Valued at around $130 billion, the United States is the world's largest luxury market and is projected to grow up to 5 percent annually through 2030, the report mentions. The state of fashion: face to face with luxury clients.
After a prolonged slowdown, the global luxury sector is gradually returning to growth in 2026, led by the United States and China, but overall growth will likely be moderate, expanding at an annual rate of 4 to 6 percent through 2030, a BoF-McKinsey report said. Reigniting growth will not be easy for many brands, as growth in experiences such as travel is outpacing product purchasing, while inflation has dampened appetite for fashion.
Meanwhile, China's $60 billion high-end market is expected to rebound and outperform other major regions, expanding by up to 6 percent annually.
Reigniting growth won't be easy for many brands. Since emerging from the pandemic and the easing of the spending frenzy that followed, luxury customers have realigned their priorities. They have become more demanding about the brands and products they are willing to buy.
Growth in experiences such as travel is outpacing product purchases, while inflation has diminished appetite for fashion, including handbags.
Price increases by major fashion brands during boom times, often without corresponding product innovation, discouraged customers across the spectrum, particularly at the aspirational level, the report notes.
As the post-pandemic euphoria began to fade, brands focused on customers most immune to economic headwinds, with many losing track of lower-tier customers and not giving them a reason to visit stores. These customers, a critical base for the sector, ended up leaving in droves.
In both the US and Chinese markets, where generating appeal has become more complicated, emotional connection has become the main driver of luxury purchases. As customers become more selective, they are more attracted to brands that resonate personally and reflect their tastes and values. Meanwhile, brand heritage and history play a less important role, the report adds.
While customers in China look to brands more as a means of external expression, their American counterparts are more interested in self-reward and lean more toward brands that share their values.
Digging deeper into the shopping experience, physical stores play an important role in motivating all types of customers in China, especially at the entry level, highlighting the central role of retail when it comes to reaching aspirational customers.
For American customers, poor retail experiences are proving to be a big problem, with aggressive sales tactics and long lines turning off customers, highlighting a critical area for improvement.
The growing use of artificial intelligence (AI) and resale channels to purchase luxury products is a trend the survey uncovered in both markets. More customers in the US look to AI for inspiration than in China, where first-time customers are more engaged with AI throughout the entire buying process, from discovery to purchase decision.
Second-hand channels are also playing an increasingly important role, particularly for higher-spending customers in the United States, motivating shoppers with both the “thrill of the hunt” and bargains.
Fiber2Fashion News Desk (DS)
