What: Luxury has grown exponentially these last years, and the trajectory should not change in vast proportions, even though some structural changes are on the way.

Why it is important: According to Bernstein, Luxury might not remain a loss leader for masses in department stores if it starts addressing only the super rich now that middle-class might lose the means to episodically buy such products.

After a surge in luxury goods consumption post-COVID-19, consumers are predicted to moderate their spending, returning the luxury sector to its cyclical pattern, according to a report by Bernstein. Despite this, the luxury industry's prospects remain positive, driven by both elite and entry-level customers.

The report highlights that the top 5% of clients contribute over 40% of sales for most luxury brands, while mega brands have expanded into lower-price categories, granting access to a wider customer base.

Luxury's major players are expected to continue penetrating the middle class through category segregation and retail amenities that maintain perceived exclusivity. The normalization of the luxury sector is suggested to follow the American market's example, with post-pandemic euphoria waning after a resurgence and Chinese consumers picking up growth.

Is the luxury party over?