MILAN (AP) — Global sales of personal luxury goods are expected to shrink in 2025 for the first time since the Great Recession, according to a Bain consultancy released Wednesday. The author said the outlook could worsen if the sector is hit by the tariffs promised by Donald Trump.
“This could be a nightmare if implemented,” Claudia D’Arpizio, who led the research for Italy’s Altagamma association of luxury manufacturers, told The Associated Press. “European brands could become super expensive in an already expensive environment.”
Trump has promised tariffs of up to 20% on imports, saying this would create factory jobs, reduce the federal budget deficit and lower food prices.
While the study did not address the potential impact of tariffs, D’Arpizio said the impact on European luxury producers would depend on how the tariffs are implemented on the category, if at all. She noted that a shortage of U.S. luxury substitutes could lead to an exemption.
Any negative impacts could also be offset by moving production to the United States, or through higher sales to American tourists in Europe.
The United States is the second-largest luxury market after Europe, worth about 100 billion euros ($106 billion), or almost a third of all global sales of luxury clothing, leather goods and footwear.
Sales of luxury goods are expected to fall 2% to 363 billion euros ($385 billion) next year, compared to an expected 369 billion euros in 2024, due to sharp price increases imposed by brands and global unrest, Bain said.
The sector recovered quickly from the COVID-19 pandemic and surpassed 2019 sales in 2022, largely thanks to pent-up spending postponed by the lockdowns. Even next year’s modest dip would leave the market 28% higher than 2019, and two and a half times greater than the Great Recession low of 2008.
Social and political turbulence, including wars and a series of national elections, have eroded consumer confidence, D’Arpizio said. Moreover, brands’ strategy to raise prices and focus on more “subtle luxury,” often without novelty, has “had a strong negative impact on willingness to buy,” even among wealthy consumers, she said.
The creativity crisis is also alienating Gen-Z shoppers, many of whom are now in their 20s, the survey found.
The result is that the luxury market has shrunk by 50 million customers, to an estimated 250 to 360 million, while the luxury base is shrinking for the first time.
“We have 50 million fewer customers because they can’t afford to shop, or they don’t want to because they think there’s not enough juice,” D’Arpizio said.
