Luxury retail faces significant headwinds in 2025, including weak economic growth, inflation, rising costs and geopolitical and climate risks. With global growth at a 30-year low—especially in China and the US—retailers must prioritize agility, deeper engagement, and personalization. As luxury shifts from products to lifestyle and experience, success will hinge on storytelling and creating experiential value-led retail that goes beyond a pure transactional model.
Delivery
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Key findings
Macroeconomic pressures challenge luxury retail resilience
Luxury retailers continue to face heightened vulnerability to global disruptions - geopolitical tensions, climate volatility and economic uncertainty. This environment demands agile inventory management, pricing strategies and risk mitigation plans to maintain profitability and protect brand equity.
Emerging markets as strategic growth engines
Luxury retail expansion should prioritise Latin America, Southern Asia and the Middle East, where rising affluence and aspirational consumers drive demand. Success hinges on culturally relevant merchandising, and exclusive retail experiences tailored to regional preferences.
Technology reshaping luxury retail models
The race for omnichannel excellence is intensifying as online luxury sales approach ubiquity. Competitors leveraging generative AI for hyper-personalized recommendations, virtual styling, and optimized store layouts will redefine the luxury shopping experience, leaving laggards behind in customer engagement.
Sustainability as a competitive differentiator
Sustainability is becoming less about a moral or regulatory obligation and more about a strategic lever that can drive profitability, differentiation and resilience across the luxury landscape, especially in today’s volatile global context. By integrating this into core business strategies, brands can Untapped consumer segments driving retail innovation
substantiate meaningful claims that set them apart.
While Gen Z remains a key future target audience, the 60+ demographic is emerging as a high-value segment, prioritising wellness, experiential luxury and premium services. Retailers can capture this market through personalised concierge services, wellness-focused product lines and in-store experiences designed for exclusivity.
Key findings
Key facts to share
Luxury retail moves beyond the transactional model to storytelling and experience
Macro and climate forces continue to reshape the luxury retail landscape
Luxury spending continues its shift from goods to elevated luxury experience
Asia Pacific at the helm of luxury retail but growth tempered by China’s headwinds
Wealth as a status symbol takes on new dimensions amid consumer diversification
The middle class and their aspirational spending still paramount for luxury retailers
Asia’s new wealth expansion positions the region as the next frontier for luxury retail
India poised as a strategic growth market for luxury retailers thanks to wealth expansion
Cross-border shopping in flux as new tariffs and tourism trends reshape consumption
Galeries Lafayette opens its first luxury department store in India, in autumn 2025
Dolce & Gabbana takes over the San Domenico Palace in Sicily, for summer 2025
Offline retailers adopt new strategies to stay competitive amid strong e-commerce growth
Physical stores remain the cornerstone of luxury retail despite digital growth
Luxury retailers and brands continue to explore the role of their brick-and-mortar stores
Despite challenges, department stores remain leaders in personal luxury goods sales
Luxury department stores face a heightened era of disruption and rising competition
Luxury consumers continue to crave the physical aspect of in-store shopping
Physical stores became engagement hubs rather than pure transactional spaces
Retailers are trading excess inventory space for memorable experiences
The power of control in the luxury digital space leads some brands to go it alone
Selfridges rewards time spent in its stores and plans to open a private members’ club
Ralph Lauren turns London’s Sloane Square into a holiday pop-up with a philanthropic twist
Navigating a shifting landscape through digitalisation
A seamless shopping experience expected throughout their entire shopping journey
Elevating the online luxury shopping experience through innovation and personalisation
Social media disrupts how consumers interact with retailers through live streaming
Advanced technologies continue to transform the face of luxury retail
Luxury retail future remains optimistic, defined more by mindset than by price tag
Key emerging markets will offer luxury retailers opportunities to diversify beyond China
Retail goes beyond the boutique into third spaces and immersive shopping experiences
Experience-led channels will increasingly become the future of luxury retail
Recommendations/how to win
Definitions (1/2)
Definitions (2/2)
Luxury Goods
This is an aggregation of: Personal Luxury, Fine Wines/Champagne and Spirits, Luxury Cars and Experiential Luxury.
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