The global luxury market is expected to grow between 2 and 4 per cent in 2026 as the industry enters “a state of normalization rather than structural decline or broad reacceleration,” according to a new report by Kearney.
“After a year of creative resets, pricing recalibration, and operational discipline, the global luxury market is stabilizing at a more measured pace,” the report said, adding that “2026 is likely to deliver 2 to 4 percent growth, but unevenly distributed across regions, categories, and client tiers.”
The consultancy described the current phase as one in which “growth is driven by resonance across product, experience, and ecosystem, not by scale alone.”
In the report, Global luxury: earning relevance in a normalizing market, Kearney said “spending is becoming more concentrated and more intentional,” with ultra-high-net-worth individuals (UHNWIs) and high-net-worth individuals (HNWIs) continuing to account for “the majority of spend.”
At the same time, “aspirational consumers are not exiting luxury so much as engaging differently, shifting where, how, and what they spend on,” the report said.
Kearney said “defensible, emotionally resonant categories such as jewelry and experiences are outperforming other segments,” while “brand loyalty (beyond top-spending clientele) [is] at risk as spend reallocation becomes a more common response.”
The report noted that 2025 was “not simply a year of moderation” but “a year of recalibration,” with brands struggling to address “operational and structural imbalances stemming from compounding cost pressures established during the pandemic and more recent global trade dynamics.”
“Consumers struggled to reconnect with both familiar and new luxury offerings amid spiraling prices, leaving luxury in a momentary pause,” the report said.
Kearney estimated that the global luxury goods market reached “approximately $530 billion” in 2025, while CAGR projections through 2028 remain “in the 2 to 4 percent range.”
The report argued that luxury is not collapsing, declaring: “Luxury isn’t asleep; it’s ‘resting its eyes’.”
According to Kearney, “overall, luxury demand was resilient, but growth was uneven across regions, categories, and client segments, as geopolitical volatility and trade friction complicated pricing, assortment, and supply decisions.”
The consultancy said the “United States, China, and Europe remained important but showcased slower recoveries,” while “growth became more concentrated in travel hubs such as Southeast Asia and the Middle East.”
Looking ahead, Kearney said “the ‘big three’ regions are the same, but globally, there is dynamic change below the statistical surface.”
“The United States, Europe, and China will continue to anchor global luxury spend, but their role in 2026 will not amount to aggressive acceleration,” the report said. “Instead, expect them to hold steady, providing industry scale and stability.”
On the United States, the report said “the K-shaped dynamic remains intact,” with wealthy clients continuing to spend while aspirational buyers become “more selective as price fatigue raises both the justification threshold and the timing of luxury purchases.”
“The biggest watch out in the luxury sector is assuming the top of the K is fully insulated and will continue to absorb price increases,” it warned.
On China, Kearney said “the ‘new normal’ mindset persists: cautious, selective, and value-aware.”
“China remains critical in scale, but it is unlikely to be the primary engine of global luxury acceleration in 2026,” the report added.
Europe’s outlook, meanwhile, remains subdued. “Europe’s fundamentals remain steady, but growth is fragile,” Kearney said, citing “soaring rents and limited availability on prime retail streets” that are “structurally increasing the cost of participation.”
Outside the core markets, Kearney identified Japan, Southeast Asia, and the Middle East as the “standouts” poised to outperform in 2026.
Calling Southeast Asia “one of the most structurally attractive luxury growth corridors,” the report said the region benefits from “a rapidly expanding cohort of young, high-income professionals amassing meaningful luxury purchasing power.”
For the Middle East, Kearney said the region “was positioned for growth as wealth continued to concentrate in Gulf Cooperation Council markets such as Dubai and Riyadh, which were outperforming global averages.”
“In 2026, the Middle East is likely to deliver some of the strongest growth globally, not as a niche, but as a meaningful contributor to incremental upside,” the report said.
Kearney also highlighted India as “one of the fastest-growing luxury markets in 2025,” saying analysts expect the country to “account for 35 percent of incremental UHNWI growth by 2030 and deliver 18 percent CAGR in luxury spend.”
The report said jewellery has emerged as “structurally stronger” than many other categories. “Luxury houses reported 6 to 14 percent growth in jewelry as the appeal proved less cyclical and more emotional, rooted in longevity, heritage, and perceived intrinsic value.”
Experiential luxury was also gaining momentum. “Hotels and lifestyle hospitality reported up to 8 percent growth in 2025 as consumers were more willing to spend ‘for the right occasion,'” the report said.
At the same time, “luxury-adjacent alternatives such as resale and second-hand gained even more traction, and ‘dupe culture’ surged on digital channels.”
“What 2025 revealed was a clear gravitation toward ‘justifiable’ luxury: purchases that felt intellectually defendable, emotionally resonant, and/or investment-worthy,” the report said.
Kearney said artificial intelligence is becoming central to the future of luxury, with AI now “rapidly evolving from experimentation into infrastructure.”
“As we enter the age of agentic AI and agentic commerce in 2026, intelligent systems will increasingly shape how consumers discover, filter, and make purchase decisions,” the report said.
“AI agents are the new digital gatekeepers, shaping what consumers see, compare, and ultimately buy,” it added.
Kearney said “60 percent of consumers expect to use AI shopping agents this year,” while “AI-driven referrals from platforms such as ChatGPT and Perplexity to e-commerce brands increased about 750 percent in October 2025.”
The report concluded that “volatility will persist and margin pressures will remain,” but said the winners in luxury will be those capable of “building relevance at scale.”
“This year won’t reward scale or speed alone—but clarity, discipline, and relevance sustained over time,” Kearney said.
