The global luxury market is showing signs of stabilisation after a turbulent period, but brands face a fundamentally different competitive landscape where experiences, artificial intelligence and cultural relevance are becoming more important than traditional product ownership, according to Bain & Company’s latest luxury market study.
The consultancy, in partnership with Italian luxury goods association Altagamma, said worldwide luxury spending reached €1.443 trillion in 2025 and is expected to remain broadly stable through 2026 despite ongoing geopolitical tensions, economic volatility and changing consumer behaviour.
According to the spring update of the Bain-Altagamma Luxury Goods Worldwide Market Study, global luxury spending is projected to reach between €1.44 trillion and €1.47 trillion this year, representing growth of between zero and 2% at constant exchange rates.
Rather than signalling a return to pre-pandemic market conditions, Bain argues the sector is entering a new phase defined by changing consumer expectations and the growing influence of AI across the purchase journey.
Meaning replaces ownership
The consultancy identifies four structural forces reshaping luxury: consumers increasingly prioritising experiences over ownership, shifting regional growth patterns, evolving definitions of luxury, and AI transforming how consumers discover and evaluate brands.
“The luxury market is stabilizing, but this is not a return to the old rhythm; it is the emergence of a new one,” said Claudia D’Arpizio, Bain & Company’s global leader of Fashion & Luxury and lead author of the report.
“Consumers are not stepping back from luxury. They are stepping forward into a new relationship with it — one defined by meaning, not just by product.”
She added that brands capable of continually reinventing their relevance while resonating with both consumers and AI-driven ecosystems will be best positioned for future growth.
Global uncertainty continues to pressure the market
The report says luxury’s recovery continues against a challenging macroeconomic backdrop.
The first half of 2026 saw oil prices rise following conflict in the Middle East, while US inflation reached its highest level since April 2023 and consumer confidence fell to a record low. The European Central Bank also raised interest rates for the first time since 2023, while global GDP growth is expected to slow compared with 2025.
Luxury shares fell by around 8% in January, while international tourism in Europe dropped approximately 20% year-on-year in February before partially recovering later in the quarter.
Despite those pressures, Bain believes the sector’s underlying fundamentals remain resilient.
The personal luxury goods market declined to €358 billion in 2025 from €364 billion the previous year but is forecast to recover to between €365 billion and €373 billion in 2026 under Bain’s base-case scenario.
That outlook assumes continued stabilisation in the Middle East, resilient domestic demand and a gradual recovery in China. Bain assigns the scenario a 70% probability.
Experiences continue to outperform products
One of the report’s strongest findings is consumers’ increasing preference for experiences over physical goods.
Demand for luxury experiences is growing roughly 1.5 times faster than demand for tangible products during 2026, reflecting what Bain describes as a structural shift from ownership towards memorable experiences.
Luxury hospitality, private aviation, yachts and cruises continue to benefit from premiumisation and strong customer demand, while fine dining has been supported by consumers embracing a “less but better” mindset.
Fine art is also returning to growth.
Not every category is benefiting equally, however. Luxury cars remain under pressure during the transition to electric vehicles, while wines and spirits continue to face softer demand as consumers reduce drinking frequency or switch to alcohol-free alternatives. Furniture and design are also slowing as post-pandemic demand eases.
Regional recovery remains uneven
The report paints a sharply contrasting picture across global markets.
The Americas continue to lead growth, with US luxury spending increasing across apparel, jewellery and beauty. American luxury brands posted year-on-year growth of roughly 10% to 15% during the first quarter, driven largely by consumers under 35 and upper middle-class households.
China is showing signs of recovery, with online luxury sales rising between 25% and 35% in the first quarter. Bain notes consumers are increasingly favouring ready-to-wear fashion over traditional status categories such as leather goods, reflecting a shift toward self-expression rather than status signalling.
Europe remains the weakest region. International tourist spending fell by around 20% in February, while the Gulf luxury consumer base contracted between 15% and 25% during the early months of 2026.
However, Bain said tax refund data from May suggests spending by American, Chinese and Middle Eastern visitors accelerated compared with April, indicating Europe and Gulf markets may be beginning to recover.
AI reshapes luxury marketing
Beyond economic conditions, Bain argues artificial intelligence is fundamentally changing how consumers engage with luxury brands.
Approximately half of luxury consumers already use AI during their purchasing journey, with almost all expecting to continue doing so.
Around one-quarter use AI to discover brands and products, while roughly two-thirds rely on it to compare products before making purchasing decisions.
The consultancy warns that brands failing to establish what it calls “AI-native relevance” risk becoming less visible as consumers increasingly rely on AI-powered recommendations and discovery tools.
At the same time, resale continues to gain momentum. Vintage handbag searches have more than doubled year-on-year, while approximately half of luxury shoppers now check second-hand markets before purchasing new products.
Brands must compete on meaning
The report concludes that luxury is evolving beyond aspiration and status toward what Bain describes as “living well.”
Consumers increasingly associate luxury with personal fulfilment rather than social validation, requiring brands to rethink how they build long-term relationships.
Federica Levato, Bain senior partner and co-author of the report, said customer expectations remain high despite recent market volatility.
“The appetite for luxury remains strong. The tolerance for disappointing experiences or products does not,” she said.
“Over 70% of customers who have left luxury intend to return – but not necessarily to the same brands. The question is whether brands are building the meaning and AI-native relevance to be surfaced and chosen when that moment arrives.”
Against that backdrop, Bain identifies three priorities for luxury brands: delivering immersive experiences, strengthening cultural relevance across diverse communities and using AI to enable greater creativity and personalisation for consumers.
