The latest Bain & Altagamma Luxury Goods Worldwide Market Study offers a narrative far more nuanced than simple resilience. It describes a luxury ecosystem undergoing a profound, almost “tectonic shift,” where the very definition of status is changing. After a post-pandemic shopping spree fuelled by saved capital, consumers are now pivoting from conspicuous consumption—the acquisition of visible goods—to experiential indulgence—the pursuit of unique emotions, wellness, and connection. This change is not a minor trend; it is the new “engine of luxury growth,” and it dictates the winners and losers in a polarized market.
@Van Cleef & Arpels Alhambra
The New Luxury Map: Scenarios to 2035
The most compelling part of the Bain-Altagamma report is the foresight it provides. The trajectory to 2035 is not a straight line but a series of calculated growth scenarios based on two core assumptions: continued consumer expansion (new consumers entering the market) and enduring demand (existing consumers maintaining or increasing spend).
The Long-Term Scenario: Growth Through Discipline
The overall outlook remains robust. The personal luxury goods market is forecast to reach between €525 billion and €625 billion by 2035, anchored by a healthy long-term growth rate of 4% to 6% per year. The overall luxury spending (including experiences) could range between €2.2 and €2.7 trillion.
This growth, however, is now conditional, relying on three critical elements articulated by Claudia D’Arpizio: discipline, ethics, and innovation.
Experiential Dominance: The central theme is the permanent re-weighting of the luxury market towards experiences. Categories like luxury cruising, bespoke travel (safaris, elite sports), and gourmet dining (especially across Asia and the Middle East) are booming, while more traditional segments like luxury automotive (excluding high-end sports models) and fine wines/spirits are stalling. The message is clear: Status is now measured by the memories one accumulates, not just the objects one owns.
Geographic Rebalance: The future of luxury is moving East and South. While Mainland China is contracting and Europe is softening, the Middle East stands out as the brightest performer, fueled by tourism and local wealth. Crucially, the combination of emerging markets—Middle East, Latin America, Southeast Asia, India, and Africa—now collectively matches Mainland China in market value. These new frontiers, driven by Gen Z’s appetite for accessible luxury and India’s growing middle class, represent the next chapter of consumer expansion.
Polarization and Bifurcation: The market is fragmenting based on price and consumer type.
The Ultra-Wealthy (High-End Tier): The top customers continue to sustain demand but their spending share is plateauing after a massive surge. They are concentrating their spend on the absolute highest end of goods (high jewellery, high watches) and, overwhelmingly, experiences.
The Aspirational Consumer: This large, value-conscious segment, including many Gen Z shoppers, has pulled back from full-price luxury goods. They are instead supporting the accessible luxury tier, driving growth in the markdown/outlet channels, and embracing resale and affordable alternatives. This creates a challenging margin pressure for brands, pushing average industry profitability back to 2009 levels (EBIT margins around 15-16%).
The “Say-Do Gap”: Why Consumers Want Green, But Buy Gold
The report highlights that the new formula for value is “entertainment, emotion, and ethics.” Yet, one of the most persistent ironies in the industry is the massive gulf between consumers’ stated desire for ethical and sustainable products and their actual purchasing behaviour—often referred to as the “Say-Do Gap.”
In the luxury context, this gap widens due to several overlapping factors:
1. The Price-Value Equation (The Cost Hurdle): While many consumers (especially Gen Z) express a willingness to pay more for sustainable products, the reality is that truly sustainable production is expensive. This high cost often means sustainable luxury products are simply too expensive for the aspirational consumer, who is already highly price-sensitive and “downtrading” to accessible luxury or outlet channels. The ethical choice is often priced out of reach for the very consumers who profess the highest ideals.
2. Abstraction vs. Tangibility: Consumers prioritize factors they can see, feel, and experience, such as quality, durability, and immediate emotional reward. Sustainability, or “ethics,” can often feel abstract, vague, or subjective—an invisible feature rather than a tangible benefit. When faced with a choice between an emotionally rewarding, aesthetically perfect “hero bag” (even if less ethical) and a “sustainable” but less exciting alternative, emotion often wins.
3. Information and Trust: Consumers face the challenge of greenwashing. It is difficult for the average shopper to distinguish between brands that are genuinely committed to ethical practices across their supply chain and those that use sustainability purely as a marketing tactic. The extra effort required to verify information and trust a brand’s claims often serves as a barrier, making it easier to simply default to a trusted, established brand name, regardless of its ethical score.
4. The Focus on Experience: The shift to experiential indulgence itself dilutes the purchasing power available for sustainable goods. When consumers are prioritizing spending on a luxury cruise or a gourmet dining experience, they have less capital left over to invest in a higher-priced, ethically-produced leather good.
In short, the luxury consumer is not necessarily indifferent, but they are financially realistic and emotionally driven. The brands that will succeed, as Claudia D’Arpizio notes, are those that “weave ethics in their value proposition with intimacy and integrity,” turning sustainability from an abstract feature into a transparent, non-negotiable part of the core luxury promise.
