In what could prove a defining stretch for the luxury goods sector, major fashion houses are navigating a tense holiday season that may determine whether the recent uptick in sentiment can translate into a durable recovery. While stocks of companies such as LVMH and Kering have surged, the underlying consumer and macroeconomic conditions remain far from settled. The question that now looms large is not only if luxury demand will rebound, but how and why brands can convert positive signals into sustained performance during the crucial year-end quarter.
Acceleration Meets Uneven Terrain
Over the past three months, luxury stocks have posted double-digit gains—Kering up nearly 49 %, LVMH around 42 %—feeding optimism that the long-troubled $400 billion personal luxury goods industry may be waking up. This surge reflects both a broader equity market rebound and tentative signs of recovery in key markets including China, plus the buzz around fresh creative leadership at several high-profile brands.
Yet beneath the shine lies a far more uncertain foundation. Growth engines that powered luxury’s boom—volume expansion, unbridled pricing power, and China’s relentless ascent—are either exhausted or loss-making. According to a recent analysis, price increases alone accounted for more than 80 % of revenue growth between 2019 and 2023, a dynamic that appears to be reversing. Growth projections for 2024–27 suggest single-digit terrain at best.
For luxury brands, the upcoming holiday quarter holds outsized importance: some players count as much as 30 % of their annual sales during the December season. The stock-market–driven rally has placed pressure on brands to show their turnaround is more than paper gains—that consumers are ready to buy again in meaningful scale. But the forces behind that optimism are mixed: yes, an increase in high-net-worth spending in the U.S., yes, pockets of rebound in China—but these are offset by affordability headwinds, volatility in key economies, and a consumer mindset shifting rapidly towards value, experience, and selective consumption.
Why the Stakes Are Elevated This Season
First, the global economic backdrop remains cloudy. In the U.S., affluent consumers indicated in mid-2025 that 56 % plan to maintain or increase luxury spending in the next three months, a rebound from earlier hesitation. That said, overall retail growth projections for the U.S. holiday season have softened markedly—a mere 1.2 % growth forecast for November–December 2025, compared with 4.3 % in the same months of 2024. Inventory shortfalls, tariff pressures, and cautious consumer behaviour are weighing on an otherwise festive period. Meanwhile China, once the locomotive of global luxury demand, continues to lag expectations with weak youth employment, muted aspirational spending and rising social sensitivity around conspicuous consumption.
Second, luxury brands are adjusting strategies in real time. The period of steep price hikes is drawing to a close: average price increases this year in luxury markets were trimmed back to around 3 %—the lowest since before the pandemic. This reflects both consumer push-back and the more modest growth outlook. Given that brands have historically relied on price increases to drive growth, the shift marks a deeper recalibration of how luxury will engage consumers going forward. Add to that the intensifying focus on creative renewal: brands are banking on new runway directions, capsule collections and higher-profile launches to reignite demand. But many of these innovations will only hit shelves in 2026, leaving a gap in the near term.
Third, channel and experience-related dynamics are evolving. Though e-commerce grew robustly in recent years, the 2025 holiday season is likely to see a larger role for in-store and omni-channel experiences as consumers return to physical retail. With inventory constrained and promotions more disciplined, brands are focusing less on broad discounting and more on curated offerings, immersive store formats and high-touch service—yet these approaches still hinge on convincing shoppers to buy rather than browse. The shift from volume-led growth to value-led, experience-driven models means the holiday season will test whether luxury brands can translate that narrative into transactions at scale.
How Brands Are Responding—and Why It Matters
Faced with these headwinds, luxury houses are sharpening their focus on the U.S. and Middle East, while seeking to stabilise China exposure. Several brands have ramped up footprint expansion in the United States—flagship openings, spa launches, elevated store environments—which reflects confidence in American demand even as overall retail growth moderates. The logic is clear: affluent American households still have purchasing power and international tourism remains a tailwind. At the same time, brands are cautious about China: even when a major player reported a return to positive Chinese sales in Q3, executives cautioned that conditions remain challenging. Until Chinese consumers display sustained engagement, the global rebound remains vulnerable.
Creative refresh is another key tool. Brands such as those under Kering, which have lagged peers, are undergoing designer overhauls and relaunch efforts aimed at reconnecting with aspirational millennials and Gen-Z buyers—groups that had scaled back luxury spending in recent years. For instance, early tests of new collections showed relative improvement in U.S. spending for one brand, though full collection effects won’t surface until next year. This delay matters: brands are entering the holiday season without the full impact of new product cycles, making this period both a proof point and a pressure point.
Pricing discipline is also front of mind. With consumer sentiment muted and affordability under stress, brands are dialling back aggressive mark-ups, focusing instead on entry-level luxury items, small leather goods or accessible categories to re-build the funnel of new consumers. While ultra-high-net-worth clients remain vital, growth will increasingly depend on aspirational buyers whose decisions reflect both economic and emotional criteria—what the brand stands for, what the experience feels like, and how owning a luxury piece fits into their lifestyle.
Why the Holiday Season’s Outcome Could Be Decisive
The December quarter has always been the luxury industry’s heavyweight round—up to a third of annual sales for some houses. This year, its importance is amplified by the fact that many of the structural adjustments—creative pipelines, pricing strategy shifts, regional refocus—are still in early implementation. In effect, the strategic bets of the past 12–18 months will either be validated or exposed. A strong season could restore momentum, rebuild investor confidence, and create a virtuous cycle of demand, elevated pricing power and innovation. A weak season, conversely, risks undermining the emerging narrative of recovery and pressures brands into discounting, margin sacrifices or accelerated creative resets.
Beyond the headline numbers, a holiday season that leans on depth rather than breadth is especially important. The luxury growth engine of recent years—mass affluent spending driven by price inflation and China theatre—has lost velocity. For the industry to re-ignite, brands must show they can engage consumers beyond the elite and stimulate demand organically, not just through scarcity or mark-ups. That means seeing increased foot traffic convert into higher average spend, repeat purchases, and stronger wallet share in core markets. And from a macro point of view, it matters for the industry to show that declining global growth expectations (which currently sit in the 1–3 % range year-on-year) are not the ceiling but a base from which incremental improvements can emerge.
As the fashion houses load their stores, launch holiday campaigns and prepare for the peak shopping weeks of November and December, they are operating under a louder spotlight than normal. The market has already priced in optimism—stock gains imply confidence—but what remains to be proven is the convertibility of that optimism into orders, volumes and margins. In short, the holiday season is not just about festive shopping; it may well determine whether the industry’s rebound is real or receding.
(Source:www.fashionnetwork.com)
Acceleration Meets Uneven Terrain
Over the past three months, luxury stocks have posted double-digit gains—Kering up nearly 49 %, LVMH around 42 %—feeding optimism that the long-troubled $400 billion personal luxury goods industry may be waking up. This surge reflects both a broader equity market rebound and tentative signs of recovery in key markets including China, plus the buzz around fresh creative leadership at several high-profile brands.
Yet beneath the shine lies a far more uncertain foundation. Growth engines that powered luxury’s boom—volume expansion, unbridled pricing power, and China’s relentless ascent—are either exhausted or loss-making. According to a recent analysis, price increases alone accounted for more than 80 % of revenue growth between 2019 and 2023, a dynamic that appears to be reversing. Growth projections for 2024–27 suggest single-digit terrain at best.
For luxury brands, the upcoming holiday quarter holds outsized importance: some players count as much as 30 % of their annual sales during the December season. The stock-market–driven rally has placed pressure on brands to show their turnaround is more than paper gains—that consumers are ready to buy again in meaningful scale. But the forces behind that optimism are mixed: yes, an increase in high-net-worth spending in the U.S., yes, pockets of rebound in China—but these are offset by affordability headwinds, volatility in key economies, and a consumer mindset shifting rapidly towards value, experience, and selective consumption.
Why the Stakes Are Elevated This Season
First, the global economic backdrop remains cloudy. In the U.S., affluent consumers indicated in mid-2025 that 56 % plan to maintain or increase luxury spending in the next three months, a rebound from earlier hesitation. That said, overall retail growth projections for the U.S. holiday season have softened markedly—a mere 1.2 % growth forecast for November–December 2025, compared with 4.3 % in the same months of 2024. Inventory shortfalls, tariff pressures, and cautious consumer behaviour are weighing on an otherwise festive period. Meanwhile China, once the locomotive of global luxury demand, continues to lag expectations with weak youth employment, muted aspirational spending and rising social sensitivity around conspicuous consumption.
Second, luxury brands are adjusting strategies in real time. The period of steep price hikes is drawing to a close: average price increases this year in luxury markets were trimmed back to around 3 %—the lowest since before the pandemic. This reflects both consumer push-back and the more modest growth outlook. Given that brands have historically relied on price increases to drive growth, the shift marks a deeper recalibration of how luxury will engage consumers going forward. Add to that the intensifying focus on creative renewal: brands are banking on new runway directions, capsule collections and higher-profile launches to reignite demand. But many of these innovations will only hit shelves in 2026, leaving a gap in the near term.
Third, channel and experience-related dynamics are evolving. Though e-commerce grew robustly in recent years, the 2025 holiday season is likely to see a larger role for in-store and omni-channel experiences as consumers return to physical retail. With inventory constrained and promotions more disciplined, brands are focusing less on broad discounting and more on curated offerings, immersive store formats and high-touch service—yet these approaches still hinge on convincing shoppers to buy rather than browse. The shift from volume-led growth to value-led, experience-driven models means the holiday season will test whether luxury brands can translate that narrative into transactions at scale.
How Brands Are Responding—and Why It Matters
Faced with these headwinds, luxury houses are sharpening their focus on the U.S. and Middle East, while seeking to stabilise China exposure. Several brands have ramped up footprint expansion in the United States—flagship openings, spa launches, elevated store environments—which reflects confidence in American demand even as overall retail growth moderates. The logic is clear: affluent American households still have purchasing power and international tourism remains a tailwind. At the same time, brands are cautious about China: even when a major player reported a return to positive Chinese sales in Q3, executives cautioned that conditions remain challenging. Until Chinese consumers display sustained engagement, the global rebound remains vulnerable.
Creative refresh is another key tool. Brands such as those under Kering, which have lagged peers, are undergoing designer overhauls and relaunch efforts aimed at reconnecting with aspirational millennials and Gen-Z buyers—groups that had scaled back luxury spending in recent years. For instance, early tests of new collections showed relative improvement in U.S. spending for one brand, though full collection effects won’t surface until next year. This delay matters: brands are entering the holiday season without the full impact of new product cycles, making this period both a proof point and a pressure point.
Pricing discipline is also front of mind. With consumer sentiment muted and affordability under stress, brands are dialling back aggressive mark-ups, focusing instead on entry-level luxury items, small leather goods or accessible categories to re-build the funnel of new consumers. While ultra-high-net-worth clients remain vital, growth will increasingly depend on aspirational buyers whose decisions reflect both economic and emotional criteria—what the brand stands for, what the experience feels like, and how owning a luxury piece fits into their lifestyle.
Why the Holiday Season’s Outcome Could Be Decisive
The December quarter has always been the luxury industry’s heavyweight round—up to a third of annual sales for some houses. This year, its importance is amplified by the fact that many of the structural adjustments—creative pipelines, pricing strategy shifts, regional refocus—are still in early implementation. In effect, the strategic bets of the past 12–18 months will either be validated or exposed. A strong season could restore momentum, rebuild investor confidence, and create a virtuous cycle of demand, elevated pricing power and innovation. A weak season, conversely, risks undermining the emerging narrative of recovery and pressures brands into discounting, margin sacrifices or accelerated creative resets.
Beyond the headline numbers, a holiday season that leans on depth rather than breadth is especially important. The luxury growth engine of recent years—mass affluent spending driven by price inflation and China theatre—has lost velocity. For the industry to re-ignite, brands must show they can engage consumers beyond the elite and stimulate demand organically, not just through scarcity or mark-ups. That means seeing increased foot traffic convert into higher average spend, repeat purchases, and stronger wallet share in core markets. And from a macro point of view, it matters for the industry to show that declining global growth expectations (which currently sit in the 1–3 % range year-on-year) are not the ceiling but a base from which incremental improvements can emerge.
As the fashion houses load their stores, launch holiday campaigns and prepare for the peak shopping weeks of November and December, they are operating under a louder spotlight than normal. The market has already priced in optimism—stock gains imply confidence—but what remains to be proven is the convertibility of that optimism into orders, volumes and margins. In short, the holiday season is not just about festive shopping; it may well determine whether the industry’s rebound is real or receding.
(Source:www.fashionnetwork.com)