Bain has revised its forecast for luxury market growth downward. Why is it talking about a recovery in the industry?
Two markets are driving the sector forward, despite the war in the Middle East
The luxury market could grow by 2–4% by the end of 2026, according to a Bain study / Photo: Unsplash.com / Dima Pechurin
Analysts at Bain & Company have revised downward their growth forecast for the luxury goods market for 2026. At the same time, they reported that the luxury sector began to show signs of recovery in the second quarter, despite the conflict between the U.S. and Iran. Market growth is driven by stronger-than-expected demand in the U.S. market and an improving situation in China.
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Bain & Company forecasts that sales of luxury personal goods will grow by 2–4% by the end of 2026, according to Reuters. These expectations are lower than the forecast from November 2025, before the war in the Middle East, when Bain had projected 3–5% growth.
At the same time, the sector is showing signs of recovery in the second quarter, according to Bain. Growth in the U.S., where demand is being driven by local brands and younger consumers, is partially offsetting losses in the Middle East and Europe. The Chinese market is also recovering faster than expected, with growth driven primarily by apparel sales rather than the traditionally popular leather goods, according to Bain analysts. At the same time, Europe remains the weak link due to a decline in tourist traffic, although signs of stabilization emerged in May. In the Middle East, the market has slowed due to the conflict between the U.S. and Iran.
According to Bain’s estimates, the luxury industry has lost about 70 million customers since 2022. This occurred after many brands raised their prices and focused on their wealthiest customers. “The industry should broaden its consumer base rather than focus exclusively on the top 1% of shoppers,” warned Bain partner Federica Levato.
The study also revealed the growing influence of AI on consumer behavior. About half of luxury goods consumers already use technology to search for products and compare offers before making a purchase. Another notable trend is the growth of the secondary market. According to Bain, half of luxury goods buyers now explore options on the resale market before purchasing a new item.
This article was AI-translated and verified by a human editor
