Key Takeaways

• Online has found its ceiling; the channel battle returns to physical retail — fewer, bigger, direct. Online appears to have reached its long-term market share of 20–25%, and outlets were the only channel to grow last year. The race to retail is accelerating (more directly operated stores, less wholesale) fuelled in part by American department stores cutting selling space by 10% between 2024 and 2025, while brands reconfigure toward fewer but larger, experience-led flagships.
• The American fault line is the wholesale model, not the market. Challenged by IADS on the contradiction between US department stores' difficulties and the American market's rebound, Bain separated market trend from player-specific management issues and pointed to structure: where Europe moved to concessions and brand-operated store-in-store, the United States remains on a wholesale model in which the department store carries the risk, hence sharply divergent results among players.
• Profitability is back at financial-crisis levels. 2025 margins returned to their 2009 level of 15–16%, with every P&L line inflating at once — tariffs, labour, rents, event-driven marketing, ballooning AI budgets and the carrying cost of post-COVID excess inventory. Roughly 20% of the profit generated between 2021 and 2025 evaporated within months.
• Customers have adopted AI faster than the brands selling to them. Bain's survey of 1,500 recent luxury buyers puts AI in the purchase journey for 27% of clients in France, 54% in the US, and 64% in China — rising with basket size — and 97% intend to use it again. Brands are behind: customer-facing use cases have not progressed since 2024, and luxury's AI adoption stands at roughly a third of retail's level and a quarter of consumer goods'.
• GEO is the new visibility battle — and scale earns no premium. 70% of luxury-related prompts mention no brand at all, delegating the recommendation to the engine, yet LLM responses omit brand websites in 90% of watch queries and 95% in beauty. Among the 30 most visible brands on LLMs, 70% of majors under-index their market share while specialists dominate the rankings. Unlike SEO, GEO cannot be bought — at least not yet — and only 10% of houses rate themselves good at it.
• The next local-brand wave is predictable, and India could be a candidate. Bain's emergence pattern (25 years of maturation in China before the current explosion of national brands, K-beauty's leap from home market to global conquest, J-beauty never scaling for demographic reasons) points to a probable emergence wherever labour, ancestral know-how and quality raw materials combine, with "Indian beauty" framed as the third wave after K-beauty.

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IADS Conference Report Bain & Company: Luxury Panorama, 2026

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Luxury in 2026, from resilience to reinvention
Winning over the customer in the age of AI: A new horizon for luxury
Global luxury stabilizes amid compounding disruptions as brands race to amplify meaning and rebuild relevance