Luxury consumers seen nudging sector back to growth despite global tensions

MILAN (AP) — Luxury consumers are cautiously resuming purchases of apparel, handbags and cosmetics despite continued geopolitical uncertainty, fueling a likely return to modest growth in the sector this year, the Bain & Company consultancy said Thursday.

After two years of contraction, global sales of personal luxury goods are forecast to grow 2% to 4% in 2026, reaching 365 billion euros to 373 billion euros ($415 billion to $424 billion), up from 358 billion euros last year, Bain said in a semi-annual study. The recovery is expected to be led by the Americas, where some U.S. luxury brands posted first-quarter growth of as much as 15%.

“People are still alive and want to live their better lives,” said co-author Claudia D’Arpizio, a partner at Bain, considered the leading consultancy for luxury goods. “So there is this mega trend of looking for good quality of life, of improving their lives and finding the meaning and living the experiences that is stronger than the fear of the future.”

Following a consumer rebellion over steep price hikes, prices have stabilized with more entry-level offerings, and consumers are returning to the luxury arena, D’Arpizio said. She called it “a healthier situation vis-a-vis two years ago,” but added that brands will continue to have to fight to regain “customer love that has been a little bit broken in the previous years.”

The base-case scenario assumes Middle East conflicts stabilize, local spending helps to offset uneven tourist flows and demand in China gradually improves. Bain’s downside scenario calls for flat growth, while easing geopolitical tensions and accelerated growth in China could lift growth to as much as 6%.

U.S. shoppers were spending on everyday casualwear, jewelry and beauty products, with young consumers under 35 years old fueling sales.

China is forecast to return to growth, helped by online sales of ready-to-wear, while Europe is lagging due largely to a dip in tourism caused by geopolitical tensions. Even Dubai has seen locals return to stores.

“People want to live a normal life, that’s a stronger feeling,” D’Arpizio said.