The State

of Fashion
Luxury

The State of Fashion: Luxury 1

ACKNOWLEDGEMENTS

The authors would like to thank Michael Amoako, Ugo Apuzzo, Charlotte Jiang, Lucrezia The authors are grateful to the Luxury Institute and Quilt.AI for their contributions to the
Luti, Nadya Snezhkova, and Liann Wu from McKinsey’s Paris and New York offices for research.
their critical roles in delivering this report.
About Luxury Institute
A special thanks to all members of The Business of Fashion and the McKinsey Luxury Institute has served over 1,100 luxury and premium goods and services brands in
communities for their contributions to the research and participation in the BoF- the last 21 years through leading-edge research with affluent, HNW and UHNW
McKinsey State of Fashion 2025 Executive Survey, especially the many industry experts consumers, consulting and training solutions developed by the best, most successful minds
who generously shared their perspectives during interviews. In particular, we would like to in the industry. Luxury Institute has the largest global networks of top-tier luxury
thank Benjamin Comar, Tina Edmundson, Andrea Guerra and Harvey Spevak. We’d also executives, experts and HNW and UHNW individuals and families. Today, the Institute
like to thank Marie Victoire de Bascher for the cover illustration. has conducted more quantitative and qualitative research on affluent, HNW and UHNW
consumers than any other entity. With unique, unmatched expertise in emotionally
The wider BoF team has also played an instrumental role in creating this report — in intelligent luxury, Luxury Institute has helped top-tier luxury and premium brands create
particular, Marc Bain, Brian Baskin, Nick Blunden, Amanda Dargan, Liz Flora, Jael extraordinary customer experiences and build long-term relationships through high trust,
Fowakes, Fred Galley, He Jia, Rawan Maki, Alex Negrescu, Anna Rawling, Darcey high humanity and high performance.
Sergison, Lillian Sesiguzel, Arunima Sharma, Robin Swithinbank, Amy Vien, Amy Warren
and Josephine Wood. About Quilt.AI
Quilt.AI is an anthropologically grounded AI Platform. We’ve been called an AI for Good
We would like to thank the following McKinsey colleagues for their special contributions company by The Economist as we work with the best brands and the most impactful
to the report: Ekaterina Abramicheva, Ekaterina Akimova, Magdalena Balcerzak, David philanthropies in the world. Our text, image and video analysis capabilities are contextually
Barrelet, Kristy Choy, Colleen Baum, Stijn Broekema, Pamela Brown, Léa Deniaud, rich, able to understand cultural nuance, generational variations, subcultures, slang and
Sandrine Devillard, Vanessa Dib, Sherina Ebrahim, Sebastian Frank, Patricia González emotions. We have built generative and predictive abilities that have been informed by
Mendez, Ana Paula Guimarães, Kenza Haddioui, Lize Hartley, Homayoun Hatami, deep human understanding at a category level with specific training on more than a billion
Johnny Ho, Patricio Ibáñez, Marcus Jacob, Rebecca Jiang, Younghoon Kang, Franck human instances. See more at www.quilt.ai.
Laizet, Hsin Yen-Lee, Clarisse Magnin, Laura Mendoza, Apurva Misra, Alexandra
Mondalek, Jessica Moulton, Alexandre Oriez, Gizem Ozcelik, Arianna Pileri, Emily
Reasor, Roger Roberts, Felix Rölkens, Erik Rong, Chloé Salomé, Carlos Sánchez Altable,
Rachel Sandri, Alex Sawaya, Alice Scalco, Jennifer Schmidt, Tanina Sehl, Gregoria
Serretta Fiorentino, Mona Sharak, Alexander Silwer, Marie Strawczynski, Philip Stephan,
Chloe Tait, Corinne Teschner, Yasufumi Tozuka and Daniel Zipser.

The State of Fashion: Luxury 2

CONTENTS

6 A Letter to the Industry

10 Market Backdrop
Prada: Growing in a Luxury Downturn

20 Market Outlook
Piaget: Powering Up Icons

32 Customer Insights
Equinox Group: Making Health the Ultimate Status Symbol

Marriott International: Redefining Luxury Travel

The State of Fashion: Luxury 3

CONTRIBUTORS

IMRAN AMED GEMMA D’AURIA SARAH ANDRÉ ANITA BALCHANDANI

Imran Amed is one of the global fashion Gemma D’Auria is a McKinsey senior partner Sarah André is an associate partner in Anita Balchandani is a senior partner in
industry’s leading writers, thinkers and and leader of the firm’s global Apparel, Fashion McKinsey’s Paris office and part of the McKinsey’s London office. Anita co-leads
commentators, and is founder, chief executive & Luxury sector. She has worked extensively in leadership of McKinsey’s Apparel, Fashion & the Apparel, Fashion & Luxury sector in
and editor-in-chief of The Business of Fashion North America, Europe and the Middle East Luxury sector in EMEA. She works with EMEA. She works with global brands in
(BoF), a modern media company and the supporting retail, fashion and luxury players luxury houses and fashion companies across shaping ambitious growth agendas, driving
authoritative voice of the global fashion and and family-owned businesses in shaping bold Europe and the US on a variety of topics digital transformation and designing
luxury industries. Imran holds an MBA from strategic agendas and driving transformations including growth strategies, omnichannel winning models for the future. Anita also
Harvard Business School and a B.Com from for higher performance and organisational transformations, digital marketing, M&A and works extensively in the private equity space
McGill University. He was born in Canada and health. Gemma is also a leader of McKinsey’s sustainability. leading diligence and value creation plan
holds British and Canadian citizenship. CEO Excellence initiative and is passionate support across numerous growth equity
Previously, Imran was a management about supporting the leadership journeys of top transactions.
consultant at McKinsey & Co. teams and CEOs.

ANUSHKA CHALLAWALA HANNAH CRUMP JOËLLE GRUNBERG VIKRAM ALEXEI KANSARA

Anushka Challawala is an associate director in As director, BoF Insights, at The Business of Joëlle Grunberg is a partner in McKinsey’s Vikram Alexei Kansara is editorial director at
The Business of Fashion’s data and advisory Fashion, Hannah Crump executes in-depth New York office and is part of the Apparel, The Business of Fashion. He oversees BoF’s
team, BoF insights. Her role involves advising editorial projects and partners with industry Fashion & Luxury sector in the Americas. luxury, fashion week, sustainability, global
fashion and beauty clients to help answer their experts to create data-driven research and She focuses on growth strategy, international markets and opinion verticals. Previously,
most important strategic questions. Prior to analysis for leaders in the global fashion and expansion and commercial transformation. Vikram was a brand strategy consultant and
BoF, Anushka spent years as an equity beauty industries. Her career spans over a Before re-joining McKinsey, Joëlle served 20 an account planner at Publicis Groupe’s
research analyst at Barclays with a focus on decade in editorial and project management years as a C-suite leader of fashion and Digitas. He has a Bachelors in English with
thematic investing. positions in fashion media and publishing. footwear brands including Wolverine, Boston High Honors from the University of
Brands and Lacoste Americas. California, Berkeley, and a Masters in
Interactive Telecommunications from New
York University.

The State of Fashion: Luxury 4

CONTRIBUTORS

ALEXANDER LI RAHUL MALIK

Alexander Li is part of The Business of Rahul Malik is the chief growth officer and
Fashion’s data and advisory team, BoF head of BoF Insights at The Business of
insights. His role as associate director of Fashion. As chief growth officer, he launches
advisory entails collaborating with fashion and oversees new businesses for BoF. As the
and beauty clients to help them achieve new head of BoF Insights, he advises leading
levels of cultural relevance and commercial fashion, beauty and luxury clients on
success. Alexander comes from a consulting answering their most pressing strategic
background with a focus on growth strategies questions. Prior to BoF, he was a long-time
in the consumer space. consultant at Boston Consulting Group.

AMAURY SAINT OLIVE ROBERT WILLIAMS

Amaury Saint Olive is an associate Robert Williams is luxury editor at The
partner in McKinsey’s Paris office and part Business of Fashion. He is based in Paris
of the leadership of Apparel, Fashion & and drives BoF’s coverage of the global
Luxury sector in Europe. He advises luxury sector as well as reporting his own
consumer and retail companies and features on French and Italian companies
investors on a range of growth-related topics in luxury fashion, jewellery and cosmetics.
including strategy, branding, portfolio Previously, Robert covered European
transformation/M&A, marketing and sales, luxury for Bloomberg News in Paris.
and operations.

The State of Fashion: Luxury 5

A LETTER TO THE INDUSTRY

How to Navigate the Luxury Slowdown

Macroeconomic headwinds, shifting customer preferences and a deteriorating
value proposition are weighing on the global luxury sector. The Business of Fashion
and McKinsey & Company outline five strategic imperatives for luxury executives.

Over the past five years, the luxury industry Several of the industry’s growth-driving engines led to overexposure and weakened the industry’s
experienced a period of exceptional value creation. have stalled. Macroeconomic headwinds — promise of exclusivity, creativity and craftsmanship.
Between 2019 and 2023, unprecedented demand especially in the key China market, which grew As demand surged, brands increased prices but
for personal luxury goods — fashion, handbags, more than 18 percent annually from 2019 to 2023 failed to sufficiently adapt their creative strategies
watches and jewellery among them — combined — are weighing heavily on the sector. and supply chains to meet new scale requirements,
with a deep well of supply allowed the sector to thereby weakening their core value proposition and,
achieve a 5 percent compound annual growth rate. Meanwhile, the luxury client base is becoming more ultimately, failing to keep their promise to
Luxury brands outperformed global markets and diverse, and clients have a more complex customers.
achieved new profitability records. relationship with luxury goods than ever. To that
end, one challenge luxury players face is how to As a result of these strategic choices and economic
The pace of growth across the industry was engage younger clients without alienating older headwinds, growth in the years ahead will be slower,
remarkable and swift, though luxury “megabrands” ones, both through the products brands create as reaching between 1 and 3 percent annual global
with annual revenues over €5 billion ($5.3 billion) well as through their marketing strategies. growth between 2024 and 2027. Dynamism in
used their global presence to drive even greater Additionally, customers of all ages are becoming emerging markets such as the Middle East, India
visibility and desirability. Price increases accounted more interested in luxury experiences, not just and other Asia-Pacific regions will not compensate
for more than 80 percent of growth during this luxury goods. This dynamic creates new trade-offs for single-digit growth in luxury’s core markets such
period, while volume gains were more moderate. for clients to consider, meaning personal luxury as China and Europe, though we are more bullish on
goods players must exceed higher-than-ever client the US where we expect better overall perspectives.
Now, as we step into 2025, the luxury industry is expectations to win spend over luxury travel and With sector recovery out of reach until late 2025 or
facing a significant slowdown that has hit even top wellness experiences, for example. 2026, the industry must use the slowdown as an
brands hard. For the first time since 2016 opportunity to reflect and recalibrate. Luxury
(excluding 2020), luxury value creation declined. But luxury’s woes are also partly self-inflicted. The leaders must play a long game rather than relying on
sector’s rapid expansion over the last five years has quick fixes to their most pressing challenges.

The State of Fashion: Luxury 6

Now is the time to take bold risks, rebuild • Invest in tech, AI and data capabilities to also focusing on long-term investments and multi-
connections with clients and invest in the critical uncover powerful customer insights to help year initiatives — can ensure the continued success
areas of your business — even if the returns may not better personalise customer journeys. and growth of their brands. If they do not make
be immediate. In our view, there are five strategic these necessary changes, they risk sacrificing brand
imperatives for luxury executives in the coming 4. Bridge the talent capability gap relevancy and market share for years to come.
years: • Attract, develop and retain the best talent across
every critical function, not just in creative roles.
1. Conduct a strategic reset Evolve corporate cultures and update operating — Imran Amed, Founder and CEO, The Business of
• Clarify core values and align on priority clients models to align with the business’s growing scale Fashion
to sharpen the brand’s long-term strategy and and complexity, and potential succession
differentiated value proposition, including planning. — Gemma D’Auria, Global Apparel, Fashion &
assortment, communication, price architecture • Professionalise operations across major Luxury Leader, McKinsey & Company
and experience. business units — including digital, data,
• Review the synergies large groups may achieve technology, supply chain and procurement — by
by launching initiatives jointly, be it on growth emulating best practices from other sectors,
acceleration or cost excellence. while looking outside luxury to find talent to
help bridge the capability gap.
2. Restore product excellence
• Continue to invest resources in creating iconic 5. Futureproof the portfolio
products that will resonate with target clients • Review exposure to different luxury categories
and uphold luxury’s promise of quality and and regions (within large groups). Define a clear
value. role and goals for expansion to adjacent
• Realign business scale with craftsmanship categories, including travel and hospitality, to
heritage by investing in long-term supply chain maximise client engagement without neglecting
stability (through vertical integration, for the core business. Allocate focus and resources
example) and by implementing best-in-class to these new ventures without impacting the
sourcing and manufacturing practices. core business.
• Seek complementary acquisitions to build
3. Rethink customer engagement strategy resiliency and secure a competitive edge in a
• Continue to develop unique “money-can’t-buy” more consolidated market. The nature and scale
experiences, both in and outside of stores, for of these shifts will likely continue to recompose
the most loyal and most promising clients that the industry.
have been underserved in recent years. These
experiences must align with the brand’s ethos, The luxury industry is at a critical juncture.
and not simply chase the latest trends. Develop Executives — should they lead with vision, creativity
new client acquisition strategies. and a renewed commitment to excellence, while

The State of Fashion: Luxury 7

This report is based on extensive customer
research and proprietary market forecasts
We engaged with luxury clients in key markets to better understand their values, needs and expectations
for the future.

Interviews conducted with ultra-high, high and aspirational luxury spenders across six
250+
markets (France, China, Japan, South Korea, the US and UAE). Part of the research was
conducted in collaboration with the Luxury Institute.

10,000+ Global social media posts and online content created by luxury customers analysed across
selected platforms (Instagram, TikTok, Reddit, Weibo), in partnership with Quilt.AI.

6,000+ Aspirational luxury clients surveyed for McKinsey’s 2024 report “Beyond Boundaries:
Redefining Aspirational Luxury Consumers.”

~50,000 Global luxury clients surveyed across categories.

Market sizing is based on Euromonitor absolute values at constant exchange rates.

Market forecasts are based on interviews with luxury executives, analyst reports and proprietary McKinsey research.

Note: Ultra-high spenders (annual spend: >€70k), high spenders (annual spend: €10k-70k), aspirational luxury spenders (annual spend: €3k-10k)

The State of Fashion: Luxury 8

The luxury industry is examined across
categories, with a focus on personal luxury goods
Personal luxury goods Adjacencies

Fashion Beauty

Leather goods Wellness

Watches Travel and hospitality

Jewellery Home décor

Luxury categories are examined at all pricing tiers,

from affordable luxury through to ultra-high end.

The State of Fashion: Luxury 9

MARKET BACKDROP

Luxury is coming off a

period of rapid expansion

• The personal luxury goods industry — defined as fashion,

+5%
personal luxury goods
leather goods, and watches and jewellery — has grown 5 industry growth per year
percent per year between 2019 and 2023 (9 percent per
from 2019 to 2023
year between 2021 and 2023), 2 percentage points above
GDP growth.

• Price increases propelled growth, particularly for larger

~80%
of industry growth was
players, with prices rising 4 percent per year on average
across the industry. driven by price increases
rather than volume increases
• The luxury industry also benefitted from explosive growth
in the Chinese domestic market, which grew at 18 percent
per year from 2019 to 2023, effectively doubling in size, as

2.6x
well as high disposable incomes in the US coming out of luxury industry economic
the Covid-19 pandemic. profit nearly tripled between
2019 and 2024

Luxury customers carrying handbags. Getty Images.

01. Market Backdrop

The luxury sector grew faster than the economy,

driven by top spenders
Luxury goods spending growth by customer Global luxury goods market growtha vs global GDP
segment, 2019-2023 growth,b 2008-2023,
%
Luxury enjoyed a long chapter of growth between
2019 and 2023, defying macro challenges to grow
Top spenders GDP growth per year

25-30%
faster than GDP. The pandemic played a key role in Luxury goods market growth per year
this, as clients opted to spend their disposable
income and savings on luxury goods.
2
Top spenders — including ultra-high and high Ultra-high spenders 2008-2010
spenders — drove 40 to 50 percent of the market (>€70,000 per year) 8
growth between 2019 and 2023, disproportionate

15-20%
relative to their 2 to 4 percent share of the luxury
client base. 4
2010-2015
6
To feed this unprecedented demand for luxury
products, luxury brands increased investments in
High spenders
marketing and store network expansion, boosting
(€10,000-€70,000 per year) 3
their visibility and desirability.1 2015-2019

10-15%
3

3
2019-2023
Aspirational shoppers 5
(€3,000-€10,000 per year)
a. Includes ready-to-wear and footwear, leather goods, watches and jewellery. Excludes luxury beauty, experiential luxury, fine wines/champagne and spirits, premium and luxury cars
b. World Bank data, nominal GDP
Sources: McKinsey State of Luxury analysis, based on McKinsey State of Tourism and Hospitality 2024, Knight Frank, Wealth-X, Credit Suisse/UBS, Capgemini, Global Blue Shopping Report, Project Max Travel
Advisor Surveys (October and November 2023), Beyond Boundaries: Redefining Aspirational Luxury Consumers (McKinsey, April 2024), McKinsey State of Beauty, Global Wellness Institute, Fortune Business
Insight, expert interviews

The State of Fashion: Luxury 11

01. Market Backdrop

Luxury’s economic profit nearly tripled from

2019 to 2024, but a slowdown is here
Fashion industry economic profit (EP) change, average EP for luxurya and non-luxury indexed to total
industryb EP,
Total industry 2010 EP = 100
The luxury sector, including affordable luxury,
Non-luxury Luxury Super Winnersc Luxury – other brands benefitted from increased customer spending
power as well as successful price elevation
strategies, resulting in both higher revenues and
2.6x higher margins.
1.3x Large players dominated, with the four biggest
87 players (referred to as “Super Winners” in The
State of Fashion report: LVMH, Hermès,
Richemont and Kering) representing the majority
66 67 of the luxury industry’s economic profit. These
companies were able to secure higher prices while
maintaining strong demand for their products.

However, a slowdown emerged in 2024, raising

64 questions about the long-term effectiveness of the
26
strategies that drove luxury growth over the past
five years.
18

8 3
2010-2019 2019-2024Ed

a. Includes affordable luxury

b. Total industry includes luxury and non-luxury. Includes apparel, footwear, leather goods, jewellery and watches
c. Super Winners are the top fashion players by economic profit (based on economic profit for 2023) according to The State of Fashion. In luxury, they are: LVMH, Hermès, Richemont and Kering
d. Based on H1 actuals and H2 analyst consensus
Note: Economic profit tracks companies’ value creation and financial development and is calculated as the difference between a company’s current adjusted operating profit (minus taxes) and its cost of capital
Source: McKinsey Global Fashion Index in The State of Fashion 2025

The State of Fashion: Luxury 12

01. Market Backdrop

Exceptional growth was driven by specific pricing

strategies, geographies and categories
PRICE AND VOLUME GEOGRAPHY CATEGORY

• Following years of moderate price increases of • Luxury sales in China fuelled around 40 percent • The leather goods and jewellery categories grew
just 1 to 2 percent, brands raised prices of global luxury goods growth from 2019 to the fastest between 2019 and 2023, boosted by
significantly from 2019 to 2023, accounting for 2023, while the US drove around 30 percent rising demand for investment pieces.
around 80 percent of luxury industry growth. and Europe around 10 percent.
• Leather goods was buoyed by a growing base of
• The biggest increases were made in leather • The rest of the world grew at around 4 percent aspirational customers and sustained price
goods and other iconic products, with some each year, with Japan and South Korea growing increases, while jewellery benefitted from
brands raising prices of selected pieces as much at 4 percent and 8 percent, respectively. heightened demand for branded jewellery.
as 50 to 100 percent over the four-year period.2

Global luxury goods market growth drivers, 2019-2023 CAGR,b % Retail sales 2023, 2019-2023 CAGR, % Retail sales 2023,
2019-2023,a % USD (billion) USD (billion)

China 18 45 Leather goods 8 79

US 82 Jewellery 8 56
6
Beauty 6 20
Europe 2 97
Wellnessc 6 20
South Korea 8 12
Watches 5 42
Japan 4 23
Traveld 239
~80%
5
~20% UAE 3 5
Home décore 5 20-25

Price Volume RoW 4 102 Apparelf 3 147

increases increases
c. Includes only luxury spas
d. Luxury accommodation (>$500 per night)
a. Includes apparel, footwear, leather goods, beauty, and watches e. Global luxury furniture market, incl. residential and commercial
and jewellery f. Includes ready-to-wear (+3% 2019-23 CAGR) and footwear (+2%)
Source: McKinsey analysis based on Euromonitor, BofA Global b. Includes apparel, footwear, leather goods, and watches and Source: McKinsey State of Luxury analysis based on MGFI in The
Research, Julius Bär Global Wealth Report 2024, Citi Research jewellery State of Fashion 2025, McKinsey State of Tourism and Travel
estimates Source: Euromonitor 2024, Global Wellness Institute, Euromonitor

The State of Fashion: Luxury 13

 01. Market Backdrop

In
In this
this period of rapid
period of rapid expansion,
expansion,the
theindustry
industry
experienced transformationalchanges
experienced transformational changes
@Amy remove the background shading and maybe change style to match something like page
move the numbering of the shifts across the two pages?
52? -> out aim is to distinct this page visually from the 10 themes in SoF
MARKET BACKDROP: HOW THE INDUSTRY CHANGED
INDUSTRY SHIFTS @Amy change ”industry shifts” to “Market backdrop: How the industry changed”
Megabrand Scaled-up operations Omnichannel Rapid footprint Vertical integration
ange Scaled-up operations
acceleration Vertical integration Omnichannel
adoption Rapid footprint
expansion Megabrand
acceleration expansion dominance
The industry saw increased Several luxury brands have Omnichannel expansion Brands significantly expanded Some luxury companies
polarisation,
Several luxurywithbrands have doubled
Some in sizecompanies
luxury since 2019, in and increased expansion
Omnichannel digitisation,and their store
Brands footprints in
significantly Thehave madesaw
industry significant
increased
ou “megabrands”
doubled in sizethatsince
generate
2019, have made significant into
part through expansions partially
increased
@Amy: In
fuelled by the
digitisation,
point 3,
recent years,
expanded their with a particular
store investments
polarisation,
@Amy: In
in vertical
with
point 5,control
over €5 billionsubstantial
($5.3 billion) new luxury goods categories pandemic, has influenced focus on the Americas (with integration to better
age on demanding investments in vertical partially fuelled by the footprints in recent years, “megabrands” that
annually growing sales at 11 and adjacencies, demanding changedistribution
brands’ the title to luxury footprints growing change
their supply chains,to
the title acquiring
upgrades to their supply integration to better control pandemic, has influenced with a particular focus on generate over €5 billion
percent per year, outpacing substantial upgrades to their ”Expanded
strategies, requiring a blend 6 percent between 2019 ”Megabrand
suppliers and distributors
chains and operating their supply chains, brands’ distribution the Americas (with luxury ($5.3 billion) annually
the broader market at 5 supply chains and operating of digital and physical
distribution” and 2023), East Asia (5 and developing in-house
acceleration”
models.
percent This2019
from includes
to 2023.3 acquiring suppliers
models. This includesand
more strategies,
experiencesrequiring
to meet a blend footprints growing
percent) and 6 China
Greater growing sales at 11capabilities.
manufacturing percent
ve more sophisticated distributors and developing of digital and physical percent between 2019 and perThis
year,has
outpacing the
LVMH’s acquisition of sophisticated processes to expectations for seamless, (3 percent). Brands such as enabled greater
9, in processes
Tiffany toEstee
& Co., scaleLauder in-house manufacturing
scale effectively and address experiences
personalisedto meet
shopping. 2023), East
Moncler Asia (5more
opened percent)
than broader market
control at 5
over product
into effectively acquisition
Companies’ and address of capabilities. This has
growing concerns for more expectations for seamless, and
130Greater China (3
stores globally over the percent from
quality, 2019
order to
volumes and
ries growing
Tom concerns
Ford and Kering’sforstake sustainable
enabled and ethical
greater control over personalised shopping. percent). Brands
2019 to 2023 such
period. 6
as environmental
2023. 7 and social
LVMH’s acquisition
ding inmore
Valentino also consolidated
sustainable and operations.
product quality, order The proportion of Moncler opened more than impact,&while
of Tiffany Co., optimising
Estee
the industry.
ethical
4
operations. volumes and environmental luxury sales that 130 stores globally over the margins.
Lauder
7
Companies’
heir Some luxury and social impact, while are digitally 2019 to 2023 period.6 acquisition of Tom Ford and
ing brands have optimising margins.3 influenced Kering’s stake in Valentino
doubled in size also consolidated the
since 2019
~80%
industry.8

2x 2x +6% >20
2x 118 ~80% +6% 2x
2
Megabrands
Some luxury grew at twice
brands Some luxury brands have The proportion of luxury sales Growthin
Growth inluxury
luxury retail
retail Investmentsgrew
Megabrands into and
at twice
Production facilities of luxury salesinfluenced
are digitally
the rate of the market doubled in size since 2019 that are digitally 5
footprints in the Americas acquisitions of manufacturers by
doubled in size since 2019 owned by LVMH in France footprints in the Americas theluxury
rate of the market
between 2019 and 2023 influenced5 from 2019 to 2023 brands from 2019 to 20238
in 20234 from 2019 to 2023 between 2019 and 2023

Source: Bernstein
Source: Bernstein “Retail
“Retail escalation”
escalation” 2023press
2023 report, report, press search
search

The State of Fashion: Luxury 14

01. Market Backdrop

Luxury customer expectations also evolved as the

industry widened its reach

MARKET BACKDROP: HOW THE INDUSTRY CHANGED

Always-on marketing Talent reshuffling Increased luxury Newness at the speed Demand for ethics
exposure of social media and sustainability
With a focus on always-on, For some fashion brands, Luxury’s increased supply, Faster trend cycles and In the wake of supply chain
digital-first marketing strategies, there has been a progressive marketing investments and instant access to brand scandals surrounding luxury
including activations that span shift in creative direction growing customer base have content on social media brands, luxury clients have
throughout the year and across away from brand heritage and increased the visibility of gave rise to a persistent shown increased scepticism
channels, luxury brands have towards the individual vision luxury products. Diffusion demand for newness. about ethical manufacturing
invested significantly in their of creative directors, which lines, luxury beauty and Luxury brands increasingly in the industry. At the same
visibility to amplify reach may impact brand identity and hospitality as well as the rapid turned to collaborations, time, customers reproach
and break free from seasonal performance in the long term.9 growth of resale have further product “drops” and brand many luxury brands online
marketing cycles. Some Meanwhile, the luxury C-suite propelled the sector’s exposure. ambassadors to meet the for greenwashing and excess
luxury brands dialled up their saw talent reshuffle. Among Today, more people than ever constant demand for novelty. inventory remains a challenge.
marketing budgets as a result. the top 15 global personal can buy into luxury, meaning However, these strategies While sustainability may
luxury brands, 10 new CEOs luxury goods no longer offer risk blurring the brand’s not play a central role in
have been appointed in the exclusivity and allure in the core identity and potentially purchasing decisions for most,
last three years.a way they used to. Brands need distancing it from its ethics and sustainability
other ways to generate the historical client base. threaten luxury’s promise of
desirability that underpins the ethical craftmanship.

10
luxury brand proposition.

1.5x 15 2–4 48%

+35% months
Growth in some luxury Number of CEOs at the top Increase in Instagram followers The average length of The share of customers who
marketing budgets to enable luxury brands who were newly for the 10 most-followed luxury a trend’s peak10 say sustainability is a top factor
always-on marketing appointed from 2019 to 2023 brands between 2019 and 2023 when buying a luxury watch11

a. Companies include three largest conglomerates (LVMH, Richemont, Kering) and 12 largest brands based on 2023 annual revenues
Source: Press search

The State of Fashion: Luxury 15

01. Market Backdrop

Prada: Growing in a
Luxury Downturn
Chief executive Andrea Guerra discusses how Prada and
Miu Miu — luxury’s ‘cultural brands’ par excellence —
continue to outperform the market, what’s behind the
slowdown in luxury demand and an industry outlook
for 2025.

BY ROBERT WILLIAMS

After years of struggling to parley its fashion The brand is staying in the spotlight with fashion Kering are reporting slipping sales. The brand has
authority into topline growth, Prada Group shows that continue to spark conversation online, as raised prices — dramatically in some cases — but
reported its best-ever year in business in 2022. well as cultural activations like literary talks, pop-up has yet to be punished by customers, who continue
Since then, it’s continued to outperform rivals, bookshops and a multi-layered art installation that to splash out on both seasonal items and bestsellers
reporting surging sales even as the broader luxury served as the backdrop for its latest runway and a like its Galleria tote bag and nylon rucksacks.
market slowed, entering a downturn in 2024. series of performances during Art Basel Paris. “We
believe working on the cultural aspects of society is Guerra — who previously led Luxottica, Eataly and
Miu Miu, which has powered much of the group’s essential for our two brands to survive in the long LVMH’s hospitality division — is Prada Group’s
recent growth, roughly doubled its sales throughout term,” the group’s CEO Andrea Guerra says. first chief executive from outside its founding
most of last year with a retooled offering of family. He’s piloted the Milanese fashion empire
subversive yet wearable designs that have The group’s flagship Prada brand has also since 2023 as it seeks to make progress on its
succeeded in engaging a broad sisterhood of continued to grow, although at a more moderate succession plans and keep outperforming
shoppers, spanning ages and nationalities. pace, at a time when rival luxury giants LVMH and competitors in a rocky luxury market.

The State of Fashion: Luxury 16

01. Market Backdrop

Miu Miu continued to report creativity, design, communication and that week. We never just put a label or Not many brands are capable of that.
spectacular performance throughout management. And a strong link tag on an event. Either we are part of
2024, even as the industry slowed between the creativity, the image and something or we don't do it. Those activities you’re speaking
overall. How can you explain this the company. This is one of the most about in art, architecture, sports are
success? important “positive tensions” you It’s like with Luna Rossa of Prada [the so closely tied to Mrs Prada and Mr
Miu Miu has always been very need in this industry — and which you Italian sailing team for the America’s Bertelli's interests, in a very
respected and very credible. But for a don’t necessarily see in all brands Cup]. It’s our team. Or we could talk personal way. You've been brought
few years the business strayed a bit today. about the Fondazione Prada — it’s our in to help guide the company's
too far from the brand. Everything on museum. succession. How do you think about
the runway and in the branding was Going into 2025, how are you scaling up and taking forward these
still very precise, but this wasn’t thinking about solidifying and So those are deep engagements, even cultural messages within the
always represented in the products, in supporting Miu Miu’s business after if rather varied. Is this what you framework of a succession plan?
stores. Since around three years ago such rapid growth? meant in your most recent earnings We are on a long journey. Our two
we’ve put everything back in line, and Firstly, we’re not talking about great- call, when you talked about building founders are still very young in spirit.
this is the success story. huge absolute numbers. So it's easier “polyhedric brand equity”? They work seven days a week,
to imagine how we’ve been doing plus We believe working on the cultural thinking about the future of their
It’s also about hitting something 50 [percent] or doubling. aspects of society is essential for our brands in terms of decades.
specific in society, linking your brand two brands to survive in the long
and products and identity to what Next we’ll add degrees of masochism: term. We are carving culture, carving It’s very unusual for an Italian
consumers are looking for. analysing whatever weak signals society. If you look at our stores, company to lay out a plan for
come from the market, competing they’re really an open door to generational transition, where the
A lot of customers are certainly with ourselves even more. For our understand where architecture is family is saying: we will remain
responding to that clear, creative branding and creativity, we’ll do the going, where art is going, where independent, Lorenzo [Bertelli, son of
identity at Miu Miu — is that a big same, but always more credible, more engineering is going. That’s what the Patrizio Bertelli and Miuccia Prada]
part of why it’s been such an outlier? impactful. It’s about doing things world of Prada represents. is the boss, Lorenzo is the person who
Does luxury have a creativity which are a bit bigger, but not will manage this in the long term, and
problem? necessarily louder. The Prada brand is credible from it's clear for everyone.
The industry is at a turning point: you sports, to culture, to the arts — these
have turmoil in creativity, turmoil in What we did with our runway show aspects that can reach very different If you look from 50 kilometres above,
companies’ leadership, and for the and during Art Basel Paris gives you typologies of consumers and the journey looks like a Californian
first time in years, you have some an idea of how strong Miu Miu’s attitudes. We are as relevant as a highway, huge and open. If you come
negative numbers like the industry cultural roots are in art and cinema. lifestyle brand as we are for a closer, sometimes it seems more like a
has never seen. This installation — a collaboration glamorous night. So Prada is naturally mountain road.
between the brand, Mrs Prada and “polyhedric” [many-sided]: it's a living
The brands with positive [growth] in Polish artist [Goshka Macuga] — was element that is able to address and Looking at the Prada brand, I know
2024 all have a long-term view on one of the most-seen events in Paris live in very different parts of your life. there’s been a big focus the past few

The State of Fashion: Luxury 17

01. Market Backdrop

years on retail execution. Tell us company, but not necessarily the best behave, to get excited with us. They have been changing their creative
about that. in customer relationships. want to have experiences that make directors, their CEOs, as there is a
Stores are a tool for something that the Prada brand alive. That is what we shift and turning point.
has completely changed in the last six, We are placing a lot of importance on have been focusing on.
seven years at Prada, which is our the experience in stores because they The sector has probably been a bit
relationship with the Prada consumer are the epicentre of that relationship. How do you filter this approach spoilt by leather goods. Leather goods
or potential consumers. We have People don’t just want a tag, people throughout the culture of an have increased in volume, increased
always been a very brand-orientated, want to live inside a brand. They want organisation as big as Prada Group? in prices, and are an easier business
image-orientated, product-orientated to know what we think, how we This is another long-term journey. It’s than ready-to-wear or footwear —
about training your own people — there is no sizing. In certain cases,
allowing them to understand that this there has been hyperinflation [in
is an opportunity to evolve — along handbag pricing] which was not
with inserting some people from linked to the value of the dream you
outside [the company] who know how were giving consumers. On the other
to do these things from a master point side, maybe the consumer said, I have
of view. too many bags in my closet. Maybe
I’m going to have a cruise; I’m going
Brands across the luxury sector are to have a holiday in a hyper luxury
dealing with weak consumer hotel. But I still think that’s cyclical,
sentiment in key economies and the and that the sector by definition will
lingering impact of inflation. What continue to grow.
else has been driving luxury’s
downturn? Do you see it as mainly What’s been driving this
coming from cyclical, macro- hyperinflation in prices? What can
economic pressures or is there brands do about it now?
something deeper at play? Prices haven’t just gone up in a
There are a couple of very specific useless manner. There are segments
challenges, the first being China. We of the market where the products,
believe in the long-term [potential] of dreams, experiences really allowed
Chinese consumers and China — for higher prices. But some brands
strongly — but 2024 and I think part who increased prices, who abandoned
of 2025 will not be easy in that part of their aspirational customers, probably
the world. should have remained more calm.

There’s also a cycle that’s more There is only one real solution, which
specific [to luxury]. Many companies is allowing your brands to make
Miu Miu models. Spotlight/Launchmetrics.
Miu Miu models. Spotlight/Launchmetrics.

18
01. Market Backdrop

people dream, having products which more generally? people to dream. So this is what we next generation [of customers] to
are credible, and granting 2025 will be, at least for the first six have to do. The more we can dream, dream with us.
experiences to your consumers that months, a tough year, as the last 12 to the more we’re linked to society and
are totally unique. 15 months have been. Demand is still culture, the more we can allow our This interview has been edited and condensed.

there; people are still wishing and

The most important thing at dreaming about luxury. At Prada,
whatever price you’re selling is not to we’ll need to do an even better job in
betray your core consumers. They order to keep growing over the
always need to find your world industry average and gaining back the
comfortable for them. market share I think we deserve.

What does this shift to spending on Prada Group, Zegna and Brunello
experiences mean for luxury? Cucinelli have all outperformed the
We are seeing, especially since Covid, market in recent quarters. But
an explosion in that experiential competing for market share is
luxury world. Hotels, cruises, food. historically tough for independent
What’s good about that is it’s still part companies. How can you keep up
of the luxury industry — getting larger with conglomerates like LVMH in
and with stronger assets and stronger the long term?
pillars.
It’s tough to work in an industry
Borders are blurring; walls are where there are such powerful,
coming down. So we’re all competing wealthy giants. We need to have very
— on heart shares, on pocket or wallet good ideas. We need to be quicker.
shares. Shall I spend thousands of We need to be different. We need to
dollars on a vacation or on a product? have a closer relationship with our
Can we put certain things together? counterparts so we can maybe
There are bits and pieces of understand before others how to deal
hospitality coming into personal with communication, real estate,
products, and vice-versa. I think that landlords. We have to do things more
will be the fun part of the next 10 simply and more quickly, to be a little
years. more clever.

So you see China remaining You’re still very optimistic about the
complicated into next year. How do industry’s potential. Why?
Prada
PradaLuna
LunaRossa.
Rossa.Shutterstock.
you expect luxury demand to evolve Our brands really are here to allow Shutterstock.

The State of Fashion: Luxury 19

MARKET OUTLOOK

The industry is now at a

critical inflection point

• After a period of rapid expansion, the sector is facing a significant

+1-3%
slowdown. Macroeconomic factors and a decline in customer global luxury market
spending impacted luxury’s core markets. China’s domestic luxury growth expected between
market slowed significantly.
2024 and 2025
• Meanwhile, steep price increases without corresponding product
innovation, amid diminished cultural cachet and reports of
declining quality and labour exploitation, have brought into

+2-4%
question the “value” — both real and perceived — of luxury goods. global luxury market growth
• Brands can no longer rely on steep price increases. Instead, many expected per year between
luxury executives intend to increase sales volumes to grow their 2025 and 2027
businesses — but higher volumes of production are at odds with
both sustainability goals as well as luxury exclusivity.
• Among personal luxury goods categories, leather goods and

+4-6%
jewellery are poised for the fastest growth at 4 to 6 percent per luxury jewellery and leather
year between 2025 and 2027. Leather goods will continue to be goods growth expected per
purchased as investment pieces, while jewellery sales will benefit year between 2025 and 2027
from a younger and more diverse client base.

A luxury department store. Getty Images.

02. Market Outlook

Luxury executives have a more pessimistic

outlook on the industry than last year
Several factors are driving increased pessimism Question: How will conditions evolve for the fashion industry in [year], in your view?,
% of luxury executives
among luxury executives for the year ahead:

• Ongoing economic instability in China is Overall sentiment (net intent),a -29 -15 -22
impacting consumer confidence and spending. Percentage points

• Import tariffs could affect the US economy.

Tariff proposals could reduce US spending by
between $46 billion and $78 billion per year.12

• Aspirational shoppers are toning down their 40 43

luxury spend due to the macroeconomic
Worse 58
environment.

• Retail footprint expansion is decelerating in line

with the market slowdown. Similarly,
multibrand retail is facing headwinds thanks to
department store closures and luxury 35
36
e-commerce profitability struggles.
Same 23
• Luxury brands are prioritising cost efficiencies
amid slower sales growth. Luxury executives
expect to tighten control on marketing spend
and headcount expenses to safeguard 25
Better 19 21
profitability.

2023 2024 2025

a. Net intent calculated as the difference between the % of respondents who rated industry conditions next year as better and the % of respondents who rated them as worse
Source: BoF-McKinsey State of Fashion 2025 Executive Survey (conducted in August 2024), Beyond Boundaries: Redefining Aspirational Luxury Consumers (McKinsey, April 2024), National Retail Federation

The State of Fashion: Luxury 21

02. Market Outlook

Global luxury sector growth slowed considerably

in 2024 and will be modest in the years ahead
Global personal luxury goods market by region, 2019-2027E,
USD (billion) Year-on-year growth by region, 2019-2027E

Global year-on-
year growth -18% +26% +9% +9% +0-2% +1-3% +2-4% +3-5% 2019- 2023- 2024E- 2025E-
2023 2024E 2025E 2027E
2-4% CAGR

365-375
350-360 4% 4-6% 2-4% 2-4%
335-345
320-330 330-340
295-305

265-275 270-280
18% -7-5% -3-0% 3-5%
215-225
RoW

China
6% 1-3% 3-5% 4-6%
US

Europea 2% 0-2% 1-3% 2-4%

2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E

a. Includes Russia
Note: Includes luxury apparel, footwear, leather goods, watches and jewellery
Source: McKinsey State of Luxury forecasts, based on McKinsey Global Fashion Index in The State of Fashion 2025, McKinsey Global Institute, Euromonitor historicals, ECB, Savills, Trading Economics, analyst
reports, company results, expert interviews

The State of Fashion: Luxury 22

02. Market Outlook

The US is forecast to become luxury’s growth

engine, thanks to favourable economic factors
Luxury market growth, 2025E-2027E

EUROPE US CHINA ROW

2-4% 4-6% 3-5% 2-4%

Key growth drivers and barriers by geography

• Positive outlook, with decreasing • Decreasing inflation rates and • Growth expected to pick up in • The luxury markets in Japan, the
inflation rates.13 increasing disposable incomes, late 2025 due to government Middle East and India are
boosting appetite for luxury from initiatives and macro factors. expected to provide growth
• Rebound of international luxury middle-class shoppers.16 UHNWI population is predicted hotspots, thanks to growing
tourism, especially from China. to grow 8 percent per year customer bases and
In the first quarter of 2024, • Increasing UHNWI population, between 2023 and 2028.18 There infrastructure as well as
foreign arrivals to European growing at 5 percent annually is also potential in underserved favourable economic
destinations were 7.2 percent between 2023 and 2028.17 wealth centres such as Wuhan conditions.21 22
above 2019 levels. They are and Hangzhou.19
expected to grow by 8 percent • Reduced uncertainty after the • Emerging markets in APAC,
per year between 2024 and US presidential election in • International personal luxury including Indonesia and
2026.14 November 2024, leading to goods spend is expected to Thailand, will benefit from rapid
accelerated growth after 2025. increase by 12 to 17 percentage economic development,
• Recovering but low consumer points over 2023 to 2025, urbanisation and growth in
confidence. The Consumer • Employment uncertainty negatively impacting domestic middle- and high-income
Confidence Indexa was at 98.9 in following headcount cuts in spend. consumer groups.23
2024, but down from 109.2 in sectors with high concentration
2021.15 of aspirational shoppers, such as • Record-low consumer and
tech and banking. investor confidence. The
Consumer Confidence Indexa
was at 86.2 in July 2024,
significantly down from 127 in
2021.20
a. Consumer Confidence Index Indexed at 2005 = 100
Source: McKinsey State of Luxury forecasts, based on McKinsey Global Fashion Index in The State of Fashion 2025, McKinsey Global Institute, Euromonitor historicals, ECB, Savills, Trading Economics, analyst
reports, company results, expert interviews

The State of Fashion: Luxury 23

02. Market Outlook

Smaller luxury markets will continue to provide

dynamic pockets of growth for brands
The Japanese luxury market is expected to grow between 6 and 10 percent in Personal luxury goods market growth by region, 2019-2027E,
2025, retaining its position as a core luxury market, driven by both solid %
domestic demand and tourism spend:
Middle East
• Japan is home to the second-largest number of UHNWIs in Asia, which is
expected to grow by more than 12 percent from 2023 to 2028. RoW market share
2023,
• The sustained appeal of Japan as a travel destination and favourable %
Japan India Other RoW
foreign exchange dynamics will buoy inbound tourism, though this trend
may be impacted by the yen’s trajectory. The Japan Tourism Agency
expects annual tourism spend to reach around $100 billion by 2030. Japan Middle East India

The Middle Eastern luxury market will continue its positive trajectory, 2019-2023 CAGR,
% 4 4
growing 3 to 7 percent in 2025.
• The HNWI population is expected to grow 15 percent per year between -1
2022 and 2035 in both KSA and UAE. 13-15

• Significant investments in residential and commercial real estate are 2023-2024E, 5-7 5-8
%
planned (e.g. the opening of Amaala’s 25-hotel luxury complex, the
planned 120 percent increase in branded residences by 2030, the Mall of
Saudi in Riyadh in 2025), fuelling domestic and international spend.24 15-20
The Indian luxury market is expected to grow between 15 and 20 percent in 2024E-2025E, 6-10
2025, fuelled by demographic and structural shifts. 3-7
%

• India’s UHNWI population is expected to grow 50 percent from 2023 to

2028, making it the fastest-growing UHNWI population globally. 10-15
• New luxury malls and department stores, such as the Jio World Plaza and 2025E-2027E CAGR, 3-6 3-7
Galeries Lafayette, are increasing luxury real estate in tier-one cities. %

• Newly increased taxes on imported goods over INR 700,000 ($8,400) are Note: Luxury includes ready-to-wear and footwear, leather goods, watches and jewellery.
Estimates reflect macroeconomic context as of December 2024 and are highly volatile due to
expected to encourage domestic spending, although the domestic Goods FX and tariff uncertainty
and Services tax on luxury goods remains high at 28 percent. Source: McKinsey State of Luxury forecasts, based on McKinsey Global Fashion Index in The State of
Fashion 2025, McKinsey Global Institute, Euromonitor historicals, ECB, Savills, Trading Economics,
analyst reports, company results, expert interviews

The State of Fashion: Luxury 24

02. Market Outlook

Jewellery and leather goods are expected to be the

most resilient categories through 2027
Global personal luxury goods market by category, 2019-2027E,
USD (billion) Year-on-year growth by category, 2019-2027E

Total market
year-on-year -18% +26% +9% +9% +0-2% +1-3% +2-4% +3-5% 2019- 2023- 2024E- 2025E-
growth 2023 2024E 2025E 2027E

2-4 % CAGR

365-375 5% -2-0% 0-2% 2-4%

350-360
335-345
320-330 330-340
295-305

265-275 270-280
8% 2-4% 3-5% 4-6%
Watches
215-225
Jewellery

Leather 8% 1-3% 1-3% 4-6%

goods

Apparel &
Footweara 3% 0-2% 1-3% 2-4%

2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E

a. Includes designer apparel and footwear
Source: McKinsey State of Luxury forecasts, based on McKinsey Global Fashion Index in The State of Fashion 2025, McKinsey Global Institute, Euromonitor historicals, ECB, Savills, Trading Economics, analyst
reports, company results, expert interviews

The State of Fashion: Luxury 25

02. Market Outlook

With historical levers exhausted, performance

across categories will be mixed
Luxury category growth, 2025E-2027E

LUXURY LUXURY LUXURY LUXURY

APPAREL & FOOTWEAR LEATHER GOODS WATCHES JEWELLERY
2-4% 4-6% 2-4% 4-6%

Key growth drivers and barriers by category

Sustained appetite to spend on Short-term resilience of iconic Increased production capacity of Rising demand from ultra-high
fashion for special occasions, products, seen by clients as the Big Three (Patek Philippe, spenders and continuous
such as events or weddings.25 holding value over time (e.g. Audemars Piguet, Rolex) investment from luxury houses
Hermès Birkin).26 expected 2024 to 2029.27 into technology and expertise.
Increased desirability of new
apparel-focused brands with Sustained demand for luxury Increased availability following Shift of customer preferences
minimalist styles, such as Khaite, gifting, often for special changes to product distribution, from non-branded to branded
Lemaire and The Row. occasions. with multibrand retail sales jewellery.30
associates acting as a “concierge”
Decreased spend from Mixing of luxury accessories as Younger, diverse clientele
to clients, securing coveted
aspirational customers given statement pieces with non- purchasing jewellery, with new
products.
luxury items. gifting occasions and genderless
reduced disposable income, with
a greater impact on luxury Opportunity to create exclusivity Continuous decline of traditional collections.31
footwear than luxury apparel. watch-wearing due to
through limited editions and Uncertainty over the impact of
competition from smart and
Competition from the personalisation. lab-grown diamonds on the
sports watches.28
market for natural stones.32
secondhand market. Limited ability to substantially
Reduced speculation (buying
raise prices following years of Unclear evolution of bridal-
price increases. watches to sell for a profit) for related demand following years
iconic watches.29
of post-pandemic rebound.
Competition from the
Increased competition from pre-
secondhand market.
owned market, putting
downward pressure on prices.
Source: McKinsey State of Luxury forecasts, based on McKinsey Global Fashion Index in The State of Fashion 2025, McKinsey Global Institute, Euromonitor historicals, ECB, Savills, Trading Economics, analyst
reports, company results, expert interviews

The State of Fashion: Luxury 26

02. Market Outlook

Executives expect to drive more growth through

volume increases rather than price in 2025
Question: What do you expect your company’s Question: How much do you expect to increase/ Question: How much do you expect to increase/
sales growth to be in 2025 compared to 2024 decrease your retail sales price on average across decrease your like-for-like retail sales volume on
globally? all products/categories next year, if at all? average across all products/categories next year,
% of luxury respondentsa % if at all?
%

Overall growth Driven by price Driven by volume

More than 10% 26 More than 11% 3 More than 11% 16

5% to 9% 24 6% to 10% 13
55% 6% to 10% 19
66%
0% to 4% 28 1% to 5% 39 1% to 5% 31

No change 7 No change 33 No change 15

-4% to 0% 14 -4% to 0% 6 -4% to 0% 12

-5% or less 2 -5% or less 7 -5% or less 6

a. Results based on executives of luxury and affordable luxury companies

Source: BoF-McKinsey State of Fashion 2025 Executive Survey (conducted in August 2024)

The State of Fashion: Luxury 27

02. Market Outlook

Top-spending clients will create 65 to 80 percent

of global market growth through to 2027
Global luxury personal goods and experiences market by customer segment
Very important clients (or VICs) will be central to
Share of growth, Market size,a 2023, Share of market
2023-2027E, USD (billion) volume, 2023, luxury brand growth in the coming years, as these
% % of individuals ultra-high spenders are less impacted by slower
market conditions than aspirational shoppers.
65-80%
Ultra-high spenders High spenders and above make up only 2 to 4
15-20% ~70-105 (10-15%) 0-1
(annual spend: >€70k)
percent of the luxury client base but currently
account for 30 to 40 percent of the market's spend
and are projected to drive 65 to 80 percent of
High spenders growth from 2023 to 2027.
50-60% ~140-175 (20-25%) 2-3
(annual spend: €10k-70k)
Concentrating on this smaller pool of potential
clients means competition between brands vying
Aspirational luxury spenders
5-12
for customers’ attention will be high. Brands should
10-15% ~105-140 (15-20%)
(annual spend: €3k-10k) differentiate their offerings as much as possible and
create robust customer engagement engines.

Other To capture growth in the years ahead, brands

10-15% ~315-350 (45-50%) 80-85
(annual spend: <€3k) should continue to focus on the top-spending client
segments, while also investing strategically in
building relationships with aspirational and other
spenders, who account for around 60 to 70 percent
Overall market 1-3% ~600-800 100
of total spend.

a. Market values for luxury personal goods (designer apparel, leather goods, jewellery and watches) from McKinsey State of Luxury 2024; model for luxury travel and hospitality from McKinsey State of Travel 2024,
Global Wellness Institute for luxury spas, McKinsey State of Beauty 2024 for luxury beauty, Fortune Business Insight for premium home and décor
Source: McKinsey State of Luxury analysis, based on McKinsey State of Tourism and Hospitality 2024, Knight Frank, Wealth-X, Credit Suisse/UBS, Capgemini, Global Blue Shopping Report, Project Max Travel
Advisor Surveys (October and November 2023), Beyond Boundaries: Redefining Aspirational Luxury Consumers (McKinsey, April 2024), McKinsey State of Beauty, Global Wellness Institute, Fortune Business
Insight, expert interviews

The State of Fashion: Luxury 28

02. Market Outlook

Piaget: Powering Up
Icons
The Richemont-owned jewellery and watch brand is enjoying
imepiece
newfound momentum after relaunching its Polo 79 timepiece
mour of its
— part of a broader programme to reactivate the glamour
jet-set glory days. CEO Benjamin Comar shares his vision for
ncrease
how Swiss watchmakers can reach new clients and increase
ury.
their desirability in a challenging market for hard luxury.
BY ROBIN SWITHINBANK

In 2024, the value of Swiss watch exports slipped to grow and consolidate its position as the industry’s and elegance.
after two years of record sales in 2022 and 2023. engine room, as did Japan, Korea and India.
Brands battled the lingering effects of inflation In February 2024, Piaget reintroduced one of its
across key markets, a sustained deterioration in For luxury watchmakers, the challenge is to most iconic designs, the Polo 79 grooved gold sports
Chinese demand and a challenging geopolitical increase desirability and market share in a shrinking watch that crystallised the jet-set glamour
climate amid conflicts in Ukraine and the Middle market. associated with the brand in the late 1970s. Under
East. Volumes also continued to slide: Despite a its then-leader Yves Piaget (great-grandson of the
bump from Swatch and Omega’s MoonSwatch Benjamin Comar was appointed chief executive of company’s founder), the brand fostered a
(estimated to shift around 1.5 million units a year), Richemont-owned watch and jewellery brand community of illustrious A-listers including
the number of Swiss watches exported each year Piaget in 2021 after stints at Cartier, Repossi and Jacqueline Kennedy Onassis, Elizabeth Taylor,
has roughly halved since 2015. Chanel. Comar has positioned the 150-year-old Sophia Loren and Andy Warhol — a “Piaget
Genevan company around what he calls Society” which Comar hopes to recreate today.
There were signs of life, though. The US continued “extrelegance” — products that marry extravagance

The State of Fashion: Luxury 29

02. Market Outlook

The relaunched Polo 79 won the on year. What factors are driving
Iconic Watch Prize at the Grand Prix this downturn?
d’Horlogerie de Genève in November. In business terms, it’s been a
The same month, the company complicated year, especially in China,
announced a new collection inspired which is suffering. This is the same for
by another 1970s design: a dress the watch industry in general. But [at
watch with a stepped, TV-shaped case Piaget] we’ve compensated for this
known for its association to Andy with [growth in] other markets.
Warhol.
Do you expect this downturn to
Comar outlines his vision for continue in 2025?
reactivating Piaget’s heritage and I’m an optimist. My gut feeling is that
evolving its business to power growth it will get better. You have to work to
in a challenging market. get out of the situation as fast as
possible with products that seduce
Piaget just celebrated its 150th people. We’re in a moment of Polo 79 watch. Piaget.
anniversary. How did you activate reconnecting with our true client
this milestone and what results did base, so I have high hopes. Where do you see the most potential Prices of luxury Swiss watches have
you observe? for the industry to grow? soared since the pandemic. It’s been
It’s been a year of reinstating the Can the industry bounce back I’d say Southeast Asia, Korea. The reported that consumers are
brand’s real DNA and codes. This has without China? Middle East will continue to do well. suffering from pricing fatigue. Have
created momentum and the results Yes, because over-exposure to China And obviously the US, which I think you witnessed this?
have been great. is behind us now. can still grow a lot more. For Europe, The valuation of the Swiss franc has
let’s stay cautious. We have high hopes not been easy for everyone [in
We’ve staged a touring exhibition of The story towards the end of 2024 in India, which is starting to grow. watchmaking], but even if your costs
vintage pieces, which showed the was of brands resorting to furlough increase, you have to respect your
continuity of creation at Piaget. We schemes and cancelling orders, and The Swiss franc remains strong. customers.
also revisited some of the great retailers selling back inventory to How will this shape the industry in
watches with the update of the Polo manufacturers. Is that your 2025? Richemont has invested heavily in
79, the Andy Warhol collection and experience? From what I read, it’s expected to retail and DTC distribution in recent
Altiplano Ultimate Concept We are less exposed to returns weaken. But when a product is 100 years. How successful has this
Tourbillon. because we have much more [direct- percent made in Switzerland, and transition been? How will this
to-consumer (DTC)] retail than most when the percentage of manpower in strategy shape the next five years?
In its most recent report, watch brands. So we don’t have the the value of a watch is high, obviously We are majority retail, but I like the
Richemont’s watch division same phenomena. your costs increase [when the Swiss balance we have between direct-to-
reported sales down 17 percent year franc is strong]. consumer and partnerships with

The State of Fashion: Luxury 30

02. Market Outlook

retailers. It helps you take the Changes in regulation mean that by secondary market values decline. Warhol Foundation in your case, to
temperature. In your own retail, you the end of the decade, large Swiss What plans do you have in this amplify your position?
can showcase your world and in our companies will be obliged to adhere space? I wouldn’t say “vital.” It’s not a full-
case that we’re a multi-faceted brand to the EU’s new sustainability I have no formal plans, but it’s time strategy. If you do it, it has to be
with watches, jewellery, high reporting rules. How will this shape something we’re looking at. We’re very adapted to your story. For us, the
jewellery, and products for men and your decision-making over the next certainly very proud of what Piaget Andy Warhol watch was an
women. So it’s true that retail is the three to five years, and how are you did in the past. If we do [resale], we’ll officialisation of a name we’ve always
natural way and you get to know your preparing for this now? do it the right way. Prices of Piaget known.
customers through it. But our watches were lower to start with
partners introduce us to people that We’re following the sustainability [than some brands, such as Rolex and Looking ahead to 2025, what are the
we don’t know. We try and work with laws and I think it’s very important we Patek Philippe], so we are happy with industry’s biggest threats and how
them to offer the same level of have to do that. For us, it’s a what’s happening [with Piaget watch will it counter them?
experience for customers so that the [Richemont] group thing and not a prices] on the second-hand market, The threat is to do short-term things
difference between the two is getting brand-by-brand thing and so we work which is helped by the release of the and be too influenced by fashion, and
thinner and thinner. with the group on this. A lot of Polo 79 and the Andy Warhol to do too much. For hard luxury, the
improvement has been made and products. The second-hand of basics are transmissibility, long-term
Experiences are often labelled as a there’s more to be done. tomorrow will be strong, and prices products, value creation and desire.
threat to hard luxury as customers will go up again.
increase spend on travel and leisure. How should the industry adapt to the And what would you say is the watch
How is Piaget responding to behaviours and interests of Gen-Z? In 2024, a large number of new industry’s outlook?
increased demand for experiences? I don’t really like this adapt thing. brands entered the market. Do these The watch industry has cycles. So I
Experience and personal service are Looking forward and tradition aren’t micro-brands pose a challenge to think it will come back. In any case,
of course part of a luxury purchase. against each other. I don’t make establishment players? there’s a dichotomy between East and
For us, we try and make people segmentation about age or regions. A market with no newcomers and no West and most of [the decline] is in
understand what the craftsmanship in Each time I’ve done that over the past innovation is a dying market. So these the Chinese market. And we don’t
our work is about. We do a lot of 30 years, I’ve been wrong. Younger brands are a sign of a healthy market. know what’s going to happen there.
workshops in-store about stone generations are more educated on And they push the big brands to be But already we see that high-ticket
selection, stone-setting, gold and luxury and they are more motivated creative and not sit back in their items continue to do well in China. It
drawing. Sometimes, when you put by emotion than older generations armchairs. Globally they give the won’t be an endless downtrend.
products in advertising, we can lose were. I believe you simply have to be market visibility, and we’re better
the value of what’s behind them. We true to your DNA. Some will like it, when we’re together.
want to reinstate that. We also do some won’t.
workshop visits and give freedom to Cutting through the noise to reach
our local markets to create experiences Younger generations are turning to potential customers remains
that gather people together and create certified pre-owned to find better difficult. How vital is it now to work
good, honest moments. price-to-value ratios, particularly as with collaborators, such as the Andy This interview has been edited and condensed.

The State of Fashion: Luxury 31

CUSTOMER INSIGHTS

Luxury’s promise has fallen

short of expectations

• On top of challenging macroeconomic factors, luxury players

80%
have struggled to keep their promises to customers, primarily
of UHNWIs say they want to
when it comes to quality and price. This is undermining the
perception of exclusivity that is so critical to the luxury model. discover new, niche brands
Luxury brands must uncover what matters to their clients to
reinstate their worth.

• Customers are increasingly opting to trade-off luxury goods

~80%
of HNWIs expect to shift part
purchases for experiences, such as travel and health and
wellness. Time is the greatest luxury of all, and customers
of their spend to experiential
perceive these experiences to enrich their time more than luxury and wellness
expensive items. While a threat to personal luxury goods
growth, it is also an opportunity for brands to evolve their
engagement strategies and portfolio.

36%
of luxury customers
• Customers express high expectations for luxury brands in believe that luxury in-store
terms of both product innovation and in-store experience. experience has worsened
Brands must build capabilities and evolve their operating
models to meet growing expectations.

Shoppers walk by a luxury store. Henry Nicholls/Getty Images.

03. Customer Insights

Luxury’s value equation — and the relationship

between price and quality — is in question
Customers are questioning whether luxury products are worth their high price tags

1 2 3 4 5
Customer brand loyalty
Price increases are Customers increasingly In-store shopping does Customers express
is at risk in the absence
hitting ceilings across of innovation and value experiences over not deliver a consistent concerns around ethical
all customer segments luxury goods luxury experience craftsmanship in luxury
attention to quality

Price increases have Online conversations The majority of luxury While multiple brands The majority of customers
reached levels where some reveal that luxury clients clients say they make more have already made expect luxury brands to
luxury clients no longer express a growing desire frequent trade-offs significant investments to demonstrate high
perceive them to be for novelty, which they find improve the customer sustainability and ethical
between luxury goods and
justified, neither according in emerging brands, as well experience across sourcing standards.
to brand value nor product experiences, such as travel,
as intrinsic product channels, luxury clients Luxury’s recent labour
quality. Social media qualities such as materials, hospitality, and health and continue to report frequent exploitation allegations
analysis suggest that luxury design and craftsmanship. wellness. Whilst pain points associated with further disillusion
clients are vocal about excitement for luxury their shopping experience. customers and undermine
ongoing price increases, In challenging times, goods remains high, the value proposition of
while aspirational clients’ luxury clients also tend to Social media only serves to luxury products.
experiences can be seen as amplify the visibility of
discontent with price favour brands and well- more exclusive and luxury clients’ frustration.
increases is exacerbated by made items they think will personal and can carry
ongoing financial best retain their value more social clout than
constraints. over time.
owning luxury goods.
In search of affordability
and uniqueness, customers
are turning to pre-owned
goods.

The State of Fashion: Luxury 33

03. Customer Insights

1. PRICE

Customers across segments feel price increases

aren’t justified by quality or innovation
Price range for select luxury bags across seven major brands, 2019-2024, USD
Around 80 percent of interviewed UHNW
clientsa express dissatisfaction with ongoing
price increases and many link this to the +55%
discussions of quality and innovation.33
Similarly, 41 percent of social media
conversations related to luxury prices include
frustrations about luxury becoming less
2019 1,320 10,100
affordable amid price increases and intensifying
economic pressures.34
While discontent with luxury prices is relatively
consistent globally, it is even more apparent in
the UAE, where luxury price-related comments
online occur around 4.5x more than the global
average, predominantly focused on price
p
disparities between different markets.35

That’ the catch: the prices have gone

That’s
through the roof while product quality has 2024 2,040 11,400
not necessarily gone in the same direction.
— UHNWI, Europe

You cannot just double the price in a few

+13%
years… luxury does not justify it all.
— UHNWI, Europe

a. UHNWI and HWNI are categorised by Knight Frank as having respectively at least $30m and $1m in assets, including their primary residence
Source: McKinsey State of Luxury Interviews with UHNWI, HNWI and aspirational clients (US, France, China, Japan, South Korea, UAE), of which selected conducted in collaboration with the Luxury Institute,
The Business of Fashion, Marketvision, brand websites as of August 2024, expert interviews

The State of Fashion: Luxury 34

03. Customer Insights

1. PRICE

Brands must rethink their target customer base

and tailor their product portfolio accordingly
Luxury brands are facing a significant ULTRA-HIGH & HIGH SPENDERS ENTIRE LUXURY CLIENT BASE
challenge as they contend with a more diverse
client base, as well as growing disparity in
• Continue to elevate the brand mix
luxury spending power, preferences and
with exclusive limited editions and
expectations. personalised products
To navigate these challenges, luxury brands • Ensure brand consistency across
• Integrate holistically into the lives
need to revisit their target client segments to products, experiences and price
of top spenders through VIP spaces
prioritise which customers they want to points
• Expand into lifestyle categories like
address. They also need to invite new • Create memorable touchpoints both
hospitality or by offering money-
customers to their brand, meeting them in-store and online to build lasting
can’t-buy experiences
through the channels these customers use. emotional connections and brand
loyalty
This involves making strategic decisions on
ASPIRATIONAL SHOPPERS • Inspire customers through
how best to address the unique needs of each
innovative design and marketing
segment and adjusting their price architecture
• Rework product range and price messages that reinforce brand
accordingly, all while protecting brand equity. architecture to cater to shoppers prestige
However, customers do not neatly fit into who have been priced out by recent
static, monolithic segments. To truly price increases
understand their clients, brands must define • Foreground in marketing products
dynamic customer segments that blend at entry price points that enable
demographics, spending habits and aspirational customers to enter the
psychographic attributes. This requires brand’s universe
investing in deep, next-generation insights
across channels to identify and engage
customers effectively.

Source: McKinsey State of Luxury Interviews with UHNWI, HNWI and aspirational clients (US, France, China, Japan, South Korea, UAE), of which selected conducted in collaboration with the Luxury Institute

The State of Fashion: Luxury 35

03. Customer Insights

2. INNOVATION AND QUALITY

Customers flock to innovative brands with

high-quality products and staying power
DESIRE FOR INNOVATION QUALITY AT THE FOREFRONT SEARCH FOR LONGEVITY

80% of UHNWI clients highlight the 37% of online discussions suggest 70% of clients surveyed express
desire to discover new, niche brands that brands that prioritise exclusivity strong loyalty towards established
and mix/match36 and quality are more likely to retain brands40
clients38

I stil
still go for big European brands, I look for inner quality — the I think my spending in fashion
but I also am looking towards finest craftsmanship and detail. will decrease and I will prioritise
local or up-and-coming I care less now about the quality, investing in durable, less
designers with unique designs. ‘premiumness’ of the brand trendy, and timeless pieces.
— UHNWI, China alone. — Aspirational luxury
— UHNWI, US shopper, US

Some clients, especially HNWIs and those who are HNWIs pay attention to intrinsic product qualities, Clients (especially aspirational ones) tend to
less vulnerable to financial difficulty, express a such as quality, design and craftsmanship.39 prioritise brands that hold their value over time.
desire to find novelty and innovation and actively 25 percent of online discussions connect
look for emerging and local designer brands.37 macroeconomic factors and related financial
constraints (e.g. inflation and currency
fluctuations) to a potential decline in brand
loyalty.41

Source: McKinsey State of Luxury Interviews with UHNWI, HNWI and aspirational clients (US, France, China, Japan, South Korea, UAE), of which selected conducted in collaboration with the Luxury Institute,
Quilt.AI analysis for BoF Insights

The State of Fashion: Luxury 36

03. Customer Insights

2. INNOVATION AND QUALITY

For value-minded luxury customers, unique

pre-owned goods make for smart purchases
1 in 3 1 in 2
25 percent of online customer conversations about
luxury resale are linked to an appreciation for the
uniqueness and history of secondhand and vintage
US luxury customers have bought US luxury resale customers luxury. Another 24 percent is related to the
or sold on a resale platform did not enjoy their experience affordability and accessibility of pre-owned luxury
goods.

Top cited reasons: Top cited deterrents: Concerns still exist around authenticity and
• Quest for unique, hard-to-get pieces • Authenticity concerns reliability in resale, however. 20 percent of
Thrill of finding attractive deals conversations revolved around buyers seeking
• • Product quality
reliable platforms that can guarantee the
• Appetite for more sustainable choices • Difficult sales process (e.g. tariffs, duties) authenticity of pre-owned luxury goods.
• Easy checkout flow • Limited supply of most desired products
In countries like the UAE where there is a high level
of scepticism around pre-owned luxury, there is
Chinese clients are increasingly adopting resale, but authenticity, positive sentiment from younger customers and
origin and cultural stigma associated with pre-owned goods remains expats sharing their experiences of buying
affordable luxury through resale platforms.
French clients express deep engagement in resale with a long history Chrono24 and StockX were specifically cited as
of appreciation for vintage and pre-owned goods trusted platforms to purchase authentic pre-owned
luxury.42
UAE clients are the most sceptical about resale, as their purchases are mostly
driven by status and buying resale suggests one cannot afford to buy new

Japanese clients express a relatively high resale adoption rate, with resale
deeply embedded in local culture and aligned with values of sustainability
and minimalism

Source: McKinsey State of Luxury Interviews with UHNWI, HNWI and aspirational clients (US, France, China, Japan, South Korea, UAE), of which selected conducted in collaboration with the Luxury Institute, Quilt.AI
analysis for BoF Insights

The State of Fashion: Luxury 37

 03. Customer Insights

3. GOODS VS EXPERIENCES
EXPERIENCES
3. GOODS VS

As clients shift spend away from luxury goods,

unique on-brand experiences can drive growth
~80%
of HNWIs expect to shift part of their spend to Brands can lean
l into money-can’t-buy experiences to
experiential luxury and wellness generate exclusivity for their top-spending clients

• Among these customers, there is a shared feeling that they have “over- • Offering top-spending customers and UHNWIs exclusive benefits and
consumed” since the pandemic. invitations to closed events fosters a sense of belonging to the high-fashion
community. This provides customers with a newfound sense of value for
• UHNWIs also express excitement to spend more on other categories
their luxury purchases and promotes brand loyalty.
including home décor (~71 percent) and travel and hospitality (~64
percent), and less on personal luxury goods. • These experiences should align with a brand’s values and ethos. Rather
than attempting to do it all, brands should focus on creating experiences
• Clients say they are seeking more ways to enhance their lifestyle, take care
that feel authentic and are deeply connected to what the brand stands for,
of themselves (both physically and emotionally) and share meaningful
ensuring they are an organic extension of its identity.
experiences
exp with their communities.

In three
t to five years, I will spend more money on traveling
and taking care of myself. I’ll probably spend less on
Mytheresa Cartier Max Mara
clothes and jewellery because I want memories that last. invited 30 of its extended hosted a dinner in
top customers to invitations to its the courtyard of
— Aspirational luxury shopper, US
designer Brunello masquerade ball Doge’s Palace in
Cucinelli’s private at the Belvedere Venice inviting its
If I have to spend £10k, I’ll do it on wellness or travel, no 70th birthday palace in Vienna top clients
longer fashion — without hesitation. celebrations for to some clients
family and friends
— HNWI, UK of the brand

Source: McKinsey State of Luxury Interviews with UHNWI, HNWI and aspirational clients (US, France,
F China,
Ch Japan, South Korea, UAE), of which selected conducted in collaboration with the Luxury Institute, The
Business of Fashion

The State of Fashion: Luxury 38

03. Customer Insights

3. GOODS VS EXPERIENCES

Evolving the portfolio beyond luxury goods

EXPERIENCES
GOODS VS
provides new engagement points for brands
Operating profit and level of client acquisition and engagement by product/service category
Luxury executives should consider
Operating profit margin, % of revenues
adjacencies as new growth opportunities
Personal goods Lifestyle
that can play a key role in acquiring new
45 customers. However, leaders must be
Market size 2023, EUR (billion)
aware of the different profitability and cash
dynamics of each category. Travel and
40
hospitality ventures may help brands tap
into customers’ lifestyles more broadly, but
they may also be riskier owing to lower
35 Beauty
profitability. Striking gold in a category
Jewellery Profitability highly dependent on expansion is possible, but it will likely
30 Leather goods chosen operating model (e.g. remain a marketing vehicle for most luxury
licensing, owner and operator) players.
Within large luxury groups, executives
25 Premium home décor
should assess how their own brands could
better engage customers and determine
Ready-to-wear whether new categories or collaborations
20 Watches Luxury spa
can help bridge this gap.

15 Luxury travel & hospitality

10
Low High
Client acquisition and engagement

Source: McKinsey State of Luxury analysis based on Euromonitor, expert interviews, luxury company annual results, press search

The State of Fashion: Luxury 39

03. Customer Insights

Equinox Group: Makingg Health

the Ultimate Status Symbol
ymbol
Spearheading Equinox’s evolution from upscale gym to
an and
luxury wellness and lifestyle brand, executive chairman
managing partner Harvey Spevak has led the charge to stay
relevant with a wellness-obsessed clientele.

BY LIZ FLORA

When Harvey Spevak took the helm of Equinox management platform Function Health. working to entice members back in its aftermath.
Group in 1999, its properties consisted of five well- But the recovery efforts have paid off, according to
appointed gyms. Since then, he has overseen its Spevak is positioning Equinox to be at the forefront Spevak, as member numbers have almost fully
move into spas, hotels and healthcare to meet its of luxury wellness today, a space occupied by high- recovered.
affluent customer base’s growing interest in spending clientele looking for exceptional service
optimising every aspect of its health. and the latest cutting-edge treatments as they try to Now Equinox is focused on the future as it charges
live longer, healthier lives — physically and ahead with its expansion. In September 2024 it had
Across 110 clubs, members can now access classic mentally. While women have historically been the plans to open three more clubs within the year, with
spa treatments and trending services like cold target market for the wellness world, for Equinox 30 more in the pipeline, and means to extend its
plunges, cryotherapy, infrared saunas and that group includes a growing number of men hospitality push as well. After unveiling its first
compression. In May 2024, it added the $40,000- looking for offerings beyond fitness equipment. hotel in New York in 2019, it hopes to open a Saudi
a-year Optimize by Equinox programme featuring a Arabia resort by the end of 2025.
concierge, trainer, nutritionist, massage therapist The journey hasn’t come without challenges, most
and sleep coach, along with blood tests from health notably during the pandemic. The group is still
The State of Fashion: Luxury 40
 want it all. The consumer today, The status symbol, in my mind, is not
certainly our consumer, wants to comparing to luxury per se. The
travel, wants to have a good time. I status symbol is, ‘I’m living a healthy
can’t talk about the hedonism part, lifestyle, which gives me a lot of
but psychedelics and mental energy, that gives me a lot of
Equinox clubat
Equinox club atHudson
HudsonYards.
Yards.Equinox.
Equinox.
wellbeing is a huge part of what's permission to explore all aspects of
happening. life.’ What’s amazing to me is the
Equinox has expanded into an array There’s no doubt that the consumer is convergence of fashion, luxury, music,
of wellness and hospitality services. more focused on experience and not Do you have a vision of the future entertainment, sport, hospitality,
What consumer mindset shifts have just products. We’ve been at the cross where wellness sits in with the wider wellness — it’s all of that coming
prompted this evolution? section of that — experience, luxury, luxury space? together. Celine doing stuff in Pilates
Over the years, we’ve done a great job wellness and community — for many The consumer that we target very or Hermès doing stuff around yoga.
of leading and anticipating where the years, if not the pioneer in a lot of that. much wants a lifestyle experience, a That is all converging, and it’s because
consumer is going. The most recent Many years ago, the younger unique experience, but an elevated the consumer wants the high-
example of that is the hotel. When we population would — if you were single experience. They want something performance lifestyle.
first started thinking about doing an in a major city, like where we that’s high-touch, service-oriented,
Equinox hotel, people were like, ‘Help operate — go out and party ‘til 3:00, thoughtful around design, has the Did the pandemic cause any long-
me understand that. Is this just going 4:00 in the morning [on weekends], right amenities. That’s what the term changes to customer behaviour
to be like a gym with rooms on top? hope you don’t get in trouble, and consumer expects more of, and they in terms of spending on wellness as a
luxury?
What are you exactly doing?’ And we then you would sleep it off the next expect you to deliver more
Higher spend — in a lot of cases, no
said, ‘No, consistent with what we do, day to whatever time you woke up. uniqueness. We have an Equinox in limit on what they will spend, as long
it's going to be a holistic and unique And you would do it again the next West Hollywood on Sunset as you give them a high-quality
experience and offering.’ If you think night. Now, people at all ages might Boulevard. We wanted to do product and a high-quality
about how we think about the have dinner out, but it’s important something unique, more forward- experience. What our members have
consumer, just as a brand, we’re that they get home at a decent time, thinking, so we’ve been working with proven to us, time and time again —
always looking for unique ways to because they want to get a good the sculpturist Daniel Arsham. Daniel and Equinox Optimize is a good
engage our members, and we think night’s sleep so they can go and helped us reimagine what that club example — is if we put in front of them
about it holistically, from a science experience their favourite class at should be. That’s going to be a good a high-quality, differentiated offering
perspective — what we call high- Equinox. with our authority, our authenticity
representation of what we think the
and our expertise, they get excited
performance living and catering to future will be like from an experience about it and they’ll pay for it. Equinox
those who want to live a high- Thinking about post-pandemic perspective. Optimize is a $40,000 membership.
performance lifestyle. consumer psychology, do consumers We have hundreds of people on a
want indulgence now, or do they Do you think that health and fitness waitlist eager to become Equinox
Are luxury consumers shifting more want self-discipline? is becoming more of a status symbol Optimize members. The consumer
spending from physical luxury goods Our hotel brand positioning has been compared to luxury goods these has more discretionary income for
towards health and wellness? from the day we opened for those who days? health and wellness than ever before.

The State of Fashion: Luxury 41

03. Customer Insights

“People are very focused on ‘how

am I going to not just extend my life,
but how am I going to do it in a
healthy way?’”

Equinox clubat
Equinox club atHudson
HudsonYards.
Yards.Equinox.
Equinox.

What are the strategies for getting I’m going to do and what results I in the GLP-1 protocol that we Men are at the beginning of a trend of
members to keep up their Equinox get?’ There’s a growing focus from developed. really engaging more and more in
memberships? men in terms of how they think about terms of their holistic and overall
Our most engaged members are, wellness. There’s a growing focus What are customers’ expectations wellbeing, not just the physical and
frankly, from a business perspective, from women about how they think around longevity these days, and working out.
our most lucrative members. If you’re about longevity, and all of that ties how do they align with what can be
getting results, you’re going to feel into unique experiences. accomplished? There’s been talk about IPO
good, you’re going to become an We all want to live longer, but we also possibilities over the years, so you
evangelist for the brand, and you’re Equinox recently unveiled its GLP-1 don’t want to be sedentary when we raised the $1.8 billion to refinance
going to stick around longer. How we Protocol, a personal-training live longer. People are very focused maturing debt. What would the
do that is by making sure we’ve got programme designed for clients on ‘how am I going to not just extend financial picture need to look like in
that great experience, high level of taking GLP-1 agonist weight-loss my life, but how am I going to do it in order to pursue an IPO in the
service, great touchpoints in terms of drugs. What kind of reception have a healthy way?’ future?
our amenities and what happens in you seen for your GLP-1 programme We have and continue to be focused
the locker rooms. We just transferred and will Equinox ever offer GLP-1 The concept of wellness is always on our long-term vision of building a
from Kiehl’s to Grown Alchemist. medications directly? talked about, most often with global luxury lifestyle brand. There’s
We do not see a future of offering businesses targeted toward women so much desire for us all around the
What are the top emerging trends GLP-1 directly. We think that’s for and the wellness industry. Have you world. We’re not focused on an IPO
you see shaping the future of luxury the healthcare practitioners. There seen men shift their focus from right now. We get calls, we get
wellness? are places that are willing to do that fitness more to overall wellness? bankers, you know, at the right time,
It’s very much focused on longevity, for you, and we think that’s a big Yes, and that shows up in a lot of we’ll consider it.
GLP-1 [glucagon-like peptide-1, the mistake. You should be under the care ways. We see that with a higher level
hormone mimicked by weight-loss of a medical professional, and that’s of engagement, just like we see with
drugs such as Ozempic], ‘how do I use not who we are. With that said, there’s women, but we think that men are
biomarkers and data to inform what been a tremendous amount of interest more focused on preventative care. This interview has been edited and condensed.

The State of Fashion: Luxury 42

03. Customer Insights

Marriott International:
l:
Redefining Luxury Travel
avel
The post-pandemic travel boom may be on the wane,,
en
but in its wake it leaves a tourism market that has been
utterly transformed. Tina Edmundson, president of
luxury at Marriott International, explains how the
s’
hospitality giant is adapting its offerings to customers’
rapidly evolving needs.
BY BRIAN BASKIN

The travel industry has emerged as one of the big Nowhere is that truer than in the company’s luxury third quarter of 2024 to open an additional 245
winners of the post-pandemic era. From the division. While customers of all income levels luxury hotels in the coming years under brands
moment lockdowns lifted, tourists flocked to travelled more post-Covid, the explosion in tourism including St. Regis, Ritz-Carlton and JW Marriott.
destinations both exotic and domestic. This was among the wealthy has proven the most enduring. The company is also finding success with a push
about more than making up for lost time; numerous What these tourists want is also changing. Many into new luxury tourism hotspots such as India, and
surveys of spending habits show that customers are now approach travel holistically; the hotel is no with hospitality formats, including yacht cruises and
steering spending away from tangible goods and longer just a place to sleep, but an integral part of all-inclusive resorts that put a high-end spin on
towards experiences of all kinds. the experience. For high-net-worth travellers, this categories that haven’t always had the best
means fine dining, personalised experiences and reputation among luxury travellers. Marriott is also
Marriott International, which puts its stamp on high-touch hospitality. taking a more active role in shaping customers’
over 9,000 properties in 142 countries across its stays, whether through retail partnerships or
more than 30 brands, has been rapidly evolving its Marriott is in the midst of a rapid expansion of its resorts built around adventure.
approach to hospitality to meet this new demand. luxury properties, with committed plans as of the

The State of Fashion: Luxury 43

03. Customer Insights

“Customers continue to trade goods and things in

order to have experiences. Travel is a wonderful
canvas to be able to do that."

For a couple of years after the The absence of Chinese tourists in more surgical about where else they themselves and their loved ones that
lockdowns lifted, we saw this huge many international destinations has want to spend their money during that are meaningful. So that’s where we
surge in travel, pretty much across been a huge story since their vacation. It might be instead of five have seen a couple of things happen.
the board, at every price point, every lockdowns lifted. How is Marriott nights of gourmet restaurants, I might One, to your point, the price of these
destination. We’ve seen something working to get those customers be doing that twice. experiences is high, but I would also
of a return to normal and even signs back? argue that what you’re getting is
of a slowdown in certain segments. Luxury travel in China is moderating, There’s been this huge ramp-up at different from what you used to get.
How are things looking at the high which is different from the Chinese the very top of the market, $1,000- We’re curating experiences for you.
end of the market? traveller outside of China, where we plus-per-night hotel rooms, for It’s really at a different level.
We are definitely seeing some are actually seeing quite a big pickup. instance. What’s driving that and is
normalisation in markets like the US, They’re cautious, and so we’re seeing there still much more room to grow I don’t think it continues to accelerate
as well as in Greater China. We a lot of last-minute, shorter-term with these ultra-high-net-worth at the rate that it did coming out of
continue to see huge demand and bookings. clients? [the pandemic]. Do I think it is
numbers in the rest of the world, There has been a real mindset change. durable? Yes, I think it will continue.
including countries like India, all of Your CEO recently said there are [The pandemic] proved to us that
Europe and the Middle East. signs, even in the luxury sector, of travel was not discretionary. People
travellers pulling back on certain realised that they needed to travel for
Even within luxury, ultra-luxury types of spending [such as] food and their own wellbeing; it became
seems to be quite unaffected. They drink. How does that manifest at fundamental. They’ve realised that
exist above the fray, if you will. your locations? life is too short. Instead of putting off
It really depends on where the trips, they have converted their
I will say, overall, luxury travel is still customer is and what they’re looking bucket list into a to-do list.
on the rise. We see that as customers for. Post-pandemic, customers that
continue to trade goods and things in are not necessarily high-net-worth As they’re doing that, they want to do
order to have experiences. Travel is a are trading up. [But] they’re being it in a way that will create memories.
wonderful canvas to be able to do conscious of where they want to For a segment of the population, that
that. spend. So yes, they are choosing the means trading up, and that means
five-star location but will be much creating these experiences for

The State of Fashion: Luxury 44

The St.
St. Regis
RegisNew
NewYork.
York.Marriott
Marriott International.
International.

On that experiences front, Marriott at one point, all-inclusives were seen conjure up in your mind what that We launched the JW Masai Mara
is experimenting with some new as bad buffets and cheap booze, our looks like. Ours feels like a Ritz- Lodge a year ago. That has done
formats, the all-inclusive resort, the mission is obviously to turn that on its Carlton at sea. About 50 percent of extremely well — since then we’ve
Yacht Collection. What have you head. We [opened] our new, all- people that sail on our Ritz-Carlton also signed three Ritz-Carlton tented
learned from these projects and inclusive, luxury collection, called yacht are new to cruise. We are lodges and camps, and several other
what else might be in the pipeline? Almare, right outside of Cancun [in clearly attracting a different JWs, as well as Luxury Collection
Part of our mission is to make sure October]. We’ve signed a couple of consumer because they want the Ritz- ones.
that we are in places that you want to Ritz-Carlton all-inclusives. We have a Carlton experience, but they don’t
be, whether it is physical places or W all-inclusive that we’ll open next want the cruise experience.
experiences. Part of our strategy is year in Punta Cana.
really to grow our ecosystem, and to The other thing that we are seeing
continue to keep [customers] We just launched our second yacht, and that we are acting on is this
interested and keep them loyal. the Ritz-Carlton Yacht. Again, when consumer wants adventure and they
All-inclusive is a great one. Whereas you think about cruises, one can want new and exciting ways to travel.

The State of Fashion: Luxury 45

03. Customer Insights

How do you personalise these

experiences?
The way we look at it is more of how
do we use [technology] to remove the
It’s a win-win, for the retailer and for
the hotel. When we look for partners,
“When people
Technology plays a big role in it. The friction and the transaction from the we’re looking for brands that match travel, they're
ability to capture preferences that experience. When we think about AI our ethos. So, what makes sense for much freer …
customers want to share with us, so we think about, how can AI help with St. Regis may be different for what
that we can provide a better stay. The the grunt work? So that you can makes sense for JW. they are much
second part of it is the training that we
do on property with associates.
actually then just have a conversation
with the guest about what they want Then we’re looking for how does that
more open, and
Making sure that they are very keenly to do or where to go. brand [fit into] the guest’s stay? One much more
focused on what guests need, to be that we’ve done is the St. Regis with willing to
able to respond to both expressed as Are you open to the idea that AI Vilebrequin. We have a broader
well as unexpressed needs, which potentially is also customer-facing? relationship with them, four or five explore, willing
really then creates that wow moment.
Then the third piece of it is we have a
Maybe we’ll make such advances in
AI that we’ll all be surprised, but for
hotels, capsule collections, and hugely
popular. Then you have the one-offs.
to discover and
programme for our most important right now, [luxury travellers are] very Ritz-Carlton Bali, Missoni is going to willing to
customers, where we provide a much looking for that personal do a store actually in the hotel, and spend.”
personal ambassador [who] will take endorsement. What am I really going they're also doing a beach club. It is
care of your every need. to get? Can I make sure that the wine about bringing their brand to life.
that I select is exactly this one, from
This interview has been edited and condensed.
This is a fun story. There’s a this year, this vintage? You don’t get
gentleman who wanted to propose to that through technology; you have to
his [girlfriend], he said he wanted it to get that through people.
be a surprise. So, he told her that he
was going to a conference. The hotel Tell me how Marriott thinks about
actually sent them conference retail within your properties. What
materials, so it felt totally real. The makes a good partnership?
hotel really ended up being this We love the relationship between
wonderful platform for him to be able hospitality and retail. They are so
to actually propose, and the hotel was complementary. When people travel,
in cahoots with him. they're much freer. They're not
bogged down by all of the stuff that
I was curious if there’s any new bogs us down at home, whether it’s
frontiers you're exploring on [the the kids or the job or whatever. So
personalisation] front, whether it's they are much more open, and much
technology or just a different type of more willing to explore, willing to
experience that you’re looking at. discover and willing to spend. Ritz-CarltonYacht
The Ritz-Carlton YachtCollection,
Collection,Ilma.
Ilma. Marriott
Marriott International.
International.

The State of Fashion: Luxury 46

03. Customer Insights

4. THE RETAIL EXPERIENCE

Customers say in-store shopping does not deliver

a consistent luxury experience
Clients are largely satisfied with their shopping Top friction points aspirational luxury clients mention when visiting storesa
experience but still encounter friction points that
could harm their long-term relationship with
brands.43 Over a third say the in-store experience Impersonal, generic I emailed client service about an inquiry and got a generic
has worsened in recent years. Expectations are also services and response that did not address my specific concerns. I was
higher as clients benchmark their experiences communication so disappointed.
against adjacencies such as luxury hospitality, as
well as non-luxury sectors like logistics (e.g. — US
Amazon, UPS).
Inadequate attention I bought a bag in a luxury store, but when I asked for gift
The in-store experience is especially important to to detail packaging, the store just didn’t have the most appropriate
older shoppers aged 55 and above, who are more
likely to seek inspiration and shop in store in the US packaging and gift box to match this bag.
and Europe.44 — China
Question: Do you think the in-store luxury
experience has gotten better, worse or stayed the Inconsistent attention At a Michelin star restaurant, everyone is treated the same
same over the last few years? given to customers, regardless of how much you spend or whether or not you
% lower quality service vs purchase wine. In luxury fashion, service is inconsistent.
other luxury sectors
— Europe
Improved 21
Insufficient expert I came in looking to purchase a watch. My advisor was not
guidance and product knowledgeable of the timepiece, couldn’t find a strap,
knowledge gave me the wrong info. Horrible.
Stayed the same 43
— US

Unsatisfactory post- When you purchase a several thousand-dollar bag, you

purchase and aftersales expect elevated aftercare and repair services. Not to have
Worsened 36 experience to pay half of the price tag again a year later.
— Europe
a. Question: What defines an exceptional in-store luxury experience for you?
Customer
Source: McKinsey State of Luxury Interviews with UHNWI, HNWI and aspirational clients (US, France, China, Japan, South Korea, UAE), of which selected on TikTok
conducted Shop. Rapeepong
in collaboration Puttakumwong/Getty
with the Luxury Institute Images.

The State of Fashion: Luxury 47

03. Customer Insights

4. THE RETAIL EXPERIENCE

A superior retail experience requires targeted

solutions to customer pain points
PAIN POINTS
Relevance based on luxury customer research findingsa

Lack of personalised interactions Insufficient guidance and Unsatisfactory

Continuous in-store frictions
across the omnichannel journey product knowledge aftersales experience

• Communication and services • Long queues • Limited expertise on product • Missed opportunities due to
not informed by client data intricacies unstructured follow-ups
• Lack of stock transparency
• No differentiation across client • Lack of brand knowledge, • Scarce aftercare information
segments • Cumbersome checkout and which can hinder customer
gifting processes product discovery and • Inefficient return process and
engagement repair services
• Uninspiring environment
lacking joy, intrigue or • Lack of multilingual assistants
entertainment

Tap into the “human side” of sales Deploy tech-driven solutions to Upskill store personnel by arming Revamp the post-purchase and
by strengthening knowledge of enhance in-store and online them with the knowledge and tools aftersales experience,
clients' interests and preferences operations through centralised to improve customer satisfaction incorporating systematic client
through granular data collection omnichannel stock transparency. and engagement, rewarding them follow-up to maintain purchase
and analysis. Train store associates with incentives. excitement.
to use this data to personalise their Implement mechanisms to collect,
interactions and recommendations analyse and act on client feedback Ensure that the experience remains Offer valuable repair services that
and create tailored offerings based rapidly, both in-store and in the inspirational and consistent across contribute to brand equity and
on client potential.45 digital ecosystem. all interactions. product longevity.

Optimise communication through Create mechanisms to entertain or

1:1 clienteling on platforms like inspire clients, such as through
WhatsApp. technology or in-store activations.

a. Question: What defines an exceptional in-store luxury experience for you?

Source: McKinsey State of Luxury Interviews with UHNWI, HNWI and aspirational clients (US, France, China, Japan, South Korea, UAE), of which selected conducted in collaboration with the Luxury Institute,
Quilt.AI analysis for BoF Insights

The State of Fashion: Luxury 48

03. Customer Insights

5. ETHICAL CRAFTSMANSHIP

Customers say that production practices do not

align with luxury’s craftmanship promise
Question: To what extent do sustainability and environmental/social practices influence purchase
decisions?
% share of “extremely important” response
There is a rising demand for sustainable products,
persistent ethical concerns and increasing
Global 50 Half of luxury
scepticism about greenwashing among luxury
clients globally say
customers online as customers call for greater
sustainability is
China 72 “extremely transparency in luxury brands’ sourcing and
important” production. Conscious shoppers cite brands such as
Japan 60 Stella McCartney and Patagonia for their
sustainability efforts, while reproaching many other
luxury brands for greenwashing.46
US 56
This is only heightened by recent allegations of
France
labour exploitation in luxury supply chains. These
46
allegations, combined with price increases, have
further disillusioned luxury customers who expect
Korea 38 ethical craftsmanship to accompany high prices.
Product quality and craftmanship is the
UAE 28
cornerstone of the luxury industry’s competitive
advantage, so investing in and nurturing the supply
chain should be a top priority. Without this, brands
I expect luxury brands to comply with I try to buy as little as possible, but I don’t may risk eroding the reputation they have built
sustainability standards, but do not actually know what brands are sustainable
through decades of cultivating heritage.
actively research their practices. or environmentally friendly.
— Aspirational luxury shopper, Europe — Aspirational luxury shopper, US

Source: McKinsey State of Luxury Interviews with UHNWI, HNWI and aspirational clients (US, France, China, Japan, South Korea, UAE), of which selected conducted in collaboration with the Luxury Institute,
Quilt.AI analysis for BoF Insights

The State of Fashion: Luxury 49

03. Customer Insights

EXECUTIVE PRIORITIES

Luxury companies should evolve their strategies

to reinforce their worth to customers
Sharpen the core Renew focus on Enhance Assess expansion
proposition product excellence experiences opportunities

• Clarify the brand’s • Continue to invest resources in • Develop unique “money-can’t- • Review exposure to different
differentiated value creating iconic products that buy” experiences, both in and luxury categories and regions
proposition. will resonate with target clients. outside of stores. (within large groups).
• Align on priority clients to • Renew the focus on • Tailor experiences to customer • Define clear goals for category
sharpen the brand’s long-term craftsmanship through best-in- profiles, targeting top spenders expansion to maximise client
strategy. class sourcing and as well as other promising engagement while staying true
manufacturing practices. segments. to the brand.
• Feed this strategy into
assortment, communication, • Invest in the longevity of the • Align experiences with the • Allocate focus and resources to
price architecture and supply chain, through vertical brand ethos rather than the these new ventures without
customer experience. integration, for example. latest trends. impacting the core business.
• Uncover powerful customer • Seek synergistic acquisitions to
insights with tech, AI and data build resiliency and secure a
solutions to better personalise competitive edge.
customer journeys.

The State of Fashion: Luxury 50

END NOTES
1. Press search; company annual reports 28. McKinsey expert interviews

2. Company websites; McKinsey analysis 2024 29. Garth Friesen, “Swiss Luxury Watch Market Struggles To Find A Bottom,
Report Finds”, Forbes, July 18, 2024
3. McKinsey analysis and company reports
30. McKinsey expert interviews
4. Press search
31. Ming Liu, “High jewellery weathers the global uncertainty”, The Financial
5. Antonio Achille, Sophie Marchessou, and Nathalie Remy, “Luxury in the Times, July 8, 2024
age of digital Darwinism”, McKinsey & Company, February 1, 2018
32. Sasha Rogelberg, “The diamond industry is ‘in trouble’ after prices sunk
6. Bernstein Report “Retail Escalation” 2023 6% this year. A jewelry CEO blames the rapid growth of lab-grown diamonds.”,
Fortune, June 5, 2024
7. Press search
33. UHNWI interviews conducted by The Luxury Institute, August 2024
8. Press search
34. Quilt.AI analysis, August 2024
9. Press search
35. Quilt.AI analysis, August 2024
10. Joan Kennedy, “The Life Cycle of a Viral Fashion Trend”, The Business of
Fashion, July 5, 2023 36. UHNWI interviews conducted by The Luxury Institute, August 2024

11. The Deloitte Swiss Watch Industry Study 2023”, Deloitte, October 2023 37. “Beyond Boundaries: Redefining Aspirational Luxury Consumers”,
McKinsey, April 2024. Question: Please indicate how strongly you agree or
12. “Estimated Impacts of Proposed Tariffs on Imports”, National Retail disagree with each of the following statements “I would feel comfortable
Federation, November 2024 wearing clothes of footwear from an unknown label” and “I would feel
comfortable using fashion accessories from an unknown label”
13. McKinsey Global Institute
38. Quilt.AI analysis, August 2024
14. “European Tourism: Quarterly Report Q1 2024”, European Travel
Commission, April 2024 39. McKinsey interviews
15. McKinsey Global Institute 40. UHNWI interviews conducted by The Luxury Institute, August 2024
16. McKinsey Global Institute 41. Quilt.AI analysis, August 2024
17. “The Wealth Report 2024”, Knight Frank, 2024 42. Quilt.AI analysis, August 2024
18. “The Wealth Report 2024”, Knight Frank , 2024 43. HNW interviews conducted by The Luxury Institute
19. Anthony Selwyn, Marie Hickey, “Localisation and the Evolving Global 44. The State of Fashion 2025 Consumer Survey, The Business of Fashion and
Luxury Landscape”, Savills, May 16, 2024 McKinsey & Company
20. National Bureau of Statistics of China 45. “The State of Fashion 2025”, The Business of Fashion and McKinsey &
Company, November 11, 2024
21. Khanh Linh, “What’s Behind Japan’s Luxury Boom?”, The Business of
Fashion, July 2024 46. Quilt.AI analysis, August 2024
22. General Authority for Statistics
Editors’ Note:
23. McKinsey expert interviews
This report was amended on Jan. 17, 2025. On page 13, a previous version of
24. Kelcie Sellers, Rico Picenoni and Peter Grmek, “Spotlight: Branded this report misstated estimates for the RoW (rest of world) 2023 market size
Residences – EMEA”, Savills, February 22, 2024 and 2019-2023 growth.

25. McKinsey expert interviews

26. McKinsey expert interviews

27. Press search

The State of Fashion: Luxury 51

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