① A Bain & Company report indicates that the global luxury goods industry is projected to grow by 3% to 5% in sales by 2026, but price increases have alienated customers and threaten long-term growth; ② Research shows that the luxury goods consumer group has shrunk to approximately 340 million people, with spending by high-spending groups stabilizing. The industry slowdown has led to inventory buildup, making the disposal of excess inventory a challenge.
According to a research report released by consulting firm Bain & Company on Thursday, the global luxury goods industry is expected to see sales grow by 3% to 5% in 2026 after stagnating in 2025. However, at the same time, aggressive price increases over the years have alienated customers and threatened the industry's long-term growth.
Bain & Company said that next year’s growth will primarily come from continued momentum in the U.S. market, robust domestic consumption in Europe and Japan, and a gradually improving trend in the Chinese market.
However, the consulting firm points out that the continued price increases are driving high-end fashion brands away from their "desire consumers" and even making ultra-high-net-worth clients feel "betrayed".
"You can't just target the top consumers, because they're starting to feel genuinely dissatisfied and even betrayed in the industry," said Federica Levato, a partner at Bain & Company. She pointed out a contradiction between price increases and a lack of brand creativity.
“Some brands may have realized their mistakes, but most still believe that they can fix the problem by improving their creativity. But in our view, at the current price level, simply improving creativity is not enough.”
Research shows that the luxury goods consumer group has shrunk from 400 million people in 2022 to about 340 million people in 2025, and may lose another 20 million to 30 million people in the future.
Even high-spending groups are showing signs of fatigue. Research shows that although they currently account for about 46-47% of the €358 billion personal luxury goods market, their spending has stabilized this year.
Levato points out that the price increases by most traditional luxury brands have created a “complete market gap” for companies offering more affordable clothing, many of which are American brands.
As an early sign that the industry may be entering a period of broader reflection, Kaiyunji Group CEO Luca de Meo said in a memo this week that the company needs to re-examine its pricing and product structure after years of price increases.
This strategy also excludes younger consumers. Despite limited budgets, young people wield cultural influence beyond their purchasing power, even swaying the buying decisions of older generations.
Bain Partner Claudia D'Arpizio stated that the downturn in 2025 was partly self-inflicted by companies, as luxury brands excessively inflated prices in their pursuit of exclusivity and a "scarcity" strategy.
She stated, "Major brands are currently in a reset phase, injecting more creativity by hiring new designers; at the same time, they are rethinking their pricing structures and launching new entry-level products."
The industry slowdown has also led to inventory buildup, with the inventory-to-revenue ratio rising by 3 to 4 percentage points compared to 2019.
How to deal with excess inventory has become a problem. Many luxury brands avoid discount channels for fear of damaging their image, while destroying unsold goods is prohibited under EU sustainability rules.
Amid geopolitical uncertainties, predicting the future of the global luxury goods industry is becoming increasingly difficult, including US President Trump's aggressive trade policies.
In May, Bain & Company sharply lowered its 2025 industry forecast to a contraction of 2% to 5%, citing the threat of U.S. tariffs and geopolitical tensions that could lead to an economic slowdown. However, it said on Thursday that the industry will ultimately remain largely flat this year.
(Article source: CLS)
