LUXONOMY Report: Key Factors Defining the Luxury Sector Between 2025 and 2030

Chairman LUXONOMY™ Group

CONTENTS OF THIS REPORT

Introduction
The New Luxury Consumer: Generation Z and Millennials
- 2.1. The Generational Convergence
- 2.2. Individualism and Personalization
- 2.3. Impact of Generational Change on the Luxury Market
Sustainability and Social Responsibility
- 3.1. Sustainability as a Central Pillar
- 3.2. Corporate Social Responsibility (CSR)
- 3.3. Circular Economy: New Business Models
- 3.4. Economic Impact of Sustainability in the Sector
Digitalized Luxury and Virtual Experiences
- 4.1. Blockchain Technology and Security
- 4.2. Artificial Intelligence and Augmented Reality in Luxury Retail
- 4.3. Data and Figures on the Growth of the Digital Market
- 4.4. Emerging Technological Innovations
Luxury Expansion in Asia
- 5.1. China as a Consumption Leader
- 5.2. Localization Strategies
- 5.3. Emerging Markets: India and Southeast Asia
- 5.4. Economic Perspectives and Regional Growth Figures
Evolution of Luxury Retail
- 6.1. Hyperpersonalization in the Shopping Experience
- 6.2. Blending Online and Offline
- 6.3. Economic Data on the Impact of E-Commerce
- 6.4. Innovations in Physical Retail
Healthy Luxury: Wellness and Personal Care
- 7.1. The Rise of "Wellness"
- 7.2. Luxury Nutrition and Biohacking
- 7.3. Investment and Growth Prospects in the Wellness Sector
- 7.4. Integration of Mental Health into Luxury
Redefined Exclusivity: From Material Wealth to Temporal Scarcity
- 8.1. Limited Access to Exclusive Events
- 8.2. Limited Edition Luxury Products
- 8.3. Artistic and Design Collaborations
- 8.4. Temporal Scarcity Strategies
Experiential Luxury
- 9.1. Exclusive Travel and Luxury Tourism
- 9.2. Ultra-luxury Hotels
- 9.3. Exclusive Artistic and Cultural Experiences
- 9.4. Luxury Gastronomy
Investment and Growth in the Luxury Sector: Economic Data
- 10.1. Global Growth of the Luxury Market
- 10.2. Economic Projections 2025-2030
- 10.3. Investment in Innovation and Technology
- 10.4. Profitability Analysis by Segment
Conclusion

1. Introduction

The luxury sector has historically been a pillar of global economies, symbolizing status, exclusivity, and craftsmanship. Over time, the luxury industry has evolved, adapting to social and economic fluctuations while maintaining its essence of offering products and services that transcend the ordinary. Between 2025 and 2030, the industry is expected to undergo one of the most significant transformations in its history, driven by technological advances, changing consumer expectations, and increasing pressure to integrate sustainable and responsible practices. The value of the global luxury market, which in 2021 stood at 320 billion euros, is projected to reach 600 billion euros by 2030, nearly doubling in just a decade, a testament to its resilience and adaptability.

The Global Context of the Luxury Sector

Since the 2010s, luxury has undergone several phases of evolution. In the years following the 2008 global financial crisis, luxury brands experienced a sales boom driven by growing demand in emerging markets, particularly in China and Southeast Asia. This expansion was accompanied by accelerated globalization, where luxury brands began adopting more accessible approaches, without sacrificing exclusivity, to attract a more diverse clientele.

In parallel, the advancement of digital technology has redefined how consumers interact with luxury brands. E-commerce, once viewed warily by brands due to concerns that it would dilute exclusivity, has become an essential sales channel. The COVID-19 pandemic accelerated this shift to online shopping, and while physical retail remains crucial for the luxury experience, the future of the sector is undoubtedly tied to the integration of both worlds: digital and physical.

As we enter the second half of the 2020s, the luxury industry faces several challenges and opportunities:

Demographic Change: Luxury consumers are changing. By 2030, Millennials and Generation Z will represent 60-70% of luxury product and service spending. These generations, unlike previous ones, not only seek products that represent status but also value authenticity, personalization, and ethical values. This has transformed how brands position themselves, with increasing focus on sustainability, inclusion, and creating meaningful experiences for consumers.
The Role of Sustainability: Sustainability has moved from being a secondary aspect to a central pillar of the luxury sector. Consumers, especially younger ones, demand ethical and responsible business practices. A study by Capgemini shows that 64% of luxury consumers consider sustainability a key factor in their purchasing decisions. Brands that fail to integrate sustainable practices into their operations risk losing relevance in an increasingly conscious market. The circular economy, the use of recycled materials, and transparency in the supply chain will be essential for future success.
Digital Transformation: Technology is reshaping all industries, and luxury is no exception. Technologies such as artificial intelligence, augmented reality, and blockchain are providing new ways to offer personalized experiences and authenticity in a digital environment. Omnichannel is becoming the key strategy for luxury brands, allowing a seamless experience in both physical stores and digital platforms. Furthermore, luxury e-commerce is expected to grow at an annual rate of 10% until 2030, representing 30% of total luxury product sales.
Growth in Asia and Emerging Markets: Asia, particularly China, continues to be the most important growth driver for luxury. By 2030, it is projected that 45% of global luxury consumption will come from China, a market that already accounted for more than 35% of global luxury product sales in 2021. Additionally, other emerging markets, such as India and Southeast Asia, are growing rapidly, offering new opportunities for brands looking to diversify their income sources.

New Definitions of Luxury: Experience and Temporal Scarcity

The concept of luxury is undergoing a fundamental redefinition. While previous generations primarily valued material possession, younger consumers seek unique and unparalleled experiences. This has led to a shift in strategy for many brands, now focusing on creating exclusive experiences for their clients, from personalized trips to restricted-access events. In this context, temporal scarcity —products or services available for a limited time— has become a crucial strategy for maintaining the sense of exclusivity that defines luxury.

An example of this shift is the rise of luxury tourism and exclusive gastronomic experiences. Instead of merely offering products, brands are investing in providing complete experiences that range from private dinners with award-winning chefs to luxury yacht trips to exotic destinations. According to Amadeus, the luxury tourism market will reach 400 billion euros by 2030, highlighting the shift towards a luxury based on experiences and moments.

The Role of Physical Retail and Technological Innovation

Although e-commerce is booming, physical stores will not disappear but rather evolve into experiential centers. Luxury stores will no longer be merely places of transaction but spaces where consumers can experience the brand in an immersive way. Brands are investing in flagship stores that combine art, culture, and technology to create unique environments that cannot be replicated online.

The use of artificial intelligence and augmented reality in retail will allow consumers to customize products in real-time, see how they would look without having to physically interact with them, and receive recommendations based on their purchase history. These innovations will not only improve the customer experience but also optimize brand operations, enabling better inventory management and greater supply chain efficiency.

According to studies by Accenture, it is expected that 80% of luxury brands will integrate AI and advanced technologies like AR into their operations by 2030, allowing them to offer a personalized experience both in physical stores and online.

The Intersection of Digital and Physical

The convergence of digital and physical will be a key feature of the luxury sector in the next decade. Brands must adopt an omnichannel approach, allowing consumers to transition seamlessly between online and physical experiences. This is achieved not only through technology but also by building a cohesive brand ecosystem that delivers value at all consumer touchpoints.

The combination of physical and digital will also allow brands to offer deeper levels of personalization, increasingly demanded by consumers. For example, a physical store equipped with AI could offer recommendations based on the customer's previous online purchase data, while a digital platform could offer immersive experiences such as virtual fitting rooms and smart mirrors.

Economic Growth Projections

The global luxury market will continue its expansion, with a compound annual growth rate (CAGR) of around 5-6% through 2030. This growth will be unevenly distributed across different regions. Asia-Pacific, driven mainly by China and India, will be the region with the greatest expansion, projected to account for more than 55% of the global luxury market by 2030. Meanwhile, Europe and North America will remain important markets, though with more moderate growth, partly due to market saturation and the maturity of consumers.

In terms of segments, personal luxury products such as fashion, jewelry, and watches will remain dominant, representing more than 40% of the market. However, experiential luxury, which includes tourism, wellness, and luxury gastronomy, will grow faster than material goods, capturing more than 35% of the market by the end of the decade.

This report provides an in-depth analysis of the key factors that will define the luxury sector between 2025 and 2030, offering detailed analysis of emerging trends, economic data, and growth projections across various geographic areas and market segments.

2. The New Luxury Consumer: Generation Z and Millennials

In the coming years, the luxury sector will undergo a profound transformation driven by generational change, particularly with Generation Z (born between 1997 and 2012) and Millennials (born between 1981 and 1996), who by 2030 will constitute the majority of global luxury consumers. These generations have very different characteristics compared to previous ones (Generation X and Baby Boomers) in terms of their relationship with luxury, which is forcing brands to rethink and redesign their strategies.

As Millennials, who will be at their peak purchasing power by the end of the decade, and Generation Z, who will exponentially grow in disposable income, become the main buyers, the luxury market will shift its priorities. Instead of focusing solely on the possession of expensive products, these generations seek experiences, personalization, and a greater alignment with their ethical values. In addition, they expect brands to adopt advanced technologies that offer them a smooth and highly personalized shopping experience.

2.1. The Generational Convergence

By 2030, Millennials and Generation Z will represent between 60-70% of global luxury spending, marking a drastic shift in consumption habits within the sector. These generations have distinctive characteristics regarding their expectations and behaviors, which break away from the consumption patterns of previous generations.

Below are the key differences between both generations and how these will impact the luxury sector:

Millennials: Experience over Product. Millennials, also known as the experience generation, are less interested in accumulating material goods and more focused on acquiring meaningful and personalized experiences. According to a study by Bain & Company, 78% of luxury Millennial consumers are willing to spend more on experiences than on physical products. This includes everything from personalized luxury travel to exclusive dinners with award-winning chefs or access to unique cultural events. For this generation, luxury is measured by the authenticity, personalization, and exclusivity of the experiences a brand offers. Luxury brands that can create memorable and unique moments for their clients, with products and services tailored specifically to their desires and needs, will be better positioned to attract this group of consumers. Millennials also value emotional connections with brands. According to a report from Harvard Business Review, 64% of Millennials state that an emotional relationship with a brand is a key factor in their purchasing decisions. Brands that create an authentic and coherent narrative that resonates with consumer values have a higher chance of generating long-term loyalty.
Generation Z: Sustainability and Social Responsibility. Generation Z, on the other hand, is the first generation to grow up in a fully digital environment, making them digital natives. This means they expect a seamless integration between physical and digital in their shopping experiences. Additionally, this generation is deeply concerned about sustainability and the ethical values of companies. A study by McKinsey reveals that 85% of Generation Z consumers are willing to pay more for products that are socially and environmentally responsible. This generates demand for products and services that not only represent luxury in terms of quality but also reflect a commitment to the planet's well-being. Transparency is essential for this generation. Generation Z consumers seek brands that are authentic and adopt sustainable and ethical practices throughout their supply chain. They want to know where products come from, how they are made, and how companies are contributing to solving global challenges. Luxury brands that cannot provide this information or fail to act responsibly may be quickly dismissed by these consumers. Additionally, Generation Z is redefining the concept of exclusivity. Unlike previous generations, who viewed luxury as something inaccessible and reserved for a few, this generation expects luxury to be inclusive and accessible without losing its essence of authenticity and quality. Brands must balance this paradox: making luxury more accessible without diluting its prestige.

2.2. Individualism and Personalization

One of the main demands of both Millennials and Generation Z is personalization. Luxury consumers no longer want generic products; they desire goods and experiences tailored specifically to them. According to a study by Deloitte, the personalized products and services market will grow at a compound annual growth rate of 7.5% through 2030, reaching a value of 50 billion euros. This growth reflects the increasing consumer interest in products and services that reflect their identity and personal style.

Personalization is being applied in multiple luxury industries. In the fashion sector, brands like Gucci and Louis Vuitton have launched options that allow consumers to personalize handbags, shoes, and clothing, choosing everything from color and materials to the smallest details. Nike, through its platform Nike By You, offers customers the ability to design their own footwear, reinforcing the sense of individualized exclusivity sought by younger consumers.

The automotive sector has also embraced this trend. Rolls-Royce, for example, offers the ability to personalize almost every detail of its vehicles, from interior materials to colors and exterior adornments. For many consumers, personalizing a car is not just a symbol of luxury but also a way to project their identity and lifestyle. The demand for personalized luxury cars is expected to continue growing at an accelerated pace in the coming years, especially among wealthier Millennials.

Additionally, new technologies like artificial intelligence (AI) and big data are enabling an unprecedented level of personalization. By analyzing large volumes of data, luxury brands can identify consumption patterns and preferences and use this information to offer personalized products and services. For example, a luxury customer could receive recommendations based on their purchase history, style preferences, and previous interactions with the brand, creating a unique and tailored experience.

Hyper-personalization will be one of the key differentiators in the luxury sector over the next decade. Brands that can offer personalized experiences and products will not only attract the most discerning consumers but also improve their loyalty and increase their customer lifetime value (CLV). According to Bain & Company, brands that adopt personalization as a central part of their strategy will experience revenue growth 15-20% faster than those that do not.

2.3. Impact of Generational Change on the Luxury Market

The impact of generational change on the luxury market will be significant and transformative. By 2030, Millennials and Generation Z will be responsible for the vast majority of the sector's growth. According to a report by Bain & Company, these groups are expected to generate 130% of total luxury market growth by that time. This means brands will need to quickly adapt to their needs and expectations to remain competitive.

Younger consumers have higher expectations regarding ethics, sustainability, and inclusion. Brands like Stella McCartney, which has led the way in adopting sustainable fashion practices, and Chanel, which has gradually eliminated the use of fur in its collections, are responding to these demands. As these generations become the dominant group of consumers, we are likely to see more brands adopting sustainable and responsible practices to stay in line with market expectations.

Additionally, younger generations are much more influenced by social media and digital platforms. A brand's ability to capture these consumers' attention through digital strategies will be key to its future success. According to McKinsey, 70% of purchasing decisions among younger luxury consumers are influenced by content they see on social media, highlighting the importance of a strong and consistent digital presence.

The Importance of Community Building in the Luxury Sector

A crucial element in attracting and retaining younger luxury consumers will be community building. Both Millennials and Generation Z value brands that not only offer products but also create a sense of belonging and community. Luxury brands can no longer limit themselves to offering material goods; they must provide a deeper experience that connects consumers with the culture, creativity, and values the brand represents.

This has led to an increase in the importance of exclusive events, artistic collaborations, and immersive experiences as strategies to attract consumers. Brands that can create closed communities, where customers feel special and valued, will be able to generate lasting loyalty that transcends fashion or product trends.

A good example of this is the strategy of Supreme, which has built a community of young and loyal customers through limited releases, collaborations with artists, and the creation of a sense of exclusivity and belonging. This strategy, which blends the digital and physical, has allowed the brand to maintain its relevance and perceived high value among younger generations.

Generational change will not only transform how luxury brands interact with their customers but also redefine what luxury means in the 21st century. Brands that fail to shift their focus towards personalization, sustainability, transparency, and building exclusive communities will fall behind in a market where consumer expectations have never been more demanding and dynamic.

3. Sustainability and Social Responsibility

The luxury sector is undergoing a structural shift toward sustainability and social responsibility like never before. Traditionally, luxury was associated with excess, consumption, and ostentation. However, global trends toward environmental protection, responsible consumption, and social justice are redefining how luxury brands must operate. As consumers, particularly Millennials and Generation Z, demand that companies take tangible actions to mitigate their environmental and social impact, the luxury sector faces pressure to adopt more ethical and sustainable business models.

This shift is not only a response to market demands but also a necessary strategy to ensure the longevity and relevance of brands in a world that is becoming increasingly aware of environmental and social issues. Transparency and authenticity in operations and the supply chain are no longer optional; they are essential for survival.

3.1. Sustainability as a Central Pillar

Sustainability has become a central pillar of the strategy for many luxury brands. It not only responds to consumer demands but also has the potential to create a competitive advantage. According to a report by Capgemini, 64% of luxury consumers consider sustainability a key factor in their purchasing decisions, and this percentage is even higher among Millennials and Generation Z. The adoption of sustainable business practices, from the use of eco-friendly materials to supply chain traceability, is no longer optional for luxury brands that want to remain relevant.

The Global Fashion Agenda estimates that the fashion industry is responsible for approximately 10% of global greenhouse gas emissions, and luxury, with its use of fur, leather, and other high-impact materials, has historically been a major contributor. However, many brands are taking steps to reduce their carbon footprint. Gucci, for example, has implemented a comprehensive sustainability strategy under its Gucci Equilibrium plan, which includes the use of recycled materials, the elimination of single-use plastics in its offices and stores, and the offsetting of all its carbon emissions.

Luxury brands are also investing in the development of alternative materials. For instance, French company Hermès has begun exploring the use of mushroom leather (mycelium) as a sustainable alternative to traditional leather. Stella McCartney, a pioneer in sustainable fashion, has rejected the use of fur and leather since its founding and continues to innovate with eco-friendly materials like plant-based vegan leather and recycled textiles.

Circular Economy: An Opportunity for Innovation

The circular economy is another concept gaining relevance in the luxury sector. This approach aims to extend the lifespan of products through reuse, repair, recycling, and designing products that generate less waste. According to the Ellen MacArthur Foundation, the circular economy could reduce the fashion industry's carbon emissions by 44% by 2030 if widely implemented.

Resale platforms like The RealReal, Vestiaire Collective, and Rebag have created a secondary market where consumers can buy and sell pre-owned luxury items. The growth of these platforms is a clear indication that consumers are interested in sustainable luxury and the second life of products. The global luxury resale market is estimated to reach a value of 75 billion euros by 2030, with annual growth of 12%.

More and more brands are actively participating in the circular economy. For example, Chloé recently launched a resale and recycling program that allows customers to return used garments in exchange for credit toward future purchases. Patagonia, while better known for its focus on accessible luxury, has been leading the adoption of the circular economy with its Worn Wear program, which encourages customers to return and recycle used products.