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American Focus > Blog > Economy > Tariff threats, wars will slow but not collapse global luxury sales in 2025, new study shows
Economy

Tariff threats, wars will slow but not collapse global luxury sales in 2025, new study shows

Last updated: June 19, 2025 5:45 am
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Tariff threats, wars will slow but not collapse global luxury sales in 2025, new study shows
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The luxury goods market is facing challenges, but it is not collapsing, according to a recent study by Bain & Co. Global sales of personal luxury goods have slowed down, dropping to 364 billion euros ($419 billion) in 2024. The study projects a further 2% to 5% decrease in sales this year due to threats of U.S. tariffs and geopolitical tensions causing economic slowdowns.

Despite the challenging environment, Claudia D’Arpizio, a partner at Bain and co-author of the study, remains optimistic. She acknowledges the difficult circumstances, including wars, economic slowdowns, and increasing inequality, but emphasizes that the market is not in collapse, just slowing down.

Luxury brands are facing external headwinds and have also alienated consumers with an ongoing creativity crisis and sharp price increases. Recent investigations in Italy exposing sweatshop conditions in subcontractors making luxury handbags have further turned off buyers.

Sales in key markets like the United States and China are declining sharply due to market volatility and low consumer confidence. In contrast, regions like the Middle East, Latin America, and Southeast Asia are experiencing growth, while Europe remains mostly flat.

The study highlights a sharp contrast between brands that are maintaining strong creative and earnings growth, such as the Prada Group, and those experiencing declines, like Gucci. Gucci owner Kering recently hired Italian automotive executive Luca De Meo to lead a turnaround, as three of its brands are launching new creative directors.

To mitigate the impact of possible U.S. tariffs, luxury brands are making changes such as shipping directly from production sites and reducing stock in stores. D’Arpizio emphasizes the importance of aesthetic changes and avoiding excess inventory in stores.

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While many challenges facing the luxury goods sector are beyond companies’ control, D’Arpizio believes that luxury consumer confidence is closely tied to stock market trends rather than geopolitics. Matteo Lunelli, President of the Italian luxury brand association Altagamma, notes that the sector has seen overall growth of 28% from 2019-2024, surpassing pre-pandemic levels.

Although luxury spending is sensitive to global turmoil, history shows that the market is quick to rebound, driven by new markets and pent-up demand. After the 2008-2009 financial crisis and the recent pandemic-induced sales plunge, the luxury goods market rebounded quickly, setting new records.

The luxury goods market may be facing challenges, but with strategic adjustments and a focus on creativity and consumer confidence, the industry is poised to weather the storm and bounce back stronger than ever.

TAGGED:collapsegloballuxurySalesShowsSlowStudyTariffThreatsWars
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