Sluggishness predicted for the global luxury personal market in 2025, according to a recent analysis.
The Boston Consulting Group (BCG) has released its 'True Luxury Global Consumer Insights 2025' report, revealing a significant slowdown in the personal luxury goods market in 2025. The report predicts flat to slightly negative growth for the first time in over a decade.
According to the report, this slowdown is driven primarily by a pullback among aspirational consumers, who historically represented the entry point for many into luxury but are now buying less. The aspirational segment, which once accounted for 74% of the market value in 2013, has dropped to 61% in 2024 and continues to shrink, signaling their diminished appetite and volatility. About 35% have reduced or stopped purchases over the past year, influenced by economic uncertainty and shifting generational attitudes.
On the other hand, ultra-high-net-worth individuals (UHNWIs) and high-net-worth individuals (HNWIs) are becoming the critical core of luxury growth. These top-tier clients, comprising just 0.1% of the population, now account for 23% of all luxury spending, with an average annual spend of €355,000 on luxury goods. The report predicts that the numbers of these top-tier clients are growing at approximately 10% per year.
India is fast becoming a key market for global luxury brands, with India's high net-worth individuals (HNI) and ultra-high-net-worth individuals (UHNI) population growing at a CAGR of 11-15% through 2034. This makes India a "must-watch" emerging market, though not yet on China’s scale.
Based on these insights, BCG recommends luxury brands to return to their core fundamentals. This includes reinforcing deep, personalized relationships with top-tier clients through enhanced crafting of exclusivity and bespoke experiences rather than broad mass-market appeal. The report also advises luxury brands to emphasize craftsmanship and vertical integration, bringing back elements that underline luxury’s roots and heritage, ensuring product quality and control over the value chain.
Additionally, the report suggests combining technology and human touch to create a richer, more tailored luxury buying experience, especially for ultra-spenders. Luxury brands are urged to move away from democratization trends that have diluted luxury's aura and instead cater more to the selective desires of ultra-wealthy consumers who drive value.
In summary, the report signals a strategic pivot in the personal luxury goods market from volume-driven growth based on broader aspirational consumers to a value-driven approach centered on ultra-wealthy clients, exclusivity, and authentic craftsmanship to sustain long-term growth amid a challenging economic environment. The report also suggests that the definition of luxury is evolving, expanding beyond ownership to a lifestyle centered around health, well-being, and meaningful connections.
- In response to the volatility observed among aspirational consumers, luxury brands are advised to focus on re-establishing deep, personalized relationships with their top-tier clients, such as UHNWIs and HNWIs, who are driving the market's growth and value.
- The Boston Consulting Group's report on the personal luxury goods market predicts that the numbers of UHNWIs and HNWIs, known for their significant spending on luxury items, will continue to grow at an approximate rate of 10% per year, particularly in emerging markets like India.
- To cater to the evolving definition of luxury, luxury brands should shift away from democratization trends and focus on delivering rich, tailored experiences that combine technology with a human touch, appealing to the selective and high-value demands of the ultra-wealthy market, rather than mass-market appeal.
