Global Luxury Set to Grow 2 to 5 Percent as Burberry and Kering Reset
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Global luxury spending is set to grow between 2 percent and 5 percent this year following a three-year malaise, according to Boston Consulting Group data presented at an executive roundtable last Thursday.
The projected rebound is driven by an 8 percent increase in North America and a 2 percent to 3 percent recovery in China, while Middle East sales are expected to drop by double digits.
Executives from Burberry and Kering told the gathering that brands are overhauling strategies and price points, as a BCG survey of 12,000 luxury shoppers revealed that 70 percent have avoided purchases due to price increases.
Shifting Price Points and Product Lines
Burberry is running a turnaround plan called Burberry Forward, focused on brand identity, client engagement, core merchandise, and store distribution. Laura Dubin-Wander, Americas president for the brand, said it is refocusing on heritage outerwear and accessible entry products. To draw new shoppers, the house set up dedicated trench coat areas, scarf bars, and displays for $400 polo shirts.
Its store network is also under review. The company plans to downsize or exit unproductive sites while adding pop-ups in affluent resort towns and growing its womenswear athleisure range. On the marketing side, it added American athletes like Carmelo Anthony to build wider recognition.
Across Asia-Pacific, landlords and department stores must rebalance their floor space. Retailers that gave prime ground-floor square footage to high-priced ready-to-wear collections now see lower sales densities. Operators in hubs like Shanghai, Tokyo, and Singapore are shifting space toward beauty counters, eyewear concessions, and fragrance boutiques where sales volumes hold up.
Brand margins are shifting as sales move from runway lines to entry-level accessories. Labels must sell far more low-ticket units to offset slowing ready-to-wear purchases. That puts direct pressure on boutique staffing and stock management.
“To draw new shoppers, the house set up dedicated trench coat areas, scarf bars, and displays for $400 polo shirts.”
Price Sensitivity Bites Top Spenders
Affordability concerns now reach well beyond entry-level shoppers, according to an annual survey of 12,000 luxury consumers by BCG and Altagamma. Roughly 70 percent of respondents walked away from a planned purchase at least once due to a price increase. Most redirected that money into luxury cosmetics and skincare.
Kering is splitting its commercial strategy to handle this divide between wealthy clients and aspirational buyers. Ewa Abrams, Americas president at Kering, said top-tier clients expect private, personalized service. Aspirational shoppers, by contrast, respond to cultural partnerships in entry categories such as eyewear and fragrances.
It’s important to stimulate them with the right product categories such as eyewear or fragrance.
Channel Synergies and Technology Steps
A shared operational platform now runs across the French group’s houses, including Gucci, Saint Laurent, Balenciaga, and Bottega Veneta. The setup streamlines administration. It also uses artificial intelligence to accelerate commercial decisions.
Social commerce is another testing ground. Tim Chai, head of product strategy at TikTok Shop, said digital luxury consumers favor unpolished, direct brand communication over rigid corporate campaigns. Burberry adopted fast-paced video clips to show British heritage to younger online shoppers.
Customer discovery is increasingly driven by artificial intelligence. The BCG survey found 90 percent of luxury shoppers use AI tools daily or weekly to find products, compare prices, and get recommendations. Those shoppers also trust AI comparison tools more than traditional social media influencers.
Regional Exposure and China Trajectory
Recent restructuring follows a painful financial stretch across the European luxury sector. London-listed Burberry posted full-year revenue of $2.42 billion and net income of $21 million, leaving an operating margin of 0.87 percent. Paris-based Kering generated trailing twelve-month revenue of 14.46 billion euros and recorded a net loss of 322 million euros as demand slowed in key Asian shopping cities.
Investors will get their next check on November 12, 2026, when Burberry reports interim results. Those numbers will show whether lower price points and store cuts can stop margin erosion.
Questions & Answers
Q.What is driving the projected growth in global luxury spending this year?
What is driving the projected growth in global luxury spending this year?
The anticipated rebound is primarily driven by an 8 percent increase in North America, alongside a 2 percent to 3 percent recovery expected in China. This growth follows a three-year period of slower performance for the sector.
Q.How are luxury brands like Burberry and Kering adapting their strategies due to price sensitivity?
How are luxury brands like Burberry and Kering adapting their strategies due to price sensitivity?
Burberry is refocusing on heritage outerwear and accessible entry products like $400 polo shirts to attract new shoppers. Kering is splitting its commercial strategy to cater separately to wealthy clients and aspirational buyers with different services and product categories.
Q.How are retailers in Asia-Pacific hubs like Shanghai and Tokyo adjusting their store layouts?
How are retailers in Asia-Pacific hubs like Shanghai and Tokyo adjusting their store layouts?
Landlords and department stores in these hubs are rebalancing floor space, shifting from high-priced ready-to-wear collections. They are allocating more prime areas to beauty counters, eyewear concessions, and fragrance boutiques where sales volumes remain strong.
Q.How do luxury shoppers currently use artificial intelligence in their purchasing process?
How do luxury shoppers currently use artificial intelligence in their purchasing process?
Ninety percent of luxury shoppers use AI tools daily or weekly to find products, compare prices, and receive recommendations. These shoppers also show more trust in AI comparison tools than in traditional social media influencers.
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