Key facts
- Luxury brands are facing a worsening slowdown due to Middle East conflict inflation and shifting consumer preferences.
- Investors are concerned about luxury brands' growth prospects.
- LVMH shares are down 37% since the start of 2026.
- Tod's chairman Diego della Valle expects a market stabilization period.
- Deloitte Advisory partner Federico Bazzani stated fewer than half of luxury brands are growing.
- Consumers are increasingly prioritizing spending on wellness, health, longevity, hotels, and restaurants.
Luxury fashion houses are facing a challenging market characterized by slowing growth and shifting consumer priorities, despite high-profile runway shows in Milan and Paris. Investors are growing concerned as the sector's recovery remains elusive, with inflationary pressures from the Middle East conflict impacting shoppers' budgets, compounded by a pre-existing decline in enthusiasm for high-end handbags.
Shares in Kering, the owner of Gucci, have lost all the gains made since CEO Luca de Meo took over a year ago. LVMH, the largest luxury conglomerate, has seen its stock fall 37% since the beginning of 2026. Diego della Valle, chairman of Tod's, anticipates that the current and next year will be a period of market stabilization and increased predictability.
Industry experts estimate that staging a fashion runway show can cost up to €10 million ($11.47 million). Studies by consultancies like Bain indicate that middle-class consumers are reducing their spending on luxury goods, intensifying competition for affluent shoppers. Brands are investing more in stores, services, and exclusive experiences even as sales decrease.
Federico Bazzani, a partner at Deloitte Advisory, observed a significant polarization within the market, with less than half of the brands experiencing growth while the others are losing ground. He advised brands to either invest in innovation, customer experience, and cultural relevance to justify their pricing or to adjust prices and accept lower profit margins.
Prada has recently updated its Milan flagship store, incorporating private areas for its top clients. David Watts, a luxury business advisor, noted that significant price increases have made even wealthy clients more mindful of value for money. Brands are hesitant to lower prices due to concerns about signaling overcharging and losing margin, while also wanting to avoid production cuts that would impact revenue.
Industry insiders are also discussing a potential shift in consumer preferences, with Renzo Rosso, chairman of Diesel owner OTB, expressing skepticism about an imminent sector recovery. He highlighted that consumers are increasingly prioritizing spending on wellness, health, longevity, as well as hotels and restaurants. Gucci, Dolce & Gabbana, and Giorgio Armani are scheduled to present their collections in Milan, while Dior and Louis Vuitton, flagship brands of LVMH, will be key attractions at Paris Fashion Week. Chanel, which has performed strongly due to successful new designs from creative director Matthieu Blazy, will showcase its spring/summer 2027 collection on October 5.