The news: Luxury sales will return to growth this year, but at a slower rate than expected due to conflict in the Middle East and other macroeconomic factors, according to the latest edition of the Bain-Altagamma Luxury Goods Worldwide Market Study.

• The firm’s base-case scenario projects 2% to 4% growth to between €365 billion ($411.8 billion) and €373 billion ($420.8 billion).
• A faster thawing of geopolitical tensions, coupled with stronger sales in the US and China, could lead to 4% to 6% growth.
• But escalating tensions in the Middle East, weaker tourism, and softening sales in the Americas could instead result in flat to 2% growth.

Regardless of the scenario, Bain expects luxury sales to pick up in Q2 2026 following a weak Q1, when sales declined between 3% and 5% YoY.

The big picture: Global luxury demand is uneven, with exuberant spending from US consumers and a recovery in China helping to make up for a steep drop in Europe and the Middle East.

• In the US, growth is being driven by shoppers under age 35—who are increasing their spending by roughly 4 percentage points faster than older consumers—and upper middle-class households, whose luxury spending is growing at twice the rate of wealthier cohorts.
• Luxury retailers in China are benefiting from an uptick in ecommerce sales, as well as rising interest in ready-to-wear.
• Europe, meanwhile, is grappling with a sharp decline in tourist spending due to the conflict in the Middle East, alongside local consumers’ general reluctance to spend.

Implications for retailers: Luxury sales are poised to return to growth this year, but how and what shoppers buy is changing.

According to Bain, consumers increasingly approach luxury spending less as a means of external validation and more as a means of personal fulfillment. In practice, that is fueling faster growth for luxury experiences—like premium airline seats and indulgent vacations—than for physical goods. Nearly 9 in 10 affluent adults made at least one travel purchase from a luxury brand or service in Q3 2025, compared with 75% who bought at least one designer fashion item, per Altiant.

At the same time, more luxury spending is being redirected to resale platforms. Half of all luxury shoppers check the secondhand market before buying new, a reflection of both price sensitivities and the extensive array of designer merchandise available on marketplaces like The RealReal.

With luxury spending being pulled in multiple directions, brands should focus on building emotional connections to keep consumers from reallocating their budgets elsewhere.