The Global Luxury Tipping Point (July 2025): Cyclical Decline or Structural Shift?

July 2025 has marked a turning point for the global luxury industry. Financial results from major players like LVMH reveal widespread stagnation—especially in fashion and leather goods (−9 % YoY)—while projections suggest a possible contraction of up to 5 % by year-end.

This report explores whether this downturn is a temporary correction—driven by macroeconomic pressures—or a deeper, generational shift in how consumers define and desire luxury. It also examines the rise of local brands in Asia, the resilience of high jewellery, and the redefinition of luxury values beyond logos.

1. The Symptoms: Troubling Financial Results

LVMH reported €39.8 billion in H1 2025 revenue, with a 4 % decline in fashion and leather goods and a 9 % YoY drop overall. Kering and Prada also reported declines, especially in Gen Z-driven categories and digital channels. U.S. luxury spending has contracted for 10 straight quarters, and Europe’s rebound is slowing.

2. The Diagnosis: Explaining the Downturn

China no longer leads: Western luxury sales in China dropped 20–23 % as national brands (Laopu, Songmont, etc.) rose, fueled by economic slowdown and cultural pride. Aspirational pricing fatigue: Repeated price hikes since 2019 alienated mid-tier and younger consumers. Generational disconnect: Gen Z and millennials seek experience, ethics, and authenticity—branding alone is no longer enough.

3. High Jewellery: The Safe Haven

Cartier, Van Cleef & Arpels, and Boucheron report stable or positive growth in rare stones and bespoke jewellery. The segment grew 2 % in 2025 and now accounts for 18 % of the personal luxury goods market. Seen increasingly as a store of value and generational asset, particularly in Asia and the Middle East.

4. Is It Cyclical or Structural?

Cyclical View:

Some analysts frame it as a correction after the post-COVID luxury boom (2021–2023). Resilient sectors like hospitality, gastronomy, and private travel are still growing.

Structural View:

70 % of luxury purchases are digitally influenced, but brands struggle to speak Gen Z’s language and values. Sustainability, transparency, and authenticity are reshaping the entire ecosystem.

5. Strategic Recommendations

Rethink pricing and scarcity: Shift from mechanical price increases to value creation through design, rarity, and heritage. Invest in experiences: Integrate physical retail with hospitality and lifestyle communities. Segment intentionally: Tailor messaging and loyalty programs to boomers, Gen X, millennials, and Gen Z. Focus on high-growth markets: Middle East, India, and Vietnam are growing at over 8 % annually. Unexpected alliances: Collaborate with niche brands, local artisans, or emerging creatives.

6. Conclusion

July 2025 was a wake-up call. This isn’t just a seasonal slowdown—it signals the end of the globalized aspirational luxury model that has dominated for two decades. Brands that fail to embrace this new logic of authenticity, community, and experience will be irrelevant within five years.