The global luxury market is on track for a muted recovery in 2026, with total spending expected to reach between €365 billion and €373 billion, according to a Bain & Company report released this week. The forecast comes after a first quarter that saw sales decline by 3 to 5 percent in Europe alone.
Europe is bearing the brunt of the slowdown, with tourism spending failing to offset reduced domestic consumption. The region’s luxury market has been hit by a combination of inflation-weary local shoppers, a shift in Chinese tourist flows toward Japan and Southeast Asia, and reduced foot traffic in Paris and Milan outside of fashion week periods.
The luxury sector has endured two consecutive years of contraction following the post-pandemic spending boom. Bain’s base-case scenario projects growth of zero to 4 percent for personal luxury goods in 2026, far below the double-digit expansions of 2021 and 2022.
For the European houses that have long defined the industry, the message is clear: the next phase of growth will not come from reopening China or pent-up demand, but from convincing a smaller, savvier customer base that true luxury is worth the premium.
Luxury groups are responding with a renewed emphasis on craftsmanship narratives, limited-edition drops, and immersive brand experiences rather than price-driven volume strategies. The report suggests that brands that double down on heritage storytelling and exclusivity will navigate the correction more effectively than those that chase scale.
