The last few years since the COVID-19 pandemic may have seen sharp rises in prices for high-end brands’ offerings, but there are signs of this era having come to an end. 

Indeed, an analysis of more than 100 brands and over 10,000 activations for the first half of 2025, as reported by FashionNetwork, has found the luxury sector is experiencing its first global slowdown for several years. 

The study by Luxurynsight and LY Watch (Heuritech) provided fascinating insights into the state of a luxury market dealing with tougher economic conditions, a rapid turnover of creative directors, and the emergence of new technologies. 

What has been happening to luxury prices so far in 2025? 

It seems that amid sustained pressures on consumer purchasing power, many prestige brands have been forced to take a more restrained approach to price rises than they have been inclined towards in recent years. 

Luxurynsight has stated that the first six months of this year saw a mere 1.2% increase in the average price of bags and leather goods on a year-on-year basis. 

However, there are regional variations in how this strategy is bearing out. Japan, for instance, has seen comparatively steeper rises (1.9%) to offset the weak yen. 

Simultaneously, a trend is being seen of closer links between luxury fashion and jewellery. Gucci’s partnership with Pomellato, as well as Dior’s release of gem-set lipstick pendants, are examples of how brands have sought to capture resilient custom from affluent individuals who aren’t as vulnerable to economic downturns. 

Given the reveal by a BCG and Altagamma report that 23% of total luxury sales are generated by 0.1% of consumers (the “top tier”), it shouldn’t be overly surprising that prestige brands have made it such a strategic imperative to appeal to this clientele. 

What is the extent of the wider pressures facing prestige brands? 

According to the FashionNetwork report, a 1% contraction was recorded for the luxury personal goods market during 2024, to €364 billion. 

Such factors as a more subdued macroeconomic environment, new tariffs imposed by the United States, and greater spending caution among consumers, have forced brands to strategically reorientate. 

A greater emphasis is now being seen on quality over quantity, as well as localisation over globalisation, and the all-round experience of the consumer, as opposed to depending on the lure of the product alone. 

Comprehensive transformation is being seen in the high-end sector 

It is becoming apparent that luxury players are pursuing a range of approaches as they grapple with a changing world, as further set by the FashionNetwork report. 

The news outlet stated, for instance, that high-end brands had deliberately reduced the volume of their activations by 2% year-on-year. Such brands are now increasingly prioritising highly targeted, deeper, and more impactful initiatives, rather than broad global media operations. 

Another of the sector’s noticeable responses to the slowdown, however, has been heavy investment in experiential retail. 

Indeed, the report said a 48% jump in retail activations (as opposed to activations in general) had been observed compared to 2024’s first six months, signalling the extent to which they had become a central pillar of brand strategy. 

The report noted, too, that brands were deploying generative AI, 3D, and data analytics to deliver ultra-personalised recommendations. 

Launch your own partnership with trusted luxury marketing specialists 

Certainly, the shifting landscape is providing plentiful “food for thought” to many a luxury advertising agency, and the clients of such companies, right now. 

To learn more about how joining forces with our strategic and creative experts at Skywire London could be central to your brand’s efforts to deliver digital excellence and grow, please don’t hesitate to contact our UK-based, but globally minded team. 

Photo by Arno Senoner on Unsplash