It might be best said quietly, but after a tough few years for the high-end sector, tentative signs are arguably emerging that the coming year could be a positive one for growth. 

This much was put forward by a recent City AM report, which cited analysts as predicting sector-wide revenue growth of five to six per cent during 2025. 

Such relative optimism appears to be based on the judgement that opportunities in the United States and China are “not getting any worse”. 

In the words of analysts at RBC, Piral Dadhania and Richard Chamberlain, “while luxury has generally been a tough sector” since the second half of 2023, “the setup is improving”. 

However, many luxury brand decision-makers seem wary of the dangers of adopting an overly upbeat stance. 

When McKinsey surveyed fashion leaders, only a fifth (20%) of them said they anticipated customer sentiment would be on the rise in 2025. Indeed, about four in 10 (39%) respondents signalled an expectation that industry conditions would deteriorate. 

Considerable uncertainty remains for luxury brands, as customer demographics shift 

There is evidence of major structural changes taking hold in the high-end market, amid a high level of uncertainty. Such factors probably help to explain why fashion leaders are hesitant to express much optimism, at least for now. 

City AM reported that the “least surprising” of these changes was the industry moving away from its traditional “centre of gravity”, China, as a consequence of low demand in this part of the world. This is allowing for alternative Asian markets, such as Japan, India, and Korea, to benefit. 

However, the business-focused newspaper also highlighted the evolving customer base for luxury brands. The outlet suggested that younger generations appeared to be reducing their expenditure on luxury items in favour of second-hand goods, in addition to drifting away from “old-school” brands, instead taking an interest in smaller and more individual purchases. 

Exacerbating this, according to Third Bridge analyst Yanmei Tang, has been the “homogenisation of luxury brands” as a result of a frequent turnover of designers. She said this had left customers “struggling to distinguish one label from another”. 

We may be in times of change, but new opportunities are also emerging 

With aspirational customers having also been alienated by ever-higher prices, it perhaps shouldn’t be a great surprise that in recent years, many people have been pulled away from luxury markets. 

Indeed, Bain has drawn attention to approximately 50 million people having been lost from the luxury customer base during 2024 – amounting to roughly 12.5 per cent. This, the management consulting firm observed, was the first such decline in a decade. 

On the surface, that might not exactly seem heartening news for the world’s premium brands. However, there is evidence of the remaining customers spending higher amounts of money on luxury items. 

While, according to RBC, the average spend per consumer was £593 in 2019, this metric went up to £842 in 2024. Furthermore, almost half of purchases last year were made by high-net-worth clients, compared to less than a third in 2019. 

North America, too, looks likely to present intriguing opportunities for high-end brands during the coming year. This region already accounts for roughly a quarter of luxury demand, and if wealthy Americans are boosted by Donald Trump’s second presidential term – as has been predicted – this share may well increase further. 

Make sure you partner with proven and luxury-focused digital marketing professionals 

Amid the unpredictability and uncertainty that 2025 is likely to bring, as a decision-maker for your own high-end brand, you will want to ensure you have the right strategic, creative, and technological experts by your side. 

The skilled and seasoned professionals who make up our luxury digital marketing consultancy at Skywire London can very much serve as those experts. 

To find out more about how we can support the fulfilment of your premium, fashion, or lifestyle brand’s growth objectives throughout 2025 and beyond, please don’t hesitate to contact us. 

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