What: Luxury discounting surged in 2025, with up to 40% of designer goods sold at markdowns as consumers questioned the value of high-priced products.

Why it is important: The backlash against covert pricing tactics demonstrates how prioritising short-term profit over trust can lead to costly regulatory and reputational consequences, as seen in recent industry analyses.

The luxury sector faced a dramatic shift in 2025 as discounting reached historic highs, with up to 40% of designer goods sold at markdowns. Years of aggressive price increases have eroded consumer willingness to pay full price, pushing industry margins to their lowest point in over a decade. This environment has been exacerbated by a shrinking customer base, with 50 million fewer luxury shoppers globally, and a growing trend toward outlet and second-hand channels, particularly in China. Brands have responded by slowing price increases, expanding accessible product lines, and investing in outlet strategies to retain aspirational customers. The contraction in the market, projected at 5% for 2025, has forced luxury brands to rethink their approach to value, creativity, and customer engagement. As the sector navigates these challenges, the need for innovation, transparency, and a renewed focus on long-term brand equity has become paramount.

IADS Notes: The Financial Times in July 2025 reported luxury brands easing off on price rises amid consumer pushback, while Inside Retail in June 2025 highlighted the rise of second-hand luxury in China and its impact on pricing. Bain & Company’s February 2025 study confirmed the first contraction in personal luxury goods in 15 years, with outlets outperforming full-price retail. Forbes in June 2025 projected a 5% market decline, and The Economist in June 2025 emphasised the strategic importance of outlet channels as brands recalibrate to shifting consumer expectations.

Luxury discounting on the rise as years of price increases bite