandemic rebound. While ultra wealthy consumers continue to sustain demand for high end luxury, aspirational shoppers have pulled back, adding pressure to the traditional luxury segment.

“After the shopping spree era, experiences and emotions have become the true engine of luxury growth,” commented Claudia D’Arpizio, senior partner at Bain & Company. “The market remains resilient but not immune to macro-economic complexities, navigating a fragile global balance. Ahead lies a phase of quality-driven growth, fueled by discipline, ethics and innovation. Expansion will favor fewer, higher-impact locations—a shift toward a more discerning, experience-led model.”

Luxury spending by price tier is becoming increasingly polarised. The high end tier, which accounts for around 40% of the market, has slightly contracted between 2023 and 2025, with a compound annual growth rate of minus 1% to minus 3%. The accessible segment remained flat to slightly negative over the same period, with a CAGR of 0% to minus 2% overall. However, while the high end is gaining share in automotive, hospitality, fine wines and spirits, and gourmet food and dining, it is the accessible segment that is winning share in personal luxury goods, driven by Gen Z and value conscious consumers.

Personal luxury goods market confront challenges and uncertainties

While the personal luxury goods market is expected to remain broadly stable in 2025, it continues to face uncertainty, and the fourth quarter will be critical in determining the full year’s performance.

Jewellery is leading growth, with expected expansion of 4% to 6%, driven by resilient demand, emotional appeal and a rise in customisable designs. Eyewear is also performing strongly, with projected growth of 2% to 4%, supported by design innovation, versatility and digital integration. Beauty remains steady, though fragrance is the standout sub category, with AI driven personalisation gaining traction, while premium skincare and makeup are experiencing performance polarisation between brands.

The market for watches shows increasing polarisation with high end pieces thriving as tariffs and pricing pressures bolster the resale market. Apparel remains stable, supported by strong performance from accessible players. Leather goods are weaker, held back by a lack of new hero bags, though lifted by playful, aspirational alternatives. Footwear is lagging, impacted by price sensitivity and competition from sportswear, although statement styles point to early signs of recovery.

Overall, accessible luxury fashion is rebounding, fuelled by brands’ success in engaging downtrading consumers, reconnecting with heritage shoppers and appealing to value conscious Gen Z buyers.

Markdown pressure across channels, while footprint shrinks in favor of more curated environments

In physical retail for luxury, outlet stores are outperforming as consumers chase value and accessible luxury. Online channels hold steady. Monobrand stores are slightly slipping, with a total reduction in store surface of 25,000 square meters in the past six months, while U.S. department stores have cut some 10% of space since 2024.

Fresh markets fuel luxury’s next chapter

Spending in China is expected to contract by 3% to 5% this year at constant exchange rates, as consumers pivot towards local, more accessible brands and experience driven categories. Japan’s market is also slowing after a strong 2024, reflecting a cooling in tourism.

Europe faces a softening trend, with its luxury market set to dip by 1% to 3% in 2025, weighed down by slower tourist inflows, a strong euro and geopolitical tensions. The Americas are expected to hold relatively firm, with growth of 0% to 2%, supported by renewed US domestic demand and expanding luxury footprints in Mexico and Brazil, despite ongoing volatility.

In contrast, the Middle East remains the luxury sector’s strongest performer, with projected growth of 4% to 6%, fuelled by tourism in Dubai and Abu Dhabi, and sustained demand in Saudi Arabia.

Beyond the traditional hubs, a new wave of markets is reshaping luxury’s global map. The Middle East, Latin America, Southeast Asia, India and Africa together represent around €45 billion in 2025 – now matching Mainland China in scale.

Luxury’s consumer base is contracting further as top customers show signs of spending stabilisation

The number of luxury consumers has fallen from 400 million in 2022 to around 340 million in 2025. Between 2024 and 2025, new customer acquisition declined by 5%. The study also reports a drop in engagement, with active luxury shoppers falling from around 60% of the total addressable base in 2022 to 40% to 45% this year.

Spending patterns are also fracturing, the study finds, with consumers making fewer purchases and favouring smaller indulgences and markdown channels. Spend is shifting towards experiences, affordable alternatives and resale, signalling a structural reset in how shoppers engage with luxury. Meanwhile, big spenders’ contribution is plateauing: their share rose from 30% (€88 billion in 2019) to 45% (€165 billion in 2024), but is expected to flatten in 2025 at around 46% to 47% (€165 billion).

Margins return to 2009 levels

The luxury industry is facing mounting margin pressures, with profitability returning to 2009 levels amid higher operating costs and slowing revenue growth. EBIT margins for selected personal luxury goods brands, which peaked at 23% in 2012, are expected to fall to 15% to 16% in 2025, in line with 2009.

This margin contraction has resulted in an estimated €100 billion loss in total enterprise value over the past twelve months.

“Luxury brands are re-defining their reach through adjacent and lower-entry categories, expanding beyond traditional lines like sneakers and small leather goods into areas such as food, dining, and wellness,” said Federica Levato, senior partner at Bain & Company. “As pricing structures elevate and customer interest surges, brands face two key challenges: re-engaging aspirational consumers and legitimizing their expansion while maintaining coherence. To future-proof the model, brands must evolve from reach to precision, from blending with trends to shaping them. Longevity will reward brands that weave ethics in their value proposition with intimacy and integrity in their dialogue with consumers.”

The luxury scenario to 2035

Looking further ahead, the report concludes that annual growth of 4% to 6% for personal luxury goods remains realistic, supported by continued consumer expansion and enduring demand. By 2035, the personal luxury goods market is expected to reach €525 billion to €625 billion, while overall luxury spending could rise to €2.2 trillion to €2.7 trillion.

“Luxury stands at a crossroads: uneven regional growth paths, pricing pressure, and fragmented consumer personas are testing its core,” Claudia D’Arpizio commented. “Creativity is progressively coming back, but a broken price–value equation calls for integrity and renewed trust. This is luxury’s moment of truth: to rise through ethics, inclusivity, and authenticity, or retreat into elitism. The new formula is clear: entertainment, emotion, and ethics are the real sources of value. The winners will balance profit with purpose, creativity and conscience, turning recalibration into reinvention.”