Tariffs, wars and creative fatigue weigh on global sales
Sales of personal luxury goods are projected to decline by 2% to 5% in 2025, according to a new study by Bain & Co., following a drop to €364 billion ($419 billion) in 2024. Despite geopolitical tensions, tariff threats, and slowing economies, Bain partner Claudia D’Arpizio emphasized that the market remains resilient. “It is slowing down but not collapsing,” she said at the report’s release Thursday.
Luxury brands are not just contending with macroeconomic headwinds. The sector is facing what Bain calls a “creativity crisis,” paired with aggressive pricing strategies that are alienating consumers. Recent revelations of sweatshop labor in Italian subcontractors have further tarnished brand perception, compounding the pressure on legacy houses.
China and U.S. lead global pullback in spending
The study shows significant sales declines in key markets. In the U.S., economic volatility and tariff risks have dampened consumer confidence. Meanwhile, China has recorded six consecutive quarters of contraction due to persistently low sentiment. Europe remains stagnant, while some regions — including Southeast Asia, Latin America and the Middle East — are experiencing growth.
This regional divide is also visible in corporate performance. Prada reported a 13% increase in Q1 revenue to €1.34 billion, while Gucci saw revenue plunge 24% to €1.6 billion. In response, Gucci’s parent company Kering appointed former Renault CEO Luca De Meo to lead a strategic turnaround. His arrival was welcomed by markets, pushing Kering shares up 12%.
Brands adapt to uncertainty with structural changes
To cushion the impact of potential U.S. tariffs, luxury companies are adjusting logistics — such as shipping directly from factories and cutting down in-store inventory. With multiple brands undergoing creative shifts, Bain warns that “stuffing the channels doesn’t make sense” in a market where consumers are increasingly selective.
D’Arpizio noted that while war and instability will likely persist, some clarity around tariffs could ease pressure. Importantly, luxury sales are more closely correlated with stock market trends than geopolitical developments.
Long-term resilience remains a hallmark of luxury
Despite short-term declines, the luxury sector has proven its capacity for recovery. From 2019 to 2024, the industry posted a 28% growth, far surpassing pre-pandemic levels, according to Altagamma President Matteo Lunelli. Previous crises — including the 2008 recession and the 2020 pandemic — saw sharp rebounds fueled by pent-up demand and emerging markets.
