Over the past three years, luxury volume growth has softened, with brands increasingly relying on price increases to maintain top-line performance. Between 2023 and 2025, around 80 percent of luxury market growth is estimated to have stemmed from price increases rather than volume gains — a lever that cannot be relied on indefinitely.
At the same time, competition for share of wallet has intensified as customers redistribute discretionary spending across a wider range of categories, including travel and wellness. Aspirational shoppers — those spending between €3,000 (approximately $3,494) and €10,000 ($11,647) annually on luxury goods — have cut spending on luxury goods amid price increases and a more challenging economic backdrop, with an estimated 35 percent of aspirational luxury customers pulling back on or delaying luxury spend.
Brand performance has become more polarised amid this shift: The range of EBITA margins among the middle 50 percent of performers (analysed to exclude outliers) has increased more than 2.5 percentage points since 2021. Brands that outperformed did so by focussing on more resilient parts of the market, such as hard luxury categories like jewellery and ultra-high-net-worth customers.
Brands are turning to creative reboots to reignite customer demand
Luxury’s creative refresh
Over the past decade of rapid growth, many luxury brands have widened their customer bases — at times, trading exclusivity for broader reach. This has accelerated customer desire for greater creativity and differentiation, which is most pronounced among younger customers: 81 percent of customers under the age of 35 cite design and creativity as their primary purchase driver. In response to this and slowing sales, luxury houses replaced their creative directors at an unprecedented rate over the last year.
Nine of 15 of the largest luxury brands appointed new creative directors in the 12 months until September 2025, with four also appointing a new chief executive.
The highly anticipated Spring/Summer 2026 season
The Spring/Summer 2026 fashion show season was an early test of brands’ new creative directions, with designers at houses from Chanel and Dior to Balenciaga and Loewe showing their debut womenswear collections.
Jonathan Anderson’s Dior was the top-performing show during Paris Fashion Week Spring/Summer 2026 by share of voice in user-generated content on social media.
Online audiences praised Jonathan Anderson’s Dior for its modern reinterpretation of heritage motifs and sculptural silhouettes and described Matthieu Blazy’s solar-system adorned Chanel runway as symbolic of the brand’s new era, according to social listening analysis. Meanwhile, audiences viewed former Proenza Schouler designers Jack McCollough and Lazaro Hernandez’s debut at Loewe as an energetic and playful reinterpretation of the brand’s craft heritage through the collection’s bold colours, frayed elements and transparent shoes.
Brands have started to capitalise on this initial buzz by accelerating their go-to-market calendars, making their collections available the same week the lookbook is released. The next challenge to fully translate this into commercial impact is to ensure aligned marketing, merchandising and store concepts.
Rebuilding customer trust is an essential part of the sector’s recalibration
Luxury’s value equation has come under pressure from repeated price increases and recent labour investigations, leaving customers questioning if luxury goods are worth the high price tags.
Rebuilding value perception has become a strategic imperative as brands reset for growth, partly achieved by taking more control over practices across the full value chain to ensure their integrity. Some brands are attempting to gain oversight of their entire value chains and protect craftmanship. For example, Dior created a new industrial division in late 2024 to centralise oversight of suppliers and workshops to strengthen quality control and preserve artisanal know-how.
The #1 attribute that epitomises luxury is ”expertise and quality,” according to ultra-high-net-worth customers.
Leading houses are also aiming to improve value perception by investing in their manufacturers, developing talent in-house or vertically integrating production to preserve rare artisanal skills. Most recently in June 2025, Prada acquired a 10 percent stake in Italian leather group Rino Mastrotto, strengthening its control over leather production. Meanwhile, brands like Van Cleef & Arpels and Bulgari are opening their jewellery schools to the public to showcase in-house craftmanship skills and inspire a new generation of customers — a growing engagement tactic across the industry.
67% of consumers say trust in a brand translates into long-term loyalty and advocacy.
Regional differences in purchase drivers reveal unique formulas to capture high spenders
In China, high-net-worth customers continue to prize exclusivity and innovation, gravitating towards brands that balance recognisable heritage design codes with creativity. Luxury is seen as an expression of taste and individuality, where exclusivity can be signalled by showcasing access to exceptional design and brand iconography.
When asked about associations with luxury, respondents in the US and UK emphasised attributes such as quality, durability, elegance and affluence. By contrast, Chinese consumers cited specific brand names twice as often.
In the US and UK markets, strengthening clienteling and store experiences through AI or digital tools can be a key source of competitive advantage. For example, such tools can be used to personalise web interfaces to customers’ purchasing and browsing history to maximise engagement, or can guide sales advisors to more effectively prepare for in-store visits. While use in luxury is nascent, brands like Saks Fifth Avenue have started to use AI to personalise editorial content and product recommendations on their websites.
Younger cohorts place greater emphasis on luxury as a marker of identity and status
Premium quality and craftmanship are key for all customers, but there are slight differences between generations on other associations with luxury.
Redefining wealth and luxury
Gen Z and Millennials are reshaping expectations of luxury brands. Younger customers use luxury purchases to signal status, image and self-definition more than older cohorts and are less likely to link luxury to wealth, redefining luxury beyond affluence. This is linked to luxury’s widening scope to include experiences, and is reinforced by resale’s rise, which weakens luxury’s link to wealth.
The evolving meaning of exclusivity
Gen Z and Millennial customers cite exclusivity as a driver for increased luxury spend, 11 percentage points above the average. Yet as luxury continues to grow its customer base and the notion of exclusivity evolves, brands must foster desirability through storytelling, personalisation and product distinction rather than limited access alone.
Younger cohorts are gaining spending power
Gen Z spending is growing twice as fast as that of previous generations. It is expected to surpass Baby Boomer spending by 2029, fuelled by $15 trillion to $20 trillion in wealth transferred from Baby Boomers to Millennials and Gen Z.
How should executives respond to these shifts?
Translate creative energy into sustained commercial impact
Support creative instinct with customer insight and analytics. Use client insights to focus artistic instincts, not replace them. Balance the art of risk-taking with a deep understanding of brand heritage and audience reception to create work that feels daring and fresh but lands with customers.
View marketing and stores as further opportunities to differentiate creatively from competitors. The most compelling creative reboots will drive early buzz, sustain momentum through consistent marketing narratives and convert it into measurable improvements to store and web traffic, engagement and sales.
Prioritise rebuilding client trust
As transparency becomes a baseline expectation and regulatory pressure increases, responsibility in sourcing and labour is central to rebuilding trust.
Whether vertically integrated or not, brands must own responsibility for the entire value chain — from raw materials and sourcing through to the finished product. Prioritising traceability and fair labour practices signals genuine integrity to customers and enables tighter control over production quality and working conditions, and enables brands to secure (and where required, rebuild) their reputations.
Customers want proof of exceptional materials and human skill visible in the product. Brands should anchor brand stories in craft and product quality. They might also invite customers behind the scenes in production with atelier visits, open workshops or storytelling to help restore value perception and strengthen emotional connection.
Improve the client retail experience across channels
Empower advisors to deliver more personal, high-touch service both online and in store, pairing investment in clienteling tools with ongoing training and incentivising digital fluency.
Data must also flow seamlessly across stores, e-commerce and social channels, creating a single, unified view of each client to enable:
- Tailored outreach, such as notifying a leather goods client that a new handbag has dropped ahead of their birthday or anniversary.
- E-commerce personalisation, such as adapting product listing pages to unique preferences to maximise engagement and conversion.
- Exceptional in-store experience, such as client advisors using AI tools to more effectively prepare for appointments.
This article first appeared in The State of Fashion 2026, an in-depth report on the global fashion industry, co-published by BoF and McKinsey & Company.
