Luxury goods market to return to growth in 2026, Bain predicts

[NEW YORK] The market for personal luxury goods should return to growth in 2026 after two years of flatlining, according to one of the world’s biggest consulting firms.

Sales of high-end goods, including jewellery, leather handbags, shoes and ready-to-wear fashions, will probably grow between 3 per cent and 5 per cent next year at constant exchange rates, Bain & Co estimates in its outlook on the state of luxury demand.

Bain currently expects the market will remain roughly flat this year, as it did in 2024, partner Claudia d’Arpizio told Bloomberg in an interview. The consulting group initially saw luxury demand shrinking by as much as 5 per cent this year when it issued its June report. 

Since then, inklings of improvement at luxury groups including LVMH, Richemont and Burberry Group have generated some optimism that the industry may have hit bottom. The downturn was in part self-inflicted, as purveyors of luxury goods drove prices up too much in a strategic push to make labels more exclusive, D’Arpizio said.

“The brands are now in a reset phase, seeking to inject more creativity by picking new designers,” she said. “They’re also re-thinking their pricing architecture, by introducing new entry-level products.”

China, a key market, should see a pickup in growth in the first quarter of next year, helped by an easier basis of comparison, she added. An economic downturn in China, due to a property crisis and high youth unemployment, has hurt luxury consumption there.

“While we see some improvement in demand from high-net worth individuals in China, the market remains difficult,” D’Arpizio said. “There’s also growing competition from local players which are challenging European labels.” 

Bain doesn’t see an immediate return in China to the double-digit or high-single-digit growth rates of the past two decades, she said.

D’Arpizio expects leather goods to fare better next year following the resilience in jewellery sales this year. “Jewellery brands have been quite good at keeping price increases contained with consumers seeing such pieces as better value propositions” than bags, she explained.

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The recovery for leather goods should be helped by new creations following the recent appointment of new creative directors at brands including Chanel, Kering’s Gucci and Christian Dior Couture, which belongs to LVMH Moët Hennessy Louis Vuitton.

Richemont in particular has benefited this year from strong jewellery demand at its brands Cartier and Van Cleef & Arpels. Although LVMH owns jewellers Tiffany and Bulgari, the French conglomerate is more exposed to the handbag category at labels like Louis Vuitton, Celine and Fendi. BLOOMBERG