The personal luxury goods market is expected to decline by 2 percent at current exchange rates, but to be flat at constant rates, reaching €358 billion in 2025, but could resume growing over the next decade by up to 6 percent a year, according to a report released by the consultancy Bain & Company in partnership with Altagamma, the Italian luxury goods industry association.
Meanwhile, global luxury spending is estimated to be stable in 2025, reaching €1.44 trillion, according to the report.
The study highlights that luxury’s consumer base continues to “shrink and splinter”. The number of luxury consumers has dropped from 400 million in 2022 to around 340 million in 2025, it estimated.
Spending patterns within the luxury market “are fracturing,” according to the report, resulting in buyers making “fewer purchases and favoring smaller indulgences and markdown channels.”
“Spending is also shifting to experiences, affordable alternatives, and resale, signaling a structural reset in how consumers engage with luxury,” it added.
Corporate operating margins have dropped to 2009 levels
The luxury industry is experiencing margin pressures that have brought its profitability back down to 2009 levels, largely due to higher operating costs and challenges in sustaining revenue growth, the report highlighted.
Ebit margins for selected personal luxury goods brands, which peaked at 23 percent in 2012, should hit 15-16 percent in 2025, similar to the level in 2009.
“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.
“Luxury stands at a crossroads: uneven regional growth paths, pricing pressure, and fragmented consumer personas are testing its core,” added Claudia D’Arpizio, Senior Partner at Bain & Company and lead author of the study “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.”
Nevertheless, the report concludes that expecting growth for personal luxury goods of 4 percent to 6 percent per year remains realistic over the next decade, anchored by continued consumer expansion and enduring demand. By 2035, the personal luxury goods market should rise to between €525 billion and €625 billion, while overall luxury spending could range between €2.2 and €2.7 trillion, Bain and Altagamma forecast.
Photo: © Alessandro Augusto Lucia on Flickr
