attention of the one per cent shopper. As Marie Driscoll, a chartered financial analyst and a professor at Parsons, The New School and the Fashion Institute of Technology, noted, “Consumers are smart and there is a copy and paste aspect to recent luxury assortments, a tactic one might expect in mall fashion retailers, not luxury brands that add a zero or two to the price versus prestige brands.” Moving further into 2025, Driscoll affirmed that the “luxury [retail market] needs to address its ubiquity, lack of innovation and the last few years of double-digit price increases without a corresponding increase in dream fulfillment and experience, product quality and innovation.” What was behind the slowdown of the luxury retail market in 2024 According to retail experts like Driscoll and Claudia D’Arpizio, Bain & Company partner and leader of the firm’s global Fashion & Luxury practice, this year’s drop in luxury sales can largely be attributed to waning interest from consumers, especially younger ones, in luxury items, thanks to excessive pricing and an overall lack of innovation.  Until recently, there didn’t seem to be a limit to the price that consumers would pay for a luxury status symbol, such as a leather handbag.  However, research conducted by the financial services institution HSBC confirmed that as the average price of personal luxury goods increased by 52 per cent in Europe since 2019, with similar price hikes across the globe, the number of consumers shopping for these products decreased.  HSBC estimated that sales of the luxury industry’s most reliable performer, leather goods, retreated between three to five per cent to hit US$83 billion. In addition to being priced out, D’Arpizio observed that a significant number of consumers, approximately 50 million, have willingly opted out of the luxury goods market, due to ethical concerns or a disinterest in the options available.  D’Arpizio explained that “this is a signal for brands that it’s time to readjust their value propositions. To win back customers, particularly the younger ones, brands will need to lead with creativity and expand conversation topics.” Simultaneously, D’Arpizio added, “They must keep their top customers front and center, surprising and delighting them while rediscovering one-to-one human interactions. For all customers, it will be critical to double down on personalisation, leveraging technology to achieve it at scale.” Areas of opportunity for luxury retailers in 2025 All hope is not lost for the world of luxury retail, a report released by advisory firm Coresight Research suggests. Sunny Zheng, a Coresight analyst predicted that the global luxury sector will experience five per cent year-over-year (YoY) growth, showing some recovery post-2024. “By segment,” Zheng disclosed, “we expect the hard luxury segment (comprising luxury jewelry and watch sales) to lose market share in 2025, at an estimated 31 per cent, while soft luxury (comprising apparel, footwear and accessories, such as handbags and belts) will gain share in 2025, reaching 41 per cent.” The soft luxury sector’s growth will be driven by shifting consumer preferences toward personal expression through fashion, the expansion of luxury fashion brands into new categories, influencer and celebrity endorsements and new collaborations, the Coresight analyst explained.  “Despite the fact that we project a slight market-share decline in 2025 (to 24.8 per cent), the US will remain a key market for luxury brands, attracting affluent consumers and driving sales across various product categories,” Zheng said. Adding that Coresight expects China’s share of the luxury market to increase between 2024 and 2028 (totaling an estimated 19.9 per cent in 2025), reflecting the growing affluence and purchasing power of Chinese consumers. Meanwhile, Europe will also maintain a sizable share of the global luxury market, at around 25 per cent, although this will likely decline over the coming years, Coresight theorised.  Three Themes to Watch in 2025 Three trends Zheng advised luxury retailers to take note of are: Mergers and acquisitions The Coresight analyst predicted that many luxury brands and retailers will continue to pursue mergers and acquisitions. More specifically, luxury brands and retailers are ramping up their investments in suppliers, driven by a desire to gain greater control over their materials and manufacturing processes, create more resilient supply chains and better guard their intellectual property. Social commerce Zheng commented on how luxury brands and retailers are increasingly using social media platforms such as Facebook, Instagram, Pinterest and TikTok to advertise and promote their products, leveraging targeted ads and sponsored posts to generate consumer interest in their offerings. Luxury resale Moving into 2025, more luxury brands are working with third-party marketplaces or launching their own resale programs and marketplaces to highlight their sustainability efforts. According to Coresight Research estimates, the US fashion resale market evolved from a single-digit-billion-dollar market in 2008 to a US$31.8 billion market in 2023. Zheng expects that the market will continue to grow in 2025, expanding by 5.3 per cent year-on-year. “Luxury brands and retailers that truly execute luxury will outperform the industry in 2025 as consumers demand more and won’t settle for the luxury products that now cost twice what they did pre-Covid and just seem stale,” Driscoll said. “Innovative products, exclusive and new brands and products that allow luxury clients to discover and engage in newness while offering the highest quality in a hospitable environment with service levels that attend to detail, that is what will drive luxury growth in 2025,” she concluded.