Significantly lowering its forecast for the luxury goods market, global consulting firm Bain & Company now anticipates a sales decline of 2 to 5 per cent in 2025. This is a sharp downward revision from the firm's previous projection of a modest gain of up to 4 per cent. The updated outlook underscores increasing challenges for the luxury industry following a 1 per cent contraction in global sales in 2024.

In its spring report, Bain notes, global luxury market is currently navigating ‘more complex turbulence across multiple axes.’ The consultancy points to increasing economic pressures and growing consumer weariness of rising prices during Q1, FY25. It also observes, many shoppers seem to be waiting for more original and creative offerings from luxury brands.

Bain had issued its earlier forecast of flat to modest growth in November. Major fashion houses such as Gucci, Chanel, and Dior have all appointed new creative directors in recent months as the sector faces its most significant downturn in years. A combination of China’s real estate crisis and weakened consumer spending in the United States has created a ripple effect across the industry.

The updated forecast comes as the luxury market grapples with renewed economic instability and intensifying global trade tensions. While 75 per cent of luxury consumers surveyed by Bain said tariffs were unlikely to impact their future purchases, nearly half of those who had already reduced their spending attributed their decision to rising prices.

Analysts point out, many luxury brands took advantage of the post-pandemic recovery to implement their steepest price increases in recent years, which may now be contributing to consumer resistance.

At the beginning of the year, industry leaders remained hopeful for a rebound in the United States following encouraging signs during the holiday season. However, early indicators of softening demand began to surface by mid-February, dampening optimism for a swift recovery.