After a two-year slump in demand and a return to stabilization in 2025, global luxury spending will continue to grow in 2026, forecasted between 0-2% on a constant currency basis, per a new report from consultancy firm Bain & Co. The base case figure will reach between €1.44 trillion and €1.47 trillion.

Spending on personal luxury goods will also remain stable in 2026, predicted to climb 2-4%, to €365-€373 billion, according to the “most realistic” outcome. For comparison, spending on personal luxury goods in 2025 grew 1% year-on-year at a constant rate, but dropped 2% at current rates, reaching €358 billion from €364 billion in 2024. In 2025, global luxury spending was broadly flat, landing at €1.44 trillion from €1.48 trillion in 2024 (between -1% and 1% on a constant currency basis).

Per the new report, the predicted growth is reliant on a base case scenario: conflicts in the Middle East settling, continued local spending, and the Chinese market’s bounce back, which, according to Bain partner and report author Federica Levato, has grown quarter-on-quarter since Q3 last year. Bain assessed this case with a probability of 70%.

Better circumstances — further geopolitical easing, accelerated demand in China, and a fresh spurt in the US market — would push growth to 4-6% in 2026, Levato says, however the probability for that is lower, at 20%.

“This industry has been not only resilient, but very stable, giving positive signals for the near future, but even the long-term future — of course, with some shifts in terms of categories,” says Levato. “Experiences [are] outperforming personal goods, but personal goods are very resilient, showing a stable performance, positive at a constant exchange rate.”

Still, the more positive findings for 2026 show that, despite geopolitical headwinds in the last six months, the industry is on a slow path to recovery, after a period of macroeconomic challenges. In 2024, the market shrunk 2% for the first time, losing some 50 million consumers. This has happened only twice since the Great Recession, previously in the 2008-2009 financial crisis and the pandemic, in 2020. Then, for 2025, Bain forecasted substantial issues tied to US tariffs. However, luxury players adapted by diversifying supply chains or upping prices to improve margins. “[The issues of the substantial import duties] are completely managed now,” says Levato. “The industry has addressed the topic.” (In February, the US Supreme Court abolished the Liberation Day tariffs. Brands can now apply for refunds on the duties.)

In spite of tariffs, the US has been a focus for luxury labels this year. In line with bright forecasts for the US in Bain’s previously launched report, US luxury and — to a smaller extent — beauty spending rose, with US-based luxury brand revenues up 10% to 15% year-on-year in the first quarter of 2026, compared to that of 2025, at a constant currency rate.

In China, the comeback is tentative: luxury online sales climbed 25% to 35% for Q1 versus the year prior, as consumers prioritize ready-to-wear over leather goods. Bain attributes this trend to an appetite for self-expression over status-signaling goods.

Europe is a pain point thanks to local consumer fatigue, a contraction in Middle Eastern tourism caused by the war — the Gulf consumer base contracted 15% to 25% in Q1 2026 — and reduced US tourism due to a strong euro, reducing pricing advantages in travel shopping. International tourist spend for Europe dropped 20% in February.

While luxury will continue to stabilize, the sector will be stratified by territories, but also categories. So far, in 2026, luxury experiences continue to outperform personal luxury goods for consumer sentiment by 150%, per Bain data, chiming with a broader departure from ownership to experiences. “As customers seek curation and exploration, brands will need to tap in. Consumers now are used to levels of service from other industries — the digital industries, Amazon, hotels — that we interact with every day,” says Levato. “We’ve all raised our expectations from brands.”

Where to find growth

Within luxury personal goods, jewelry is fueling growth, followed by apparel, eyewear, and fragrances. Leather goods and footwear remain a challenge, although Bain noted mild improvements in H1 for the latter. Vintage also remains a high-growth segment with around half of consumers looking to resale before considering new goods.

The price hikes on personal luxury goods, such as leather goods and jewelry, mean consumers expect more from the service and clienteling experiences luxury brands provide. Brands must adapt by offering hyper-personalized shopping journeys — where stores are no longer sites of transaction, but experience, too, Levato says.

But within an ongoing profitability crisis — where overheads, such as freight and material costs eat into margins — brands must address the issues with agility, optimizing efficiency and cutting costs. For this, the winners will lean on new technologies, introducing AI to scale personalized experiences and streamline back-office operations. “We have lost 70 million luxury consumers in the last two years, so brands should try to recover part of them,” Levato says.

The consumer appetite is there already. The report notes that around half of luxury consumers have already used AI in their shopping journeys, and 100% intend to reuse it, while 25% employ the tool for discovering new brands, and 65% use it to compare products. “AI can be useful for back office, but also for recovering profitability and getting nearer to the consumer to push revenues,” says Levato. The technology’s take-up, she claims, also means that consumers are more knowledgeable about products, manufacturing techniques, and materials, increasing consumer expectations for value.

Baked into this problem is an ongoing dissonance between elevated pricing and perceived value. Essentially, customers — including the HNWIs — no longer see consistency in pricing or value for money, creating negative sentiment. For Levato, Gen Zs epitomize the conundrum. Their brand loyalty is relatively low and they judge, evaluate, and choose intently. Their appetite for meaning and relevance means that they resonate less with personal luxury brands vis-a-vis other industries.

Levato notes that they should not be dismissed, though. “They are strongly influential, and they influence not only their parents, but even their bigger brothers and sisters — the millennials. So, they are a culture-shaping generation,” she says. Currently, Levato claims, some luxury brands only invest in the wealthier, older generations — Gen X, for example — but this comes at the cost of longevity, due to a lack of new customers.

The final takeaway underscoring the report? Invest in meaning. Players should engage in the zeitgeist, concerts, cultural events and sports, all to create authentic connections with consumers. Currently, over 80% of the luxury market’s value is made up by brands who sponsored sports in the last year.

“For sure, the winners in these [past two quarters] are the accessible luxury brands that have been the most consistent in being true to themselves in terms of pricing and value proposition, plus authentic connection with consumers,” Levato says. “Where they were lagging earlier was not to create authentic connection with the consumers, which they are now, but being a present at sport events, concerts, mega-events that are very in line with the zeitgeist, and how the consumers now live their lives.”

More than 70% of the customers that the luxury market lost plan to come back, but not to specific brands. Loyalty, it seems, is fickle. In the coming years, market share for luxury contenders must be earned, not assumed, and that, Bain’s study shows, starts with more clearly defined, participatory and culturally engaged brands.