Bain Forecasts Luxury Growth But Trims Outlook

MILAN – The personal luxury goods sector will grow this year but at a more modest rate than previously expected, with Bain slightly trimming its forecast.

Bain now expects growth in personal luxury goods this year of between 2 to 4 percent at constant exchange rates, down slightly from a November estimate of 3 to 5 percent, according to the mid-year update of the closely watched Bain–Altagamma Luxury Goods Worldwide Market Study released on Thursday, a forecast that serves as an industry benchmark Spending on personal luxury goods – which include fashion ready-to-wear, leather goods, footwear, watches and jewellery – is expected to rise to between €365 billion and €373 billion this year, according to the report.

The slightly lower forecast comes after a somewhat disappointing first half of the year for the luxury industry, which has been hit by the war in the Middle East that raised gas prices and hit consumer confidence, as well as oscillating US tariffs and a challenging macroeconomic environment marked by rising interest rates. While the forecasted growth is modest, it would signal a turnaround for an industry coming off two years of declining revenue.

“The luxury market is stabilising, but this is not a return to the old rhythm, it is the emergence of a new one,” said Claudia D’Arpizio, Bain & Company senior partner and global leader of the firm’s fashion & luxury practice. “Consumers are not stepping back from luxury. They are stepping forward into a new relationship with it – one defined by meaning, not just by product.”

Bain gives a 70 percent chance that growth will fall within its range and said the result is contingent on the Middle East stabilising and Chinese demand improving gradually. If the situation in the Middle East escalates and demand in the US market softens, the industry could see flat to 2 percent growth, according to the report, the complete version of which will be released in November.

Growth could exceed the baseline forecast if geopolitical tensions ease further, the football World Cup provides a push to the US market, and China grows faster than anticipated, the report said.

D’Arpizio pointed to an initial recovery in China after several difficult years for Western luxury labels, as Chinese consumers curtailed spending and increasingly turned to local brands. She said growth in China will be “moderate” and that the growth rates of the past will not be repeated.

“We see an initial recovery in China after a long period of decline”, D’Arpizio said in an interview. “Of course, it’s moderate growth, not the growth rates of the past, but there are signs of recovery.”

The US will likely remain the industry’s main growth engine in the near future, D’Arpizio said. She flagged growth in Japan after a difficult 2025 and a revival of the high-end market in South Korea. Europe, by contrast, continues to struggle, weighed down by weak domestic demand, reduced tourist flows and currency headwinds.

Performance across the luxury industry has diverged sharply, with weakness concentrated in aspirational and soft luxury, particularly among large European brands that pushed prices aggressively after the Covid pandemic, the report said. At the same time, accessible luxury brands, especially in the US, are growing steadily, while the super high-end remains resilient.