What: The luxury sector is experiencing its first post-crisis slowdown, but brands are responding by expanding digital, phygital, and accessible offerings to attract a wider customer base.

Why it is important: Adapting to a more inclusive and digitally driven luxury market is essential for brands aiming to capture new generations and sustain long-term growth.

Luxury retail is facing its first significant slowdown since the financial crisis, with global economic uncertainty and declining demand among high-net-worth individuals contributing to a projected 5% market contraction in 2025. Despite this, the sector is evolving rapidly as brands broaden their focus beyond the ultra-wealthy, introducing more accessible product lines and targeting aspirational and middle-class consumers. The shift is also marked by a surge in digital and “phygital” experiences, with luxury brands investing in seamless omnichannel journeys, immersive technology, and exclusive online campaigns to engage a younger, more diverse audience. This transformation is driven by the anticipated entry of 300 million Gen Z and Gen Alpha consumers over the next five years, who are expected to fundamentally reshape luxury retail strategies. December remains the peak month for luxury spending, with brands leveraging exclusive holiday campaigns and experiential gifting to capture demand. In this changing landscape, innovation, inclusivity, and digital engagement are becoming critical for brands seeking resilience and long-term growth.

IADS Notes: The luxury retail landscape in 2025 is marked by a notable slowdown in spending, with Bain & Company projecting a 5% global market decline and 50 million fewer customers compared to previous years (Forbes, June 2025). This contraction is driven by economic uncertainty, subdued demand in key markets like China and the US, and a sharp deterioration in spending intentions among high-net-worth individuals (Financial Times, August 2025; WWD, June 2025). In response, major luxury brands are expanding their product lines to include more accessible items under $500, aiming to retain aspirational and middle-class consumers while balancing the need to preserve brand exclusivity (Fashion Network, December 2024). The industry is also witnessing a shift toward digital and “phygital” experiences, as retailers invest in seamless omnichannel journeys and immersive technology to engage a broader, younger audience (Fashion Network, October 2025; Journal du Net, January 2025). Despite current headwinds, the long-term outlook remains positive, with BCG/WWD (October 2025) and Bain & Company (February 2025) forecasting robust growth driven by the entry of 300 million Gen Z and Gen Alpha consumers over the next five years. December continues to be the peak month for luxury spending, with exclusive holiday campaigns and experiential gifting strategies playing a crucial role in capturing demand (Press Release, October 2025).

Luxury shopping is no longer just for the affluent - Full Report