As 2025 unfolds, luxury markets are experiencing a period of change in outcomes and dynamics. Recent news and revenue reports reveal sectors experiencing significant evolutions that require flexibility and strategic adjustments from key players, according to a report from ModernRretail.
While some major brands, like LVMH, continue to grow in certain segments, such as fashion and cosmetics, others, like Burberry, suffer from poor performance in key markets. High-income consumers remain an important source of demand, but they are more price sensitive and seeking greater value and quality in their luxurious purchases.
During LVMH’s recent revenue calls, CEO Bernard Arnaud said the luxury industry is in the midst of “very intense times.”
Personalization, you need to focus on technology
Meanwhile, Claudia D’Arpizio, a partner at Bain & Company and a leader in global fashion and luxury practices, will rethink the value brands offer and use personalization and technology at scale. It says that it should be urged to do so.
“To get back customers, especially young customers, brands need to guide creativity and expand the topic of conversation,” writes D’Arpizio. “At the same time, they need to rediscover one-on-one human interactions while keeping top customers front, center and center and being incredibly pleased.”
This evolving landscape reflects greater economic pressures, such as inflation and geopolitical instability, affecting consumer trust and spending habits. Luxury brands continue to rely on their ability to adapt to new trends and maintain the brand’s appeal, but the market is unpredictable. Companies must maintain agile to manage changing consumer preferences and market conditions. When preparing for the future, you need to balance growth with careful growth.
Minimum expected growth in the luxury sector until at least 2027
Analysts expect minimal growth in the luxury sector until at least 2027. However, some regions are projected to see expansion in 2025, particularly in Japan, the Middle East and India, with the latter expected to experience 15%-20% growth. The key trends to form the luxury industry in 2025 are:
Travel towards an experiential, wellness-focused trip with gorgeous hospitality. With an emphasis on sustainability and cultural connection, trends such as “quiet luxury” have gained traction. Improved relevance of resale markets driven by consumer desire for budget-conscious shopping.
According to some experts, the industry is facing an “existential crisis” that changes the value of young consumers, forcing luxury brands to adapt their strategy and cultural positioning.
Capri Holdings faces challenges amid declining revenue
This change in consumer behavior is evident in Capri Holdings, the parent company of Michael Kors, Versace and Jimmy Chew. Despite the expected revenues of 2025 reaching $4.4 billion, Capri’s recent value of Versace and Jimmy Chew highlights deeper challenges, according to the Wall Street Journal Report. . These struggles, exacerbated by the failed merger with tapestry, have resulted in significant losses in both revenue and market share, particularly as they work on relocating the brand.
Versace’s attempts to boost the brand with more refined pieces alienated some customers and reduced revenues by 15%. Meanwhile, Michael Kors faced criticism for alienating core audiences by focusing too much on fashion items. Capri is currently working on re-adjusting the brand, including introducing low-priced items and lowering Kors clothing prices.
Gucci faces similar challenges. After two years of tenure, Creative Director Sabato de Sarno parted ways with a brand struggling with stagnant demand, particularly in China. His shift to a more timeless look failed to resonate with consumers, with revenue falling 26% in the third quarter of 2024.
Meanwhile, Ralph Lauren’s third quarter revenue for fiscal year 2025 rose 11% above expectations to $2.1 billion, thanks to strong, strong performance in global performance across the region and channels. The company has grown significantly in consumer sales, with comparable store sales increasing by 12%, and continued expansion in major markets such as Europe, Asia and North America, with China increasing by more than 20%. .
The highlights of the third quarter include customer acquisition and loyalty growth, adding 1.9 million new consumers to direct consumer business, increasing brand considerations, purchase intent and net promoter score has increased social media to over 64 million people. There has been a small double digit rise from the previous year.
The focus on expanding the consumer base is consistent with the trends in payment preferences. According to the PYMNTS Intelligence report, “New Data: Pay New Purchases Now, Later Consumers” one-third of high-income consumers earn more than $100,000 a year, people who earn more than $100,000 a year use Buy Now, You are using the Pay Later (BNPL) service. 25% of them choose BNPL as their preferred payment option rather than required.
Targeting elderly consumers in the luxury market
As brands focus on consumer-based diversification, 2025 shows a shift towards recognizing the potential of older consumers. This demographic has long been overlooked in favour of young, trend-driven shoppers, but now controls most global wealth and makes them a stable and valuable market for luxury goods. It is positioned.
Retailytics Principal and Founder Bellamy Grindl recently told Pymnt: The older generation not only have more disposable income, but are price sensitive and have higher brand royalties. They value quality and heritage, and this is perfectly in line with what luxury brands offer. The problem is that many feel that media and marketing remain focused on younger audiences. By prioritizing young people, brands risk alienating demographics that are keen to invest in their products. ”
