Tariff threats, wars will slow but not collapse global luxury sales in
2025, new study shows
[June 20, 2025] By
COLLEEN BARRY
MILAN (AP) — Global sales of personal luxury goods are ”slowing down but
not collapsing,” according to a Bain & Co. consultancy study released
Thursday.
Personal luxury goods sales that eroded to 364 billion euros ($419
billion) in 2024 are projected to slide by another 2% to 5% this year,
the study said, citing threats of U.S. tariffs and geopolitical tensions
triggering economic slowdowns.
“Still, to be positive in a difficult moment — with three wars,
economies slowing down, inequality at a maximum ever — it’s not a market
in collapse,’’ said Bain partner and co-author of the study Claudia
D’Arpizio. “It is slowing down but not collapsing.”
Alongside external headwinds, luxury brands have alienated consumers
with an ongoing creativity crisis and sharp price increases, Bain said.
Buyers have also been turned off by recent investigations in Italy that
revealed that sweatshop conditions in subcontractors making luxury
handbags.
Sales are slipping sharply in powerhouse markets the United States and
China, the study showed. In the U.S., market volatility due to tariffs
has discouraged consumer confidence. China has recorded six quarters of
contraction on low consumer confidence.
The Middle East, Latin America and Southeast Asia are recording growth.
Europe is mostly flat, the study showed.
This has created a sharp divergence between brands that continue with
strong creative and earnings growth, such as the Prada Group, which
posted a 13% first-quarter jump in revenue to 1.34 billion euros, and
brands like Gucci, where revenue was down 24% to 1.6 billion euros in
the same period.
Gucci owner Kering last week hired Italian automotive executive Luca De
Meo, the former CEO of Renault, to mount a turnaround. The decision
comes as three of its brands — Gucci, Balenciaga and Bottega Veneta —
are launching new creative directors.
Kering’s stock surged 12% on news of the appointment. D’Arpizio
underlined his track record, returning French carmaker Renault to
profitability and previous roles as marketing director at Volkswagen and
Fiat.
[to top of second column] |
These are Gucci bags in the window of a Gucci store in Pittsburgh on
Jan. 30, 2023. (AP Photo/Gene J. Puskar, File)
 “All of these factors resonate well
together in a market like luxury when you are in a phase where
growth is still the name of the game, but you also need to make the
company more nimble in terms of costs, and turn around some of the
brands,’’ she said.
Brands are also making changes to minimize the impact of possible
U.S. tariffs. These include shipping directly from production sites
and not warehouses and reducing stock in stores.
With aesthetic changes afoot “stuffing the channels doesn’t make a
lot of sense,’’ D’Arpizio said.
Still, many of the headwinds buffering the sector are out of
companies’ control.
“Many of these (negative) aspects are not going to change soon. What
can change is more clarity on the tariffs, but I don’t think we will
stop the wars or the political instability in a few months,’’ she
said, adding that luxury consumer confidence is tied more closely to
stock market trends than geopolitics.
President of Italian luxury brand association Altagamma Matteo
Lunelli underlined hat the sector recorded overall growth of 28%
from 2019-2024, “placing us well above pre-pandemic levels.”
While luxury spending is sensitive to global turmoil, it is
historically quick to rebound, powered by new markets and pent-up
demand.
The 2008-2009 financial crisis plummeted sales of luxury apparel,
handbags and footwear from 161 billion euros to 147 billion euros
over two years. The market more than recovered the losses in 2010 as
it rebounded by 14%, with an acceleration in the Chinese market.
Similarly, after sales plunged by 21% during the pandemic, pent-up
spending powered sales to new records.
All contents © copyright 2025 Associated Press. All rights reserved |
