MILAN — Global sales of personal luxury goods are expected to contract in 2025, according to a study published Wednesday by Bain Consulting. The book’s authors said the outlook could worsen if the sector is hit by President Donald Trump’s promised tariffs.
“If this is implemented, it could be a nightmare,” Claudia D’Alpizio, who led the investigation for Italy’s luxury producer association Altagamma, told The Associated Press. “European brands can end up being very expensive in an already expensive environment.”
President Trump has promised to impose tariffs of up to 20% on imported goods, which he claims will create factory jobs, reduce the federal deficit and lower food prices.
Although the study does not address the potential impact of tariffs, the impact, if any, on European luxury goods producers will depend on how tariffs are implemented for that category. Dalpizio said. He noted that a lack of luxury alternatives in the U.S. could lead to an exemption.
The negative impact could also be offset by moving production to the United States or increasing sales to American tourists in Europe.
The United States is the second-largest luxury goods market after Europe, with a value of approximately $106 billion and accounting for nearly one-third of global luxury sales of apparel, leather goods, and footwear.
Luxury sales are expected to fall 2% to $385 billion next year from an expected $390 billion in 2024 due to steep price increases by brands and global disruption, Bain said.
The sector recovered quickly from the coronavirus pandemic, surpassing 2019 sales by 2022, thanks to pent-up spending delayed by lockdowns. Even a modest decline next year would leave the market 28% higher than in 2019 and 2.5 times higher than its 2008 recession-era low.
D’Arpizio said social and political turmoil, including war and a series of national elections, has eroded consumer confidence. Additionally, brand strategies that focus on “subtle luxuries” that often lack novelty while raising prices “have a strong negative impact on purchase intent” even among affluent consumers, he said. .
The crisis of creativity is also alienating Gen Z shoppers, many of whom are now in their 20s, the study found.
As a result, there were 50 million fewer customers in the luxury market, and the luxury segment shrank for the first time, from an estimated 250 million to 360 million.
“We’re losing 50 million customers because they can’t afford to shop or they don’t want to shop because they feel like they don’t have enough food,” D’Arpizio said.
