Luxury Goods Market: Millennials, Gen Z Influence & Future Demand Patterns

According to IMARC Group's latest research publication, global luxury goods market size reached USD 296.9 Billion in 2025. Looking forward, IMARC Group expects the market to reach USD 407.2 Billion by 2034, exhibiting a growth rate (CAGR) of 3.57% during 2026-2034.

How AI is Reshaping the Future of Luxury Goods Market

• Hyper-Personalization and Virtual Styling: AI analyzes customer purchase history and preferences to deliver tailored product recommendations. Brands like Louis Vuitton use AI systems recommending exclusive products, while Chanel employs virtual assistants offering real-time fashion advice and personalized shopping experiences.
• Counterfeit Detection and Authenticity Verification: AI-powered image recognition authenticates luxury products with 95% accuracy. Companies like Cartier and Bulgari developed AI and blockchain systems verifying high-end watches and jewelry authenticity through material and pattern analysis, protecting brand integrity and consumer trust.
• Augmented Reality Shopping Experiences: Over 35% of luxury brands implemented augmented reality solutions enhancing customer experience. Gucci allows customers trying glasses and sneakers using AR through its app, while Rolex created online AI-powered configurators helping customers design perfect watches based on personal style.
• Supply Chain and Inventory Optimization: Machine learning algorithms identify production workflow inefficiencies, flagging bottlenecks and optimizing resource allocation. Predictive analytics forecasts demand and manages inventories, helping brands minimize waste, reduce costs by 20%, and maintain artisanal quality standards while responding agilely to market demands.
• Sustainable Material Sourcing and Production: AI tools verify raw material provenance ensuring responsible sourcing while tracking carbon footprints and labor conditions. Stella McCartney employs AI selecting eco-friendly materials, reducing fabric waste by 30%. Hermès uses AI enhancing leather goods quality, ensuring each piece meets excellence standards.

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Luxury Goods Industry Overview:

The luxury goods sector is experiencing remarkable transformation driven by rising affluence in emerging markets, particularly Asia-Pacific, which now accounts for 39.8% of global market share. China leads luxury consumption with urbanization reaching 66.16% by 2023, expected to approach 70% soon. The United States holds 76.80% market share within its region, with the jewelry market reaching USD 75 billion in 2023 and luxury handbag brands showing 46.2% purchase rates among consumers. Growing millennial and Gen Z demographics—projected to represent 50-55% and 25-30% of luxury purchases respectively by 2030—are reshaping market dynamics. These younger consumers prioritize experiential luxury and sustainable practices, driving brands toward digital transformation and eco-conscious initiatives while maintaining craftsmanship excellence.

Luxury Goods Market Trends & Drivers

Rising disposable incomes and accelerating urbanization are fundamentally reshaping luxury consumption patterns globally. The United States leads with USD 54,854 average gross disposable income per household, followed by Luxembourg at USD 49,860 and Switzerland at USD 43,035. Women control approximately USD 20 trillion in annual consumer spending, expected to reach USD 28 trillion within five years, representing 60.5% of luxury market share. High-net-worth individuals continue expanding, with Asia-Pacific surpassing Europe in 2020 to capture 35% of global luxury consumption. E-commerce platforms are revolutionizing accessibility, with the global e-commerce market projected to reach USD 183.8 trillion by 2032 at 27.16% growth rate. Online distribution channels now command 32.5% market share as consumers increasingly value seamless purchasing experiences, personalized recommendations, and efficient delivery services enhancing convenience and brand engagement.

Experiential luxury and millennial preferences are fundamentally changing traditional consumption patterns as younger demographics value experiences over material possessions. Studies reveal 78% of millennials prefer spending on experiences rather than tangible goods, prompting luxury firms to offer immersive experiences including special travel packages, personalized lifestyle services, and invitation-only events. Louis Vuitton opened The Louis cruise-ship-shaped Shanghai flagship in 2025, combining exhibitions, café, and events to offer spectacle and cultural access even to non-buyers. Ralph Lauren operates over 40 global Ralph's Coffee cafés alongside destination restaurants like The Polo Bar in New York and Ralph's in Paris, with a London Polo Bar outpost planned for 2028. Hermès's Carré H reopened as gallery-style celebration of craft and design, while Dior and other luxury houses continue investing in museum-style spaces creating immersive brand experiences beyond traditional retail environments.

Digital transformation and sustainability initiatives are becoming essential competitive differentiators in the luxury sector. The AI in luxury brands market reached USD 1.2 billion in 2024, projected to grow to USD 5.6 billion by 2034 at 16.2% compound annual growth rate as brands leverage technology for personalization and operational efficiency. The Aura Blockchain Consortium, supported by LVMH, Cartier, and Prada, expanded its digital product passport initiative now tracking tens of millions of luxury items to combat counterfeits. European luxury goods prices increased 54% from 2019 through September 2024, with iconic items like Chanel Classic Flap bags rising from USD 5,800 in 2019 to USD 11,300 in 2025. Despite pricing pressures, brands emphasizing sustainability attract eco-conscious consumers increasingly concerned about ethical sourcing, with resale platforms and pre-owned luxury items becoming mainstream among younger shoppers challenging traditional exclusivity notions.

Leading Companies Operating in the Luxury Goods Industry:

• Chanel
• Compagnie Financière Richemont S.A.
• Gianni Versace S.r.l
• Giorgio Armani S.p.A
• Hermès International S.A.
• Kering S.A.
• LVMH Moët Hennessy Louis Vuitton
• Prada S.p.A.
• Ralph Lauren Corporation
• Rolex SA
• The Estée Lauder Companies Inc.
• The Swatch Group Ltd
• Valentino S.p.A.

Luxury Goods Market Report Segmentation:

By Product Type:

• Watches and Jewellery
• Perfumes and Cosmetics
• Clothing
• Bags/Purse
• Others

Watches and jewellery dominate the luxury goods market with a 27.0% share in 2024, driven by continuous demand across demographics and cultures, with luxury watches projected to reach US$ 36.8 billion by 2032 at a growth rate of 2.9%.

By Distribution Channel:

• Offline
• Online

Online sales lead the luxury goods market with a 32.5% share in 2024, benefiting from changing consumer behaviors and the advantages of e-commerce, which is expected to grow to US$ 183.8 trillion by 2032 at a rate of 27.16%.

By End User:

• Women
• Men

Women hold a significant 60.5% market share in luxury goods in 2024 due to their substantial buying power and influence, controlling approximately $20 trillion in annual spending, which is projected to rise to $28 trillion in five years.

Regional Insights:

• North America (United States, Canada)
• Asia Pacific (China, Japan, India, South Korea, Australia, Indonesia, Others)
• Europe (Germany, France, United Kingdom, Italy, Spain, Russia, Others)
• Latin America (Brazil, Mexico, Others)
• Middle East and Africa

Asia Pacific is the largest market for luxury goods in 2024, accounting for over 39.8% of the share, fueled by economic growth, increased disposable incomes, and a large youth population eager to purchase luxury items.

Recent News and Developments in Luxury Goods Market

• January 2026: Luxury retail restructuring — Iconic luxury retailer Saks Global is preparing a Chapter 11 bankruptcy filing amid continued financial pressure from e-commerce competition and heavy debt following its 2024 merger with Neiman Marcus. The company is negotiating a ~$1.25 billion DIP financing package to maintain operations through restructuring.
• January 2026: Experiential retail focus grows — As department stores face declining sales, luxury houses and legacy retailers are investing heavily in immersive in-store experiences (events, performances, designer talks) to draw foot traffic and deepen brand engagement.
• January 2026: Heritage revival in fashion accessories — Gucci officially relaunches its Horsebit bag for 2026, blending archival design with modern utility, with high visibility among fashion influencers and icons, signaling consumer appetite for nostalgia and classic luxury pieces.
• January 2026: K-pop’s influence grows — Heritage European brands are increasingly leveraging K-pop culture and Seoul’s fashion influence to boost global relevance, with major houses reporting significant gains linked to idol collaborations and Asian market engagement.
• Late 2025: Industry recovery outlook — Luxury leaders are projecting renewed growth and stability in 2026, with HSBC and industry voices citing stronger consumer sentiment in the U.S. and China plus a strategic focus on craftsmanship and authenticity as key drivers.

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