Following the post-pandemic boom, the luxury sector is looking for a second wind

Read the McKinsey & Company report here: The State of Fashion 2026

The luxury industry is at a historic turning point. Following the post-pandemic euphoria, characterised by soaring sales and aggressive price rises, the sector has entered a phase of structural normalisation. The frenetic growth has given way to a more moderate and selective rate of growth — between 2 per cent and 4 per cent per year — forcing luxury houses to completely rethink their business models.

The previous cycle: price rises and mass market expansion

The previous cycle was characterised by a strategy centred on pricing power. To maintain their margins in the face of inflation, brands raised their prices dramatically, banking on the enthusiasm of so-called ‘aspirational’ buyers and the rebound in global consumption.

This policy has shown its limitations : by decoupling prices from perceived value and the actual quality of products, the market has encountered widespread fatigue. The mid-tier customer base has gradually withdrawn or shifted towards the upper mid-range, the second-hand market or ‘dupe culture’. Paralysed by this impersonal marketing overload and the loss of exclusivity in-store, the fashion houses have seen their momentum for mass acquisition run out of steam.

The current cycle: hyper-concentration and a refocus on value

The new luxury landscape is now centred on one principle: extreme selectivity. The drivers of performance are based on four major transformations.

- Customer polarisation: The sector no longer depends on the general public. The wealthiest 2 per cent of customers (HNWIs and UHNWIs) now account for half of total spending, whilst the ultra-exclusive segment (the 0.1 per cent spending over €50,000 a year) alone generates more than 20 per cent of global turnover. Their purchasing power is now driven by the health of the financial markets rather than GDP.

- From product to heritage experience: Traditional material luxury (ready-to-wear, mass-market leather goods) is losing ground to safe-haven assets and experiences. High jewellery and exceptional timepieces are outperforming thanks to their heritage value, whilst luxury hospitality, gastronomy and wellbeing (Health-as-Wealth) are capturing an increasing share of budgets.

- The return of the human touch and bespoke service: Faced with complaints about declining quality and a loss of privacy, brands are reinvesting in the in-store experience. As the direct relationship fostered by sales advisers (Client Advisors) has once again become the key factor in building customer loyalty, the focus has shifted towards hyper-personalisation and an ultra-exclusive shopping experience.

- AI as an operational and commercial driver: On the technological front, artificial intelligence is becoming established at every level. On the consumer side, the rise of virtual shopping assistants (Agentic AI) is transforming the way products are searched for. On the management side, generative and predictive AI optimises stock levels, ensures environmental traceability (digital passport) and refines customer relations.

A redefined geographical landscape and governance

Whilst Europe retains its supremacy in design and production — driven by the financial clout of French giants and Italy’s artisanal sector — growth hubs are shifting. The traditional powerhouses (the US, China, Europe) are experiencing a soft landing, leaving the Middle East and, above all, India (expected growth of +18 per cent) to take on the role of new regional drivers. The era of easy growth through indiscriminate price rises is definitively over. To maintain their exceptional profitability in this new cycle, major groups must combine exceptional craftsmanship, close customer relationships and technological agility.

Conclusion: A challenge of cultural and operational relevance

In short, the luxury industry is not facing a crisis of appeal, but a crisis of undifferentiated growth. The houses that will successfully navigate this cycle will be those capable of resisting the temptation of volume in favour of genuine rarity.

In a world where consumers seek both to preserve their wealth and to find meaning in their purchases, the luxury of tomorrow will be defined less by the ostentation of a logo than by the depth of the experience, absolute control over the value chain and the authenticity of human relationships.