The global personal luxury goods market has shown signs of recovery in the second quarter despite the ramifications of the war in the Middle East, with demand in the U.S. outpacing expectations, according to a new report from Bain & Company.

The  management consulting company, headquartered in Boston, MA, included its findings in a spring update to the Bain-Altagamma Luxury Goods Worldwide Market Study, which the company conducts in partnership with Altagamma, the Italian luxury goods manufacturers’ industry association.

Bain’s base-case scenario points to a 2 percent to 4 percent rise in global personal luxury goods sales this year, marking a reduction from its previous forecast of 3 percent ​to 5 percent growth published in November 2025, before the U.S.-Israeli war began in Iran. However, the growth marks a bounce back for personal luxury goods after two straight years of declines, and despite macro disruptions caused in large part by the Iran war.

Bain reported, “The first half of 2026 has been shaped by a series of macroeconomic shocks. The outbreak of the Middle East conflict pushed oil prices up. U.S. inflation climbed to its highest since April 2023 – while consumer confidence hit an all-time low. The ECB [European Central Bank] raised interest rates in June for the first time since 2023, and global GDP growth this year is now forecast to be weaker than in 2025. Luxury share prices fell [about] 8 percent in January, and international tourism in Europe was down 20 percent year-on-year in February before partially rebounding.”

The personal luxury goods market in 2025, according to Bain’s analysis, dipped slightly to €358 billion ($406 billion), down 2 percent at current rates, though up 1 percent at constant exchange rates. In 2024, the personal luxury goods market reached €364 billion in 2024, a 2 percent decline compared to 2023 at current exchange rates and flat at constant exchange rates.

Bain assigned a 70 percent probability that personal luxury goods sales will climb 2 percent to 4 percent globally this year, “underpinned by assumptions of continued Middle East stabilization, resilient local spending, and a gradual recovery in Chinese demand.”

Taking a more optimistic view, a 20 percent probability was assigned for growth of 4 percent to 6 percent, a pace that would “require geopolitical tensions to ease further, a boost from renewed momentum of the US market, and China accelerating its recovery.” The pessimistic side, flat to 2 percent growth for personal luxury sales, was assessed at a 10 percent probability and “would reflect renewed Middle East escalation, softer tourism, or weakness in the Americas.”

Bain estimated global sales of personal luxury goods in the first quarter declined between 5 percent and 3 percent at current exchange rates compared to the prior year in the first quarter, but said: “Conditions are expected to slightly improve in Q2 as macro and geopolitical headwinds begin to lift.”

Bain noted that around 60 percent of luxury players are “outperforming their Q1 2025 results,” and “the wide performance gap that defined 2025 is beginning to close, as last year’s winners cool and former laggards recover.”

Regional Trends In Luxury
By region, the Americas have seen strong momentum in luxury spend, offsetting the challenges facing Europe and the Middle East. Bain described Europe as luxury’s “weak link”, with international tourist spending dropping around 20 percent in February, with Middle Eastern visitors especially affected by regional conflict. The study found the Gulf luxury consumer base in Europe shrank by between 15 percent and 25 percent in early 2026. Bain noted, “That said, the picture has started to show some signs of improvement in Q2: tax refund data from May show accelerating spending by American, Chinese and Middle Eastern visitors compared to April — a tentative signal that both Europe and the Gulf may be turning a corner as the second quarter unfolds.”

Broader Luxury Trends
Global luxury spending in 2026 is expected to reach €1,440 to €1,470 billion in Bain’s base scenario for the market, a growth rate of between zero and 2 percent at constant rates. In categories outside personal luxury goods, “resilient” demand is being seen for luxury hospitality, private jets, yachts, and cruises, “driven by premiumization, strong backlogs, and new customer acquisition,” while fine dining and gourmet food are benefiting from a  “’less but better’ mindset.” Fine arts are returning to growth. Luxury laggards include luxury cars, which are being impacted by the shift toward electric vehicles. Fine wines and spirits are being impacted by reduced frequency and the declining popularity of alcohol for health reasons. Design and furniture luxury sales are also slow due in part to a weak housing market.

Other Findings In Bain’s Report

  • Experiences Gaining Favor: Consumer sentiment continues to shift towards “experiences,” with experiences outgrowing tangible goods by 1.5x so far in 2026, reflecting a “structural and cultural shift from ownership to lived moments.” Immersive bookings across dining, leisure, and entertainment are up 30 percent compared with last year, “driven by bespoke, slow-travel formats rooted in local culture.” Travel beyond traditional hotspots has grown by 20 percent versus last year.
  • Luxury Category Leaders: Jewelry is seeing the strongest demand among luxury goods categories, with apparel, eyewear, and fragrances also “holding up well,” according to Bain’s analysis. Cosmetics are lagging, and leather goods and footwear are “still under pressure, yet on an improving trajectory.”
  • Artificial intelligence (AI) Influencing Luxury: Bain’s analysis found that approximately half of luxury consumers already use AI in their buyer journey, while nearly all plan to continue this pattern. About one in four luxury consumers use it for brand and product discovery, while two out of three of them leverage it for product comparison.
  • Resale Appeal: Half of luxury shoppers now consult the secondhand market before buying new.
  • Sports driving brand building: Over 80 percent of luxury market value is now represented by brands that have sponsored a sports experience in the past 12 months, although the “focus is still mostly on building cultural credibility and saliency at scale, rather than on driving growth in sales.”

Bain’s analysis concludes that the meaning of luxury to consumers is evolving from “being about social validation towards an individual focus on ‘self-actualization’ — a shift from a desire to be admired towards a goal of personal fulfilment.” The consultancy added that luxury “will no longer define what its consumers own but rather how they live.”

Bain stressed the importance of luxury brands to deliver immersive experiences, cultural relevancy and platforms supporting AI-enabled creativity and personalization.

“The luxury market is stabilizing, but this is not a return to the old rhythm; it is the emergence of a new one,” said Claudia D’Arpizio, Bain’s senior partner and global leader of the firm’s Fashion & Luxury practice and lead author of the study. “Consumers are not stepping back from luxury. They are stepping forward into a new relationship with it – one defined by meaning, not just by product. The brands that will win are those that can continuously reinvent their relevance and resonate with both consumers and AI-led ecosystems.”

“The appetite for luxury remains strong. The tolerance for disappointing experiences or products does not,” said Federica Levato, Bain’s senior partner, leader of the firm’s EMEA Fashion & Luxury practice and co-author of the study. “Over 70 percent of customers who have left luxury intend to return – but not necessarily to the same brands. The question is whether brands are building the meaning and AI-native relevance to be surfaced and chosen when that moment arrives.”

Image courtesy Bain-Altagamma