What: Luxury goods are losing value as wealthy consumers shift their spending from products to exclusive services and experiences.

Why it is important: As traditional luxury goods lose their allure, brands must adapt to a market where scarcity and status are tied to experiences, not possessions.

The luxury market is undergoing a significant transformation as the value of traditional high-end goods—such as fine wine, watches, art, and real estate—declines, while demand for exclusive services and experiences surges. Once driven by the scarcity and rivalrousness of physical products, luxury is now increasingly defined by access to unique, unrepeatable moments, from Michelin-starred dining and elite sporting events to private travel and bespoke hospitality. Social media and resale platforms have democratized access to many luxury goods, eroding their exclusivity and prompting the wealthy to seek status through experiences that cannot be replicated or resold. As a result, prices for luxury services have soared, even as the value of goods like Bordeaux wines and Rolex watches has dropped sharply since 2023. This shift challenges luxury brands and retailers to rethink their strategies, focusing on creating new forms of exclusivity and desirability rooted in personalised, memorable experiences rather than material possessions.

IADS Notes: The current downturn in the luxury sector, as reported by the Financial Times in December 2024, marks the industry’s worst year since the 2007–09 recession, with global luxury sales declining by 2% and the loss of 50 million consumers over two years. This contraction is echoed by Forbes in June 2025, which projects up to a 5% drop in 2025 and highlights the growing emotional disconnect between brands and consumers. The shift from goods to experiences is particularly pronounced in China, where Inside Retail in January 2025 notes that 68% of luxury consumers are increasing their spending on wellness and experiential luxury, while the second-hand market is booming as price pressures mount (Inside Retail, June 2025). The industry’s identity crisis is further underscored by Forbes in July 2025 and LUXUS PLUS in March 2025, both of which highlight the challenges of maintaining exclusivity and desirability in an era of democratized access and social media influence. Successful brands like Hermès and Brunello Cucinelli are navigating this transformation by focusing on controlled scarcity, authentic storytelling, and exclusive experiences, while mass-market strategies and overexposure have led to declining sales for others. These developments collectively signal a fundamental restructuring of the luxury market, with exclusivity, experience, and community engagement emerging as new benchmarks for value.

Why the ultra-rich are giving up on luxury assets