After a two-year drop in demand and a return to stability in 2025, global luxury spending is expected to keep growing in 2026. According to a new report from the consulting firm Bain & Co., growth is forecasted at 0–2% on a constant currency basis. In the most likely scenario, total spending will reach between €1.44 trillion and €1.47 trillion.

Spending on personal luxury goods is also expected to stay stable in 2026, with a predicted increase of 2–4%, reaching €365–€373 billion in the “most realistic” outcome. For comparison, spending on personal luxury goods in 2025 grew 1% year-on-year at a constant rate, but fell 2% at current exchange rates, dropping from €364 billion in 2024 to €358 billion. Overall, global luxury spending in 2025 was roughly flat at €1.44 trillion, down from €1.48 trillion in 2024 (a change of between -1% and 1% on a constant currency basis).

According to the new report, this predicted growth depends on a base case scenario: conflicts in the Middle East calming down, continued local spending, and a recovery in the Chinese market. Federica Levato, a Bain partner and the report’s author, notes that China has grown quarter-on-quarter since Q3 last year. Bain estimates this scenario has a 70% probability.

A more favorable scenario—further easing of geopolitical tensions, faster demand in China, and a new boost in the US market—could push growth to 4–6% in 2026, says Levato. However, the probability of this is lower, at 20%.

“This industry has not only been resilient, but very stable, giving positive signals for the near future and even the long term—of course, with some shifts in categories,” says Levato. “Experiences are outperforming personal goods, but personal goods are very resilient, showing stable performance, positive at a constant exchange rate.”

Still, the more positive findings for 2026 show that, despite geopolitical challenges over the last six months, the industry is slowly recovering after a period of macroeconomic difficulties. In 2024, the market shrank by 2% for the first time, losing about 50 million consumers. This has only happened twice since the Great Recession—during the 2008–2009 financial crisis and the pandemic in 2020. For 2025, Bain had forecast major issues related to US tariffs. However, luxury companies adapted by diversifying their supply chains or raising prices to improve margins. “The issues of the substantial import duties are completely managed now,” says Levato. “The industry has addressed the topic.” (In February, the US Supreme Court abolished the Liberation Day tariffs. Brands can now apply for refunds on those duties.)

Despite tariffs, the US has been a key focus for luxury brands this year. In line with Bain’s earlier optimistic forecasts for the US, luxury spending—and to a lesser extent, beauty spending—rose. US-based luxury brand revenues were up 10% to 15% year-on-year in the first quarter of 2026 compared to the same period in 2025, at a constant currency rate.

In China, the recovery is still tentative: luxury online sales climbed 25% to 35% in Q1 compared to the previous year, as consumers prioritize ready-to-wear over leather goods. Bain attributes this trend to a desire for self-expression rather than status-signaling items.

Europe is a weak spot due to local consumer fatigue, a drop in Middle Eastern tourism caused by the war—the Gulf consumer base shrank by 15% to 25% in Q1 2026—and reduced US tourism because of a strong euro, which lessens the price advantage for travel shopping. International tourist spending in Europe fell 20% in February.

While luxury will continue to stabilize, the sector will be divided by both region and category. So far in 2026, luxury experiences continue to outperform personal luxury goods in consumer sentiment by 150%, according to Bain data. This aligns with a broader shift from ownership to experiences. “As customers seek curation and exploration, brands will need to adapt. Consumers are now used to levels of service from other industries—like digital platforms, Amazon, and hotels—that we interact with every day,” says Levato. “We’ve…”All of this has raised our expectations of brands.

Where to find growth

In the luxury personal goods sector, jewelry is driving growth, followed by apparel, eyewear, and fragrances. Leather goods and footwear remain challenging, though Bain noted slight improvements in footwear during the first half of the year. Vintage items are also a fast-growing segment, with about half of consumers looking to resale before buying new.

Price increases on personal luxury goods—like leather items and jewelry—mean consumers now expect more from the service and personalized attention luxury brands offer. According to Levato, brands need to adapt by creating highly personalized shopping experiences, where stores become places for experiences, not just transactions.

But with ongoing profitability issues—where costs like freight and materials eat into margins—brands must respond quickly by improving efficiency and cutting costs. The winners will use new technologies, like AI, to scale personalized experiences and streamline back-office operations. “We’ve lost 70 million luxury consumers in the last two years, so brands should try to win some of them back,” Levato says.

Consumers are already ready for this. The report shows that about half of luxury shoppers have used AI in their shopping, and all of them plan to use it again. Meanwhile, 25% use AI to discover new brands, and 65% use it to compare products. “AI can help with back-office tasks, but also with recovering profitability and getting closer to consumers to boost revenue,” says Levato. She adds that the use of this technology means consumers are more informed about products, manufacturing, and materials, which raises their expectations for value.

A key part of this problem is the ongoing gap between high prices and perceived value. In short, customers—including high-net-worth individuals—no longer see consistent pricing or value for money, which creates negative feelings. For Levato, Gen Z perfectly represents this issue. Their brand loyalty is low, and they carefully judge, evaluate, and choose. Their desire for meaning and relevance means they connect less with personal luxury brands compared to other industries.

Still, Levato says they shouldn’t be ignored. “They are very influential—they influence not only their parents but also their older siblings, the millennials. So, they are a culture-shaping generation,” she says. Currently, some luxury brands only invest in wealthier, older generations like Gen X, but this hurts long-term growth because they aren’t attracting new customers.

What’s the main takeaway from the report? Invest in meaning. Brands should get involved in current trends, concerts, cultural events, and sports to build genuine connections with consumers. Right now, over 80% of the luxury market’s value comes from brands that sponsored sports in the past year.

“Without a doubt, the winners in the last two quarters are accessible luxury brands that have stayed true to themselves in terms of pricing and value, and have built authentic connections with consumers,” Levato says. “Where they fell short before was in creating those real connections—which they’re now doing—by being present at sports events, concerts, and major events that align with current trends and how consumers live their lives today.”

More than 70% of the customers the luxury market lost plan to return, but not to specific brands. Loyalty, it seems, is fragile. In the years ahead, luxury brands will have to earn their market share, not assume it. And according to Bain’s study, that starts with brands that are clearer, more participatory, and more culturally engaged.

Frequently Asked Questions
Here is a list of FAQs based on the Bain forecast about luxury goods recovering slowly with growth expected in 2026

FAQs The Slow Recovery of Luxury Goods

1 What exactly is the Bain forecast saying about luxury goods
It predicts that the luxury goods market will recover slowly not bouncing back quickly The main growth is expected to happen in 2026

2 Why is the recovery so slow
Several factors are at play high inflation and interest rates making people more cautious a slowdown in key markets like China and a general shift in consumer spending away from highpriced status symbols towards experiences or more affordable luxuries

3 Does this mean luxury brands are in trouble
Not necessarily in trouble but they are facing a challenging period It means slower sales and tighter profits for the next couple of years rather than a crisis

4 When will things start to get better
The Bain forecast specifically points to 2026 as the year when significant growth is expected to return to the luxury market

5 What does slow recovery mean for me as a luxury shopper
You might see fewer price increases more sales or promotions and brands focusing on their most loyal customers rather than trying to attract new ones

6 Will prices of luxury goods go down
Probably not drastically You might see more stable pricing instead of the rapid price hikes we saw in recent years Some brands might offer more entrylevel products or limitedtime discounts to boost sales

7 Which luxury brands will be hit the hardest
Brands that rely heavily on aspirational buyers and those with high exposure to the struggling Chinese market are likely to feel the most pressure Very toptier ultraexclusive brands might be more insulated

8 What about the secondhand luxury market
The slow recovery for new goods could actually help the preowned market As people become more priceconscious they may turn to resale platforms for better deals potentially keeping that segment more active

9 Is this just a problem for luxury or is the whole economy slowing down
Its a specific trend within luxury but it does reflect broader economic uncertainty When people feel less wealthy luxury is often one of the first spending categories they cut back on even if the overall economy