The global luxury goods market may be on the brink of its biggest downturn since the 2008 financial crisis. This is predicted by consultancy firm Bain & Company in collaboration with Italian trade association Altagamma. According to their latest report, the market will shrink by 2 to 5 per cent by 2025.
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It is the first significant slowdown in years, and the causes are diverse: geopolitical tensions, trade tariffs, wars and falling consumer confidence are hitting the sector hard. Young consumers in particular, such as Generation Z, appear to be becoming more critical. They show themselves less impressed by the current range of luxury brands.
Growth stalls, frontrunners fall silent
The impact can be felt among the big names. Fashion group Kering, the parent company of, among others, Gucci, has been struggling with disappointing figures for some time. Lvmh, owner of Louis Vuitton, is also struggling to maintain sales growth. Only a handful of brands, including Prada, Hermès and Moncler, managed to escape the downward trend for the time being.
According to Bain & Company, the situation shows how sensitive the luxury sector is to global turmoil. 'Without a strong recovery in consumer confidence or innovation within brand offerings, 2025 will be a challenging year for many players.'
Source: retail trends