The global luxury industry approaches 2026 with cautious optimism and an unresolved tension at its core. Industry forecasts suggest that a broad-based recovery may finally begin to take shape over the next year, following a prolonged period of slowing demand and uneven growth. Yet beneath this improving outlook lies a structural concern that luxury brands can no longer afford to sidestep: the cumulative impact of sustained price hikes on aspirational and younger consumers.
Recent industry analysis by Bain & Company, widely reported by Reuters, points to 2026 as a potential turning point for the sector after a weaker-than-expected period of demand. At the same time, the same assessments underline a growing sense of resistance among consumers who have seen prices rise sharply while perceived value has remained broadly static.
The result is a luxury market that may be stabilising financially, but is increasingly fragile in terms of long-term demand and generational relevance.
A recovery forecast shaped by imbalance
Luxury’s expected recovery in 2026 rests on several familiar pillars: easing inflationary pressures, a gradual improvement in consumer confidence, and the continued spending power of high-net-worth individuals. In recent years, this cohort has been largely insulated from economic volatility and has continued to support headline revenues for the world’s leading luxury houses.
However, this reliance has introduced a clear imbalance. Growth has become increasingly concentrated at the very top of the market, while demand from aspirational consumers has softened across multiple regions. Volume growth has slowed, store traffic has weakened, and entry-level purchases have become more sporadic.
A recovery driven by a narrower customer base may restore revenues, but it does little to secure the industry’s longer-term resilience.
The cumulative effect of relentless price rises
Luxury brands have raised prices consistently since 2020, initially in response to supply-chain disruption, rising input costs and currency volatility. Over time, these increases became a strategic tool to protect margins and reinforce perceptions of exclusivity.
The cumulative impact has been significant. In many categories, price growth has outpaced both inflation and income growth, particularly among younger consumers. Products that once served as accessible entry points into the luxury ecosystem have moved decisively out of reach.
What was once framed as pricing power is now increasingly perceived as pricing excess. For a growing segment of consumers, higher prices no longer signal enhanced desirability, but diminishing justification.
Aspirational buyers and the erosion of confidence
Aspirational consumers have long played a foundational role in luxury’s business model. While their spending may be modest relative to ultra-wealthy clients, they sustain brand visibility, cultural relevance and future demand.
In recent years, that relationship has weakened. Younger consumers face a markedly different economic environment from previous generations, characterised by slower wage growth, higher living costs and greater financial uncertainty. Against this backdrop, repeated luxury price hikes have altered the perceived balance between heritage, quality and cost.
The implicit assumption that aspirational buyers will simply wait, save and eventually return may prove misplaced. Consumer behaviour suggests that once purchasing habits shift, they rarely reverse fully.
Resale as both outlet and warning signal
One of the clearest manifestations of this shift is the rapid expansion of the luxury resale market. For younger shoppers, resale offers accessibility, sustainability and variety, often at substantially lower prices than primary retail.
What was once viewed as a secondary channel has become a central point of engagement. Increasingly, consumers encounter luxury brands for the first time through resale platforms rather than flagship stores. For some, second-hand purchasing is no longer a stepping stone, but a permanent alternative.
For luxury houses, this presents a strategic dilemma. Resale extends brand reach and cultural relevance, yet diverts demand from full-price sales and reduces control over pricing and distribution. The longer brands remain disengaged, the more influence they cede over how their products are valued in the market.
The shrinking entry-point problem
Perhaps the most consequential effect of sustained price inflation is the erosion of luxury’s entry tier. Small leather goods, scarves and accessories once acted as gateways, allowing new customers to form emotional connections with brands before trading up over time.
As prices have climbed, that gateway has narrowed. Without credible entry points, the customer pipeline weakens, and the industry risks severing the gradual relationship-building that underpins long-term loyalty.
Some brands have begun experimenting with alternative strategies, including limited-access products, experiential engagement and selective category expansion. These efforts, however, remain cautious and uneven across the sector.
Why discounting offers no durable solution
As growth slows, the temptation to stimulate demand through discounting and outlet expansion inevitably increases. Yet such measures carry significant risks for luxury brands, whose pricing power rests on consistency and perceived scarcity.
Visible discrepancies between full-price retail and discounted channels undermine consumer confidence. Younger shoppers, particularly attuned to transparency, are quick to detect such contradictions, reinforcing scepticism around headline pricing.
In this context, short-term volume gains can come at the expense of long-term brand equity.
Recovery versus resolution
The distinction luxury faces in 2026 is not between decline and recovery, but between recovery and resolution. Forecasts may point to improving revenues, but they do not resolve the underlying tension created by years of aggressive pricing.
A market sustained primarily by its wealthiest consumers is inherently more vulnerable to shifts in sentiment and macroeconomic conditions. Without renewed participation from aspirational buyers, growth risks becoming increasingly brittle.
The challenge for luxury brands is therefore strategic rather than cyclical: to recalibrate pricing discipline, re-establish trust with younger consumers and articulate value in ways that extend beyond price alone.
The long view on desire
Luxury’s strength has never rested solely on cost, but on desire carefully cultivated over time. When prices begin to suppress desire rather than intensify it, the model falters.
As the industry looks towards 2026, recovery remains achievable. Whether it proves durable will depend on brands’ willingness to reassess the balance between exclusivity and accessibility. Growth secured by higher prices alone may restore margins, but relevance is what ultimately sustains demand
