In November 2024, Bain & Company and the Italian trade body Altagamma reported something the industry had not seen in fifteen years: the global market for personal luxury goods — the handbags, watches, jewelry, shoes, and apparel that define the sector — was shrinking, dipping about 2% to roughly €363 billion [source: Bain & Company, 2024]. It was the first contraction since the 2008–09 financial crisis, setting aside the pandemic year of 2020 [source: Bain & Company, 2024]. A year of confident price rises and record margins had run into a wall, and by the industry's own count the market had shed tens of millions of shoppers. The question underneath the numbers is the one the whole sector is now arguing about: is this a passing dip, or did luxury lose a customer it will not easily get back?
This is a story about the buyers of luxury goods and the brands that sell to them — not about gold as a safe-haven asset, and not about the broad macroeconomy. The lens stays on the sector: who is still buying, who stopped, and why the houses selling the same category of goods have posted such wildly different results.
The first contraction since the financial crisis
Bain's headline figure is worth stating precisely, because precision is where this debate usually goes wrong. The 2024 study measured personal luxury goods at about €363 billion, down roughly 2% at current exchange rates [source: Bain & Company, 2024]. A later revision put 2024 nearer €364 billion against €369 billion in 2023, and pegged 2025 at about €358 billion — down around 2% at current rates but roughly flat, even up 1%, once currency swings are stripped out [source: Bain & Company, 2025]. These are estimates of a whole market, not audited company accounts, and the gap between "current" and "constant" exchange rates explains much of the apparent disagreement between headlines.
Two measured findings stand out. First, breadth collapsed: only about one-third of luxury brands managed positive growth in 2024, down from roughly two-thirds a year earlier [source: Bain & Company, 2024]. Second, the customer base thinned dramatically. Bain estimates the market lost something like 50 million customers between 2022 and 2024, and that the addressable base fell from around 400 million shoppers in 2022 to roughly 340 million by 2025 [source: Bain & Company, 2024] [source: Bain & Company, 2025]. That is the statistic that reframes the whole story. A 2% dip in revenue sounds cyclical and mild; a loss of tens of millions of buyers sounds like something changed in the relationship.
A tale of diverging houses
If the slowdown were purely about the economy, every luxury house would sink together. They did not — and the spread between them is the clearest evidence that brand and price position matter as much as the macro weather.
Consider the reported, audited full-year 2024 results across the major groups:
- Kering — group revenue €17.2 billion, down 12%, with recurring operating income down 46% to €2.6 billion and its margin compressing from 24.3% to 14.9%. Its flagship Gucci fell 23% to €7.7 billion, one of its steepest annual declines [source: Kering, 2025].
- LVMH — group revenue €84.7 billion, up 1% organically, but profit from recurring operations down 14%; the key Fashion & Leather Goods division saw reported revenue slip about 3% to roughly €41 billion [source: LVMH, 2025].
- Hermès — revenue up 15% at constant exchange rates to €15.2 billion, essentially defying the downturn [source: Hermès, 2025].
- Richemont — for its year ended March 2025, its Jewellery Maisons (Cartier, Van Cleef & Arpels) grew 8% to €15.3 billion, carrying the group [source: Richemont, 2025].
The pattern held into 2025. Kering's first-half revenue fell about 16%, with Gucci down 26% in the second quarter [source: Kering, 2025]. LVMH's first-half revenue slipped 4% and Fashion & Leather Goods fell 8% as reported — though that division crept back to 1% organic growth in the second quarter, an early hint of a floor [source: LVMH, 2025]. Hermès, meanwhile, closed 2025 with revenue up 9% at constant rates to €16 billion and an operating margin near 41% [source: Hermès, 2026]. Richemont's jewelry momentum continued, with second-quarter sales up 17% at constant rates [source: Richemont, 2025].
Read side by side, the results say something a single market-wide number cannot: the brands at the very top, and those anchored in hard luxury, kept growing, while the more accessible, fashion-driven houses took the damage.
China: the engine that stalled
No factor looms larger over the slowdown than China, which had been the sector's growth engine for a decade. In 2024, Bain estimates mainland China's domestic luxury sales fell roughly 18–20%, effectively reverting to 2020 levels, before it forecast the market to stay broadly flat in 2025 [source: Bain & Company, 2024] [source: Bain & Company, 2024]. The proximate causes Bain cites are weak consumer confidence, a prolonged property downturn, and a rebound in Chinese shoppers buying abroad rather than at home [source: Bain & Company, 2024].
Here a careful distinction matters. China's property slump and its luxury pullback moved together, and it is reasonable to treat falling home values and shaken confidence as associated with softer luxury demand. But the two moving in tandem is not proof that one alone caused the other; youth unemployment, an anti-extravagance mood, and shifting travel patterns all overlapped in the same window. The honest framing is association and plausible mechanism, not a single proven lever. What is not in dispute is the scale: when the market that had supplied much of the industry's growth stops growing, even resilient houses feel weaker traffic — Hermès and Richemont both noted softer Chinese demand even as their global numbers held [source: Hermès, 2026] [source: Richemont, 2025].
The aspirational customer, priced out
The most contested part of the story is not about China at all. It is about price. Through the boom years, luxury houses raised prices aggressively — and the debate now is whether they pushed a whole tier of buyers out of the market.
The measured company data is clear on margins and revenue but silent on any single "price index," so much of this argument runs through analyst estimates, which should be labeled as such. Morgan Stanley analysts have argued that the affordability of certain iconic handbags in the United States deteriorated by somewhere between 10% and 33% over the past decade — price growth far outpacing disposable income — effectively "pricing out the middle-income consumer," and that brands now sit in a difficult spot where they "cannot play with the pricing lever anymore" [source: Morgan Stanley, 2026]. Bernstein analysts have separately estimated that like-for-like price inflation, especially in soft luxury, ran well into double digits and significantly ahead of the long-term average over roughly three years [source: Bernstein, 2025]. These are analyst estimates and reconstructions, not audited disclosures — but they line up with what the companies themselves reported: the accessible, price-led houses lost the most ground, while Hermès, which is famously restrained about volume and discounting, gained.
The behavioral counterpart has a name in the trade press — "luxury shame" or price fatigue — describing aspirational middle-class buyers who, after double-digit increases, no longer feel a €2,000 bag is worth it. That mood is real but hard to measure directly; what can be measured is the exit. Bain's estimate that the market lost tens of millions of customers, and that price hikes left many shoppers feeling, in the words of one widely reported Bain framing, "betrayed," is the quantitative shadow of the sentiment [source: Bain & Company, 2025] [source: Reuters, 2026]. Whether that customer comes back at the same price is the open question.
Cyclical or structural?
This is the debate that matters, and it deserves to be stated fairly from both sides, because serious analysts genuinely disagree.
The cyclical case holds that the slowdown is mostly about the macro moment: a property-hit, low-confidence China, high interest rates, and elevated youth unemployment that will ease with time. J.P. Morgan's research team leans this way, arguing the trends "might be largely cyclical and related to the macro backdrop — notably, high unemployment rates among younger consumers" [source: J.P. Morgan, 2025]. Morningstar has been blunter, calling the downturn "a cyclical pause — not a structural shift" [source: Morningstar, 2025]. On this reading, when China recovers and rates fall, the aspirational buyer returns and the price increases prove durable.
The structural case holds that something more permanent broke: years of price rises detached the product from its aspirational buyer, and a younger generation is less willing to pay. Berenberg analysts have described a "structural demand problem," a "perfect storm" of weakened Chinese spending, an aspirational retreat, and a failure to engage the next generation [source: Berenberg, 2025]. J.P. Morgan itself concedes the two views are not mutually exclusive: "the longer these shifts persist, the more some of them could become structural" [source: J.P. Morgan, 2025]. That is the most defensible position — that a cyclical shock, left to run for several years, can harden into a structural change in how a cohort relates to the category.
Crucially, this is a disagreement among analysts about interpretation, not a settled fact. Both sides are reading the same reported results and reaching different conclusions about causation and permanence, which is exactly why it should be presented as an open debate rather than resolved.
Where the money still flows
Even in a down market, some corners boomed — and they point to where value proved durable. Hard luxury, especially jewelry, was the standout. Bain named jewelry the most resilient core category through the downturn, and Richemont's jewelry-led results confirmed it in audited numbers: 8% growth in the year to March 2025 and a 17% constant-rate jump in the following second quarter [source: Bain & Company, 2024] [source: Richemont, 2025]. Branded jewelry, harder to discount and easier to read as a store of value, behaved differently from a fashion handbag whose price had tripled.
The secondhand market is the other tell. Bain reports that roughly half of luxury shoppers now consult the resale market before buying something new [source: Bain & Company, 2026]. Estimates of the resale market's total size vary and come mostly from market-research firms rather than audited sources, so those specific figures are not independently verified here; the direction, though, is consistent — resale has been growing faster than the primary market, and brands from Richemont (which owns the pre-owned watch platform Watchfinder) to Gucci (which partnered with resale sites) have moved to participate rather than resist. A shopper who checks resale first is a shopper doing the price-to-value math the boom years let brands ignore.
What to watch
The slowdown is not resolved, and a few signals over the next year will tell us which way it settles. First, whether Bain's forecast holds: it projects personal luxury goods returning to roughly €365–373 billion in 2026, up 2–4%, on gradual stabilization [source: Bain & Company, 2026]. If that growth materializes broadly rather than only at the top, the cyclical camp gains. Second, whether the accessible houses — Gucci above all — can stabilize without simply cutting prices; a recovery led by desirability rather than discounts would suggest the aspirational customer is reachable again. Third, China: Bain flagged online luxury in China up sharply in early 2026 even as the physical market stayed soft, so watch whether the recovery is real demand or channel-shifting [source: Bain & Company, 2026]. Fourth, the geographic hand-off — the Americas were surging into 2026 while Europe and the Middle East lagged, and a durable rebound needs more than one region carrying it [source: Bain & Company, 2026].
The grounded reading is neither "luxury is broken" nor "this was just a blip." The measured evidence shows a real contraction, a genuine loss of tens of millions of buyers, and a sharp split between houses that held their pricing power and those that did not — while whether the aspirational customer returns at today's prices remains, honestly, unproven. Watch who comes back, at what price, and whether the brands measure it or just assume it.