For the first time since the 2009 recession, the personal luxury goods market is slowing, with Bain & Company reporting that 50 million consumers have stopped purchasing high-end items from brands like Dior and Burberry. Rising prices without improvements in quality or innovation have led to widespread consumer dissatisfaction, with many either priced out or choosing to invest in other priorities.

The fallout is evident among industry giants such as LVMH and Kering, both of which missed revenue targets this year. LVMH, once Europe’s most valuable company, was overtaken by Novo Nordisk, while Kering reported a 15% revenue decline. Michael Kors also noted struggles with “brand fatigue,” attributing revenue drops to fast fashion and influencer-driven trends outpacing the luxury sector’s response.

China, historically a key driver of luxury growth, has significantly reduced spending due to low consumer confidence and the impact of inflation. This downturn has further pressured the global luxury market, which Bain projects will shrink by 2% by the end of 2024. Despite these challenges, some sectors—such as travel, fine dining, and luxury autos—have shown modest growth, signaling a shift in consumer priorities.

Xupes Bags Hermes birkin
The Hermès Birkin bag.

Brands like Hermès have defied the trend, thriving on exclusivity through products like the Birkin bag, which maintains high demand with strict purchasing benchmarks. This approach has helped Hermès grow even as competitors falter. Analysts believe luxury brands must rethink their strategies, prioritizing personalization and innovation to recapture consumer interest, especially among Gen Z buyers.

While the current economic climate dampens growth, a gradual recovery is expected by late 2025, particularly in key markets like China, Europe, and Japan, where favorable exchange rates may reignite demand. For luxury brands, the challenge lies in adapting quickly to meet evolving consumer expectations and reclaim their status as aspirational symbols of exclusivity and value.