Luxury Consumer Outlook: How is 2025 Progressing
Pandora Mather-Lees
Luxury Director, IORMA
April 2025
The Future of Luxury: Trends Shaping the Industry in 2025 and Beyond
The luxury sector is at a checkpoint. After many years of thriving sales, global economic changes, advances in technology and evolving consumer expectations new market dynamics are redefining what luxury means. As we are now fully into the swing of 2025, we examine key reports from industry leaders which highlight critical trends that will shape the future of high-end goods, services and of course, experiences.
Luxury Real Estate: A Resilient Market in Transition
Sotheby’s International Realty’s 2025 Luxury Outlook Report underscores the resilience of the luxury property market despite global economic fluctuations. A huge US$84 trillion intergenerational wealth transfer is set to reshape property ownership, with 135,000 high-net-worth individuals expected to relocate globally. Additionally, the desirability of certain cities, reinforced by “Best Places to Live” rankings, will continue influencing real estate values and inventory levels.
Bradley Nelson of Sotheby’s International Realty proposes that while the real estate property environment has faced disruptions in recent years, the market is entering a new cycle with promising investment opportunities. Insights from J.P. Morgan, PwC, UBS, and other experts suggest that luxury real estate will remain a strong asset class, particularly for ultra-high-net-worth buyers seeking stability and exclusivity.
Luxury Retail: Adjusting to a Post-Boom Era
After an unprecedented surge in sales during the pandemic, the personal luxury goods sector is experiencing a slowdown. Bain & Company reports a 2% decline in global luxury sales for the first time since 2008 (excluding the pandemic year). While affluent consumers continue to spend, the broader customer base has receded, pushing brands to focus on exclusive experiences and bespoke marketing to retain top-tier clients.
Geopolitical instability has played its part. For instance, elections in over sixty countries together with global conflicts has dampened consumer confidence. Additionally, the landscape of luxury e-commerce is shifting. Matches fashion shut down, Farfetch restructured under new ownership and even the Saks Fifth Avenue-Neiman Marcus merger collapsed after regulatory challenges. Despite these events, analysts expect modest improvements in 2025, driven by macroeconomic adjustments and potential regulatory easing.
A Pricing Reality Check for Luxury?
Prestige brands have relied on price hikes to drive revenue in recent years. Since 2019, prices have soared by 52% in Europe and the industry is now reckoning with the consequences. Brands such as Burberry and Mulberry struggled after pushing too far upmarket while Hermès successfully navigated the shift by offering enduring value.
Moving forward, sales growth as a consequence will need to be driven by volume rather than price inflation. Analysts predict that brands must recalibrate their pricing strategies to balance exclusivity with broader consumer appeal.
Accountability and Ethical Luxury
Luxury brands can no longer afford to ignore environmental, social, and governance (ESG) concerns. Recent investigations into labour conditions at brands like Dior and Armani have allegedly damaged reputations, pushing such companies to invest in supply chain transparency and ethical sourcing. It is no longer sufficient to promote ethics in marketing outreach – it has to be monitored, evidenced and meaningful under the watch of today’s consumers.
To safeguard their status, major groups such as Chanel and Only The Brave (owner of Maison Margiela and Diesel) are acquiring their suppliers to secure greater control over production. Consumer expectations for sustainability will continue to shape all aspects of consumer commerce in thefuture, making corporate responsibility a non-negotiable aspect of brand integrity.
Creativity as a Market Differentiator
Many industry insiders argue that fashion has become too safe, leaning heavily on iconic re-editions, safe colours and styles along with commercial staples rather than bold new ideas. However, a shake-up is underway, with several major brands appointing fresh creative direction. Chanel, Bottega Veneta, Givenchy, Tom Ford for example, will debut new visions, injecting much-needed excitement into the sector.
Meanwhile, the rise of the second-hand luxury market is influencing consumer behaviour. Shoppers are increasingly turning to pre-owned pieces as a way to access high-end fashion sustainably. As a result, brands must rethink their approach, ensuring their designs remain compelling across both primary and secondary markets. Interest in the ‘pre-owned’ market is not only spawned by a desire to save the planet – or being seen to do so. There is a significant retro aesthetic across the creative industries and in fashion it brings with the desire to own authentic, rare, vintage pieces from the heyday of the 40s, 50s, 60s and 70s.
The Return of Personal Style
The era of “quiet luxury” and stealth wealth may be giving way to a renewed appreciation for individual expression. According to Net-a-Porter and Mr Porter’s fashion director Kay Barron, consumers are moving beyond minimalist staples to embrace romantic, character-driven dressing. Brands such as Chloé, Margiela, and Valentino are leading this shift, offering a balance between timeless elegance and personal flair.
Middle-Market Growth and Emerging Luxury Consumers
While ultra-luxury will always cater to an elite clientele, brands must also consider the growing middle-class consumer base in regions like India, Mexico, Southeast Asia, and Africa. Bain projects over 300 million new luxury consumers emerging from these markets in the next decade. Contemporary brands with strong value propositions such as Toteme, Aimé Leon Dore and Studio Nicholson are now capitalizing on this trend, offering distinct designs at accessible price points.
China: A Complicated Market Dynamic
China still remains a key focus for luxury brands, but the strategy is evolving. Economic slowdowns and government crackdowns on displays of wealth have impacted spending, prompting brands to reconsider pricing strategies. However, 150 million new aspirational shoppers are expected to emerge in China by 2035, making long-term engagement essential. Japan, benefiting from a weak currency, has become a luxury hotspot, attracting high-end shoppers from across Asia.
Mergers, Acquisitions, and Industry Consolidation
With valuations still high and margins under pressure, the luxury sector is approaching an inflection point. Analysts predict more mergers and consolidations in 2025 as brands seek to streamline operations and strengthen market positioning. While private equity interest has picked up in other sectors, significant luxury deals remain rare. Nevertheless, this could change if market conditions stabilize.
The future and technology for the sector
Innovations in luxury are increasingly driven by progressive technology, seamlessly blending craftsmanship with digital advancements. From AI-powered personal shopping assistants to blockchain-backed provenance tracking for fine art and collectibles, technology is used to enhance exclusivity and authenticity. In the superyacht industry, automation, sustainable propulsion systems and smart materials redefine both performance and comfort. Meanwhile, luxury fashion embraces bioengineered fabrics and digital couture, offering new dimensions of personalization. As brands integrate these innovations, they create immersive experiences that cater to the evolving expectations of high-net-worth individuals. However, they also lead the trend by setting new trends, unveiling novel inventions and exclusive “must-haves” tailored for a privileged market.
Finally: What’s Next for Luxury?
Despite some challenges for now, the luxury industry is poised for improvement. Sustainability, ethical production, creative reinvention and emerging markets will define the next chapter of luxury commerce. While 2025 may not be a year of explosive growth, it will be a period of recalibration—one that sets the stage for a more dynamic and responsive luxury landscape in the years ahead.
References:
What to expect in luxury in 2025
The Future of Luxury: Consumption Predictions by Sectors (2025-2030) | LUXONOMY
2025 Outlook: “Luxury fatigue” weighs in | UBS Global