Luxury Isn't Collapsing -- It's Recalibrating Downward

• by Sarah Mahoney , December 1, 2025

Luxury marketers like to boast that their customers are resilient, but the latest numbers tell a more brittle story. Bain’s newest benchmark pegs global luxury spending at €1.44 trillion — flat at best — as the consumer base contracts, active shoppers fall sharply, and profit margins sink back to levels last seen in 2009. Beneath that surface stability is a structural reset: Consumers are prioritizing experiences over goods, and brands are losing both aspirational shoppers and margin power.

The Bain–Altagamma study describes “tectonic shifts” as consumers redirect spending toward cruises, fine dining, travel adventures, safaris, and elite sports. These categories are redefining exclusivity, while anything that signals conspicuous consumption — cars, handbags, and shoes — is struggling. Even beauty, typically a bright spot, stalled and ended the year flat.

The demand problem is real. Active luxury shoppers now make up just 40% to 45% of the addressable customer base, down from roughly 60% last year. The total number of luxury consumers has fallen from 400 million in 2022 to about 340 million in 2025, and new customer acquisition slipped 5% between 2024 and 2025.

Personal luxury goods, which excludes categories like travel, automotive, and furniture, are expected to finish the year down about 2%. Apparel is likely to edge down, and both leather goods and footwear are forecast to fall 5% to 7%. Growth is limited to jewelry (up 4% to 6%) and eyewear (up 2% to 4%).

Spending patterns are also diverging by income tier. Ultra-wealthy buyers have trimmed purchases slightly, with the high-end segment (about 40% of the market) contracting by 1% to 3%, even as they spend more on cars, hospitality, fine wines and spirits, and gourmet dining. Yachts and private jets remain strong sellers. The accessible segment was flat to slightly negative, but gained share within personal luxury goods, powered by Gen Z and value-conscious shoppers.

“After the shopping spree era, experiences and emotions have become the true engine of luxury growth,” writes lead author Claudia D’Arpizio, Bain & Company senior partner in fashion and luxury. “The market remains resilient but not immune to macroeconomic complexities, navigating a fragile global balance.”

Retail behavior is shifting, too. Outlet stores are outperforming as consumers hunt for value. Online spending is stable, but physical retail footprints are shrinking sharply, with declines across monobrand stores and U.S. department stores.

Profitability is deteriorating, with margins expected to fall 15%–16%, matching the lows of 2009.

D’Arpizio calls this a crossroads, shaped by uneven regional growth paths, pricing pressure, and fragmented consumer personas. “Creativity is progressively coming back, but a broken price–value equation calls for integrity and renewed trust,” she adds. “This is luxury’s moment of truth… The winners will balance profit with purpose, creativity and conscience, turning recalibration into reinvention.”

Bain expects a modest recovery in 2026, forecasting growth of 3% to 5%. Deutsche Bank is slightly more optimistic, predicting 6% growth next year — up from its estimate of 2% for 2025 — while cautioning that the sector is unlikely to return to its prepandemic trajectory. The firm names LVMH, Burberry, and Richemont as its most preferred stocks, and lists Kering and Moncler among its least preferred.