US demand anchors luxury market recovery as global base shrinks

The sector, valued at €358 billion in 2025, is attempting to pivot after two years of stagnation. While Bain’s latest forecast remains slightly lower than the 3% to 5% range initially predicted in November, the current trajectory suggests a stabilization of demand. Growth is increasingly bifurcated; while the United States benefits from robust spending by younger demographics and domestic brands, Europe continues to grapple with sluggish tourism. In China, recovery is underway, though it remains concentrated in ready-to-wear segments rather than traditional leather goods.

Beyond shifting geography, the fundamental mechanics of how luxury is purchased are undergoing a radical transformation. Bain partner Francesca Levato warns that the industry’s previous strategy of aggressive price hikes and an exclusive focus on the top 1% of spenders has alienated a massive portion of the consumer base. Simultaneously, technological shifts are accelerating, with half of all luxury shoppers now utilizing artificial intelligence to navigate brand discovery and price comparisons. This digital shift, paired with the rising prominence of the second-hand market, suggests that future growth will require brands to broaden their reach beyond ultra-high-net-worth individuals.