Luxury consumers seen nudging sector back to growth despite global tensions

Global sales of personal luxury goods are projected to return to modest growth in 2026 following two years of contraction. According to a semi-annual study by Bain & Company, the sector is expected to expand by 2% to 4%, reaching a total valuation between 365 billion euros and 373 billion euros. This recovery signals a shift in consumer sentiment as shoppers prioritize quality of life and stabilized pricing over geopolitical concerns.

Bain & Company forecasts that the personal luxury goods market will reach up to 373 billion euros ($424 billion) in 2026, a notable increase from the 358 billion euros recorded last year. The recovery is currently being spearheaded by the Americas, where some U.S. luxury brands have already reported first-quarter growth as high as 15%. This resurgence is largely driven by younger consumers under the age of 35 who are investing in everyday casualwear, jewelry, and beauty products.

Claudia D’Arpizio, a partner at Bain, attributes this growth to a mega trend where consumers prioritize a high quality of life and meaningful experiences over the fear of future global instability. After a period of consumer rebellion caused by aggressive price hikes, luxury brands have begun to stabilize pricing and introduce more entry-level offerings. D’Arpizio describes the current market as a healthier situation compared to two years ago, though she notes that brands must still work to rebuild customer loyalty that was strained in previous years.

The outlook for the sector remains contingent on several geopolitical factors, with a base-case scenario assuming stabilized conflicts in the Middle East and gradual improvement in China. While China is expected to return to growth through online sales of ready-to-wear items, Europe continues to lag due to a decline in tourism linked to international tensions. Conversely, local spending is bolstering markets like Dubai, and an upside scenario suggests growth could reach 6% if geopolitical pressures ease and Chinese demand accelerates.