Study says global luxury goods market will shrink in 2025. Trump’s tariffs could make situation worse
MILAN– Global sales of personal luxury items are expected to decline in 2025 for the first time since the Great Recessionaccording to a study by consulting firm Bain published Wednesday. The outlook could deteriorate if the sector is hit by promised prices by Donald Trump.
“It could be a nightmare if it were implemented,” Claudia D’Arpizio, co-author of the study for Italian luxury producers association Altagamma, told the Associated Press. “European brands could end up being very expensive in an already expensive environment.”
Trump has promised tariffs of up to 20% on imports, saying it would create factory jobs, reduce the federal deficit and lower food prices.
Although the study did not address the possible impact of the tariffs, D’Arpizio said the impact on European luxury goods producers would depend on how the tariffs would be applied to that category. , if at all. She noted that the shortage of substitutes for American luxury could lead to an exemption.
Any negative impact could also be offset by a shift in production to the United States or increased sales to American tourists in Europe.
The United States is the second-largest luxury market, after Europe, worth around 100 billion euros ($106 billion), or nearly a third of all global high-end clothing sales. , leather goods and shoes.
Sales of luxury goods are expected to fall 2% to 363 billion euros ($385 billion) next year, compared to 369 billion euros expected in 2024, due to steep price hikes imposed by brands and of the global turmoil, Bain said.
The sector rebounded quickly from the COVID-19 pandemic, surpassing 2019 sales in 2022, largely thanks to pent-up spending that was delayed by lockdowns. Even a slight decline next year would leave the market 28% higher than it was in 2019, and two and a half times larger than the lows of the 2008 Great Recession.
Social and political turmoil, including wars and national elections, have eroded consumer confidence, D’Arpizio said. Additionally, the brands’ strategy of raising prices while focusing on “subtler luxury”, often lacking novelty, has “had a strong negative impact on willingness to purchase”, even among affluent consumers, she declared.
The creativity crisis is also alienating Gen Z shoppers, many of whom are now in their 20s, the study found.
The result is that the luxury market has shrunk by 50 million customers, to an estimated figure of between 250 and 360 million, as the luxury base shrinks for the first time.
“We have 50 million fewer customers, either because they can’t afford to shop or because they don’t want to because they feel there isn’t enough of juice,” D’Arpizio said.
