For the luxury industry, 2026 looks to be a challenging year, with changing consumer habits, geopolitical crises affecting key markets, and the growing influence of AI in shaping how consumers discover and engage with luxury, writes eToro analyst for Romania, Bogdan Maioreanu. .
After decreases in spending for the past two years, analysts project only marginal growth this year, but this is conditional upon the Iran settlement holding, spending picking up, and the Chinese market’s bounceback. Meanwhile, the luxury industry will have to adapt to changing habits as consumers move away from overt status symbols toward tangible value, personal wellness, and experiential spending.
After a two-year fall and a flat 2025, global luxury spending is expected to edge back into growth in 2026, rising 0–2% on a constant-currency basis to about €1.44–€1.47 trillion, according to the consulting company Bain &Co. The outlook hinges on a “base case” in which Middle East tensions ease, domestic demand holds up and China’s gradual recovery, visible in quarter‑on‑quarter gains since late last year, continues. Bain assigns this scenario a 70% probability, versus a 20% chance of a more upbeat outcome where easing geopolitical risks, stronger Chinese demand and a renewed US upswing lift growth to 4–6%.
The US remains a key focus, with luxury and, to a lesser extent, beauty spending rising and US-based luxury brand revenues up 10%–15% year-on-year in Q1 2026 at constant exchange rates. In China, the recovery is still cautious: luxury online sales grew 25%–35% in Q1 versus a year earlier, driven by a shift toward ready-to-wear over leather goods as consumers favor self-expression over status signaling.
Europe is the weak spot, hit by local consumer fatigue, a 15%–25% drop in the Gulf consumer base in Q1 2026 due to the war, and reduced US tourism as a strong euro erodes travel-shopping price advantages, with international tourist spend falling 20% in February. Overall, luxury is stabilizing but increasingly split by region and category, with luxury experiences in 2026 outperforming personal luxury goods on consumer sentiment by 150%, reflecting a broader shift from ownership to experiences.
The US and Chinese consumers will largely determine which brands lead the luxury sector, with the US remaining the biggest market by sales and China among the fastest-growing through 2030, according to the latest report of consulting company McKinsey. Across both the US and Chinese markets, emotional connection now ranks as a top driver of brand desirability, ahead of traditional luxury markers such as craftsmanship, heritage, and exclusivity.
Consumers increasingly want brands that reflect their identity, values, and aspirations rather than simply signaling wealth or status, but this takes different forms by market. In the US, luxury shoppers are shifting toward challenger labels, forcing heritage houses to behave more like disruptors through culturally tuned campaigns, bolder creativity, and communities built around shared values. In China, established brands still hold the edge as consumers prioritize trust, recognition, and authority, with desirability driven by visibility and high-touch, personalized service that makes clients feel known rather than sold to. In both markets, craftsmanship and quality are now just the entry ticket to luxury, while exclusivity rests on recognition, access, and distinctive experiences. That ranges from early access, limited editions, and membership-like perks in the US to bespoke services, private appointments, and adviser-led relationships in China, where many consumers now see challenger brands as more exclusive than heritage houses.
At the same time, according to McKinsey, AI and resale are reshaping how consumers discover and engage with luxury, again in market-specific ways. In the US, AI is becoming a key influence on inspiration and consideration, especially for higher spenders, pushing brands to optimize product information, reviews, and narratives, so they rank in AI-driven environments. Meanwhile, resale caters to the “thrill of the hunt,” discovery, and collectability, giving secondary platforms a growing influence over which products become iconic or investment worthy. In China, AI is used more functionally to assess specifications and quality, and must complement, not replace, high-touch human service, while trust remains a key factor in resale, with authenticity, provenance, and credibility as critical prerequisites. For brands, closing these trust gaps might be essential before they can fully unlock the potential of AI and resale-driven engagement.
This year, luxury stocks have been underperforming the broader market. The S&P Global Luxury Index, which includes 80 of the most prominent companies in the industry, lost almost 7% from the beginning of the year. In Europe, the Stoxx Europe Luxury 10 index, which includes the 10 most prominent companies involved in luxury/fashion accessories, cosmetics/care products, and high-class vehicles, lost 4.5% year to date. With consumer spending still weak due to inflation and changing habits, the index-level performance already reflects the pressure luxury companies are facing. For luxury sector investors, 2026 looks like a stock‑picker’s market where the need to focus on names that can adapt while defending pricing power and status might be more important than a broad sector approach.
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