Jewelry Stays Strong as Luxury Market Slows, Bain & Co. Says
Turbulence will be the new baseline for luxury as it faces its biggest potential setbacks in 15 years, a recent report said.

The sector is up against its “biggest potential setbacks for at least 15 years,” said the report, citing economic issues as well as societal and cultural shifts.
It is facing its first slowdown since the financial crisis of 2008/2009, excluding the COVID-19 pandemic.
According to the report, the personal luxury goods segment posted a post-pandemic rebound of €369 billion ($435 billion) in 2023 while sales were down 1 percent (flat when adjusted for currency fluctuations) to €364 billion ($429 billion) last year.
For some luxury brands, the slowdown has continued into the first quarter of this year, with jewelry the shining exception.
Luxury conglomerate LVMH, which owns Louis Vuitton and Tiffany & Co., among others, reported that Q1 revenue was down 2 percent, though sales were up in its jewelry and watch division.
Similarly, Kering saw sales sink in Q1 amid Gucci’s ongoing struggles while sales for its jewelry brands, which include Pomellato and Boucheron, grew.
“Worldwide luxury spending, historically sensitive to uncertainty, is coming under intensified pressure as luxury consumers’ confidence is eroded by current economic upheavals, geopolitical and trade tensions, currency fluctuations, and financial market volatility,” said Bain.
However, armed with strong fundamentals and a resilient spirit, the luxury market’s long-term prospects remain bright, it said.
Here are five key takeaways from the report.
Demand for luxury goods has softened in the United States and China.
There is a growing polarization in the luxury market, said the report, noting varying performances in different parts of the world.
In the U.S. and in mainland China, the two most important luxury markets, the report noted a period of softened demand due to “economic turbulence.”
In the U.S., tariffs have led to volatility, which is affecting the market and consumers’ willingness to spend.
In China, the middle-class consumers are in “wait-and-see” mode, said Bain.
“Despite this, the report points to glimmers of hope for the medium-to-longer term, with American consumers signaling appetite for accessible luxury while high-spending customers remain resilient,” it said.
In China, there’s a small but growing consumer interest in “new” local luxury brands.
As for other markets, Europe and Japan have been hurt by weakening tourism but local demand has somewhat offset the decline.
Notably, European consumers have continued to show an interest in jewelry and ready-to-wear clothing, especially in destination locations and for value-driven formats.
The luxury market remains strong in the Middle East, Latin America, and parts of Southeast Asia.
While spending habits vary by generation, brand engagement is down across the board.
The growing polarization noted above also applies to different generations of consumers.
Gen Z consumers are “split between a perceived need for self-expression and a desire for conformity.”
“These young consumers are seeking creativity, excitement, and emotional re-engagement,” the report said.
Financial pressures have made millennials more cautious, but they are responding to “fresh brand engagement,” said the report.
Older consumers, meanwhile, value meaningful experiences over goods.
Across all demographics, however, brand engagement has declined since 2022, the report said.
Brand-related searches are down for more than 40 percent of the brands, said Bain, while social media follower growth sank 90 percent.
Engagement rates are down by 40 percent, which the report attributes to “price fatigue and stagnant creativity.”
“In turn, brands have begun to pursue efforts to nurture consumers’ desire through new, experiential formats, category diversification, ‘beyond product’ experiences, and increasingly through a new wave of creative change,” said the report.
Claudia D’Arpizio, a partner at Bain & Co., encouraged brands to focus on their strengths and to prioritize quality, creativity, and authenticity.
“Deepening consumer relationships is essential, shifting away from push marketing toward seamless, customer-centric experiences across every touchpoint,” she said.
Jewelry is performing well while the watch category faces headwinds.
The divergence continues across product categories.
Jewelry remains strong, as it did last year, alongside apparel and eyewear, with “uber-luxury” items and those in the aspirational segment posting positive performances.
Watches, leather goods, and footwear are facing headwinds, “unless backed by true innovation,” according to the report.
“Even if the price points continue growing by 2 to 3 percent on average, brands are subtly reinforcing entry-price strategies to broaden their appeal without eroding brand equity, with winning cases underpinned by [a] combination of true newness and a unique brand point of view,” it said.
“Traditional brands, stuck in diluted identities and lookalike aesthetics targeting the same consumer pools, are losing ground to more agile, culturally rooted luxury rivals.” — Bain & Co.
As competition heats up, offering a strong value proposition is key.
New and evolving brands are giving traditional luxury brands a run for their money, combining authenticity with a modern strategy.
“Traditional brands, stuck in diluted identities and lookalike aesthetics targeting the same consumer pools, are losing ground to more agile, culturally rooted luxury rivals,” said the report.
New Western brands are offering strong value propositions and more accessible pricing, said Bain.
As for retail, multi-brand channels are facing added pressure, even though consumer interest is still there.
“More than 70 percent of luxury brands are pulling back volume from these retail platforms amid their financial struggles,” the report said.
“To remain vital, multi-brand players must evolve–deepening customer engagement, supporting emerging brands, and delivering standout service across the journey.”
Brands can also stand out by offering a solid value proposition.
Luxury brands are up against weakening consumer sentiment and a “growing disillusionment” with their offerings, particularly among Gen Z.
“This trend is calling into question the luxury sector’s long-standing price-to-value equilibrium as a growing group of younger consumers reassess their relationship with luxury,” said the report.
Bain said it’s urging the industry to respond to the current challenges by refocusing on the fundamentals, “grounding value propositions in clear and differentiated brand identities, anchored in strong product quality and thoughtful price architectures.”
“At the heart of this shift lies a more fundamental question: Who are we as a brand, and what do we stand for?”
— Federica Levato, Bain & Co.
The future of luxury remains hopeful.
The current luxury market is facing short-term volatility, but all hope is not lost.
The industry’s long-term fundamentals and prospects remain strong, the report said.
Over the next five years, more than 300 million new consumers are expected to enter the luxury market, with more than half of these shoppers falling into the Gen Z or Gen Alpha (2010-today) demographic.
The number of potential luxury buyers is set to expand further as global incomes rise and generational wealth is transferred. There is expected to be a 20 percent increase in the number of high-net-worth consumers.
That doesn’t mean the industry doesn’t have work to do.
“Brands will need to rethink how they engage younger consumers, avoid over-reliance on top spenders, and build emotional connections that go beyond transactional loyalty,” said the report.
Bain & Co. partner Federica Levato said, “At the heart of this shift lies a more fundamental question: Who are we as a brand, and what do we stand for?
“Answering this with clarity and conviction will be critical for any brand aiming not just to endure, but to lead in this new era of transformation.”
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