As 2025 progresses, the luxury sector is experiencing a period of transition, influenced by shifting consumer preferences and broader economic conditions. Recent earnings reports highlight varied performance across brands, reflecting the need for strategic adaptability.
While companies such as LVMH continue to see growth in segments like fashion and cosmetics, others, including Burberry, are facing challenges in key markets. High-income consumers remain a vital segment, but they are increasingly mindful of pricing, prioritizing value and quality in their purchases.
During LVMH’s recent earnings call, CEO Bernard Arnault described the luxury industry as navigating a period of significant turbulence.
Emphasis on Personalization and Technology
Claudia D’Arpizio, a partner at Bain & Company specializing in luxury and fashion, noted in a recent report that a shrinking luxury consumer base may require brands to reassess their value propositions. She emphasized the importance of personalization and technology-driven engagement at scale.
“To reconnect with customers, particularly younger demographics, brands should prioritize creativity and expand the scope of their engagement,” D’Arpizio wrote. “At the same time, they must maintain strong relationships with their core customers, offering personalized experiences and fostering direct interactions.”
Economic factors such as inflation and geopolitical uncertainty continue to influence consumer confidence and spending patterns across regions. While luxury brands work to adapt to emerging trends and sustain their market presence, the sector remains dynamic. Companies must remain flexible to meet evolving consumer expectations while balancing growth strategies with market realities.
Modest Growth Projected for Luxury Market Until 2027
Industry analysts anticipate limited overall growth in the luxury sector until at least 2027. However, some markets, including Japan, the Middle East, and India, are expected to see expansion in 2025, with India projected to grow by 15%-20%.
Key trends shaping the luxury market in 2025 include:
- A growing focus on experiential and wellness-oriented travel in the luxury hospitality sector.
- Increased emphasis on sustainability and cultural engagement, with trends such as “quiet luxury” gaining traction.
- The expanding resale market, driven by a consumer shift toward budget-conscious shopping.
Some industry experts suggest that shifting values among younger consumers may require brands to refine their strategies and market positioning.
Capri Holdings Responds to Market Challenges
Changing consumer preferences have impacted companies such as Capri Holdings, the parent company of Michael Kors, Versace, and Jimmy Choo. Despite projected fiscal 2025 revenue of $4.4 billion, Capri recently recorded a $600 million write-down of Versace and Jimmy Choo, reflecting underlying business challenges. The company has also faced setbacks following a failed merger with Tapestry, affecting revenue and market share.
Versace’s strategy to position itself as a more premium brand led to a decline in revenue, while Michael Kors faced criticism for pricing and product focus. In response, Capri is adjusting its approach, including introducing more accessible price points.
Gucci has encountered similar obstacles. Following a shift toward more classic designs, the brand saw a decline in demand, particularly in China, with revenue falling 26% in Q3 2024.
Ralph Lauren Reports Strong Growth
In contrast, Ralph Lauren reported an 11% increase in third-quarter revenue for fiscal 2025, reaching $2.1 billion. The company saw growth across regions and sales channels, with notable expansion in direct-to-consumer sales and key markets such as Europe, Asia, and North America. In China, sales rose by more than 20%.
Ralph Lauren’s customer acquisition strategy has contributed to its strong performance, adding 1.9 million new direct-to-consumer customers. The company also reported increased brand engagement, purchase intent, and a growing social media following, which reached over 64 million users—a low double-digit increase from the previous year.
This expansion aligns with evolving consumer payment preferences. According to a PYMNTS Intelligence report, “New Data: Defining the New Buy Now, Pay Later Consumer,” one-third of high-income consumers (earning more than $100,000 annually) have used buy now, pay later (BNPL) services, with 25% choosing BNPL as a preferred payment method.
Growing Focus on Older Consumers in the Luxury Market
As brands diversify their customer base, 2025 marks a shift toward recognizing the potential of older consumers. Traditionally, luxury brands have focused on younger, trend-driven shoppers, but older demographics now control a significant share of global wealth and represent a stable market for high-end goods.
Retailytics principal and founder Bellamy Grindl told PYMNTS that this shift presents an opportunity for luxury brands.
“Older consumers have historically been overlooked, despite their strong purchasing power and brand loyalty,” Grindl said. “They value quality and heritage, which aligns with what luxury brands offer. However, many feel underserved due to the industry’s focus on younger audiences. Brands that continue to prioritize youth risk missing a key demographic that is eager to invest in luxury products.”
As the luxury market adapts to evolving consumer expectations, brands are refining their strategies to maintain relevance and long-term growth.
Discover the latest in supply chain logistics news on The Supply Chain Report. Free international trade tools are available at ADAMftd.com.
#LuxuryMarket #ConsumerTrends #EconomicShifts #HighEndRetail #LuxuryIndustry #MarketAdaptation #GlobalEconomy