Luxury Goods in the United Kingdom

Luxury goods in 2025: The big picture

Luxury goods in the UK experienced a mixed performance in 2025, influenced by various socioeconomic and macroeconomic factors. Despite an overall challenging economic environment marked by persistent inflationary pressures and ongoing geopolitical uncertainties, the market demonstrated a degree of resilience. Local consumer spending was characterised by cautious optimism, driven by a gradual stabilisation in disposable incomes and a recovering labour market. Value sales of luxury goods, which include experiential luxury, fine wines/champagne and spirits, premium and luxury cars, and personal luxury, showed moderate growth overall, although the growth rate varied significantly across different categories. However, the removal of tax-free spending following Brexit trade agreements continued to have a negative impact, and fluctuations in tourism-driven spending further affected sales. A notable slowdown in tourists from the US, although less pronounced than in European markets, compounded these challenges.

2025 key trends

In 2025, luxury goods in the UK was notably influenced by several key trends that shaped consumer behaviour and industry dynamics. Sustainability remained a critical consideration, with luxury brands increasingly integrating eco-friendly materials and transparent sourcing practices to meet heightened consumer expectations around ethical consumption. Personalisation also gained traction as a significant market driver, with bespoke offerings and tailored shopping experiences becoming essential to differentiate luxury products in a competitive landscape. The development and application of artificial intelligence (AI) technologies significantly enhanced customer engagement and operational efficiencies. Brands such as Louis Vuitton, Gucci, Chanel, and Farfetch have leveraged AI-powered personalisation, chatbots, virtual try-ons, and data-driven recommendations to deliver more tailored experiences both online and in-store. These technologies not only provide 24/7 customer service, thereby increasing conversion rates, but also play a crucial role in capturing the attention of Generation Z and millennials. While luxury goods historically favoured physical and experiential shopping, the shift towards digital integration has become an increasingly important focus of investment for luxury conglomerates. This strategic move helps brands to maintain their competitive edge and improve overall consumer satisfaction.

Competitive landscape

The competitive landscape of luxury goods in the UK remains dominated by established brands, with a notable focus on premium and luxury car manufacturers and luxury fashion houses. Leading automotive companies such as Volkswagen Group United Kingdom Ltd (Audi, Porsche), BMW (UK) Ltd, Mercedes-Benz Cars UK Ltd, Tata Motors Ltd (Land Rover, Jaguar), and Tesla Inc continue to hold significant share, driven by consumer demand for luxury automobiles that symbolise status and craftsmanship. In the more fragmented landscape of personal luxury goods, Louis Vuitton UK Ltd, Chanel Ltd, Christian Dior (UK) Ltd, The Rolex Watch Co Ltd, and Cartier Ltd remain prominent.

Retail developments

The distribution of personal luxury in the UK continues to be driven by specialist retailers, department stores, and e-commerce, reflecting the evolving preferences of affluent consumers. Sales via e-commerce continue to be supported by luxury brands’ investments in digital transformation. Technologies such as artificial intelligence (AI), augmented reality (AR), and virtual fitting rooms have enhanced personalised online experiences, facilitating seamless omnichannel shopping journeys. This digital growth complements the enduring importance of bricks-and-mortar stores, which remain integral to the luxury buying experience, particularly in key locations such as London’s Mayfair and Knightsbridge districts. These physical stores continue to offer exclusive events and bespoke customer services, ensuring their relevance and appeal.

What next for luxury goods?

Over the forecast period, luxury goods in the UK is anticipated to experience moderate growth, with a 4% current value CAGR (2025 constant value CAGR of 2%). This performance will be driven by a gradual increase in the number of HNWIs, UHNWIs, and wealthy adults, along with a further rise in the number of inbound arrivals from key source markets. Despite challenges related to wealth redistribution and tax policies, the affluent consumer base is expected to diversify, with Generation Z emerging as a significant driver of demand. This demographic shift is likely to influence purchasing behaviours, placing greater emphasis on digital engagement, sustainability, and brand authenticity.