Why Shoppers Are Turning Away From Luxury Brands | The Palki Sharma Show | IGR | India Global Review

Luxury Brands Face a Sharp Downturn

European luxury brands—including Louis Vuitton, Dior, Hermès, Gucci and Tiffany—remain powerful status symbols, but the companies behind them are facing a sharp downturn.

A report cited in the programme says Europe’s ten largest luxury companies lost about $350 billion in market value in 2026. LVMH reported a 5% year-on-year fall in fashion and leather-goods sales for July–September, while its shares had fallen by more than 40% over the year. The programme identifies LVMH, Hermès, Kering and Richemont as the sector’s “big four” and says their combined market value has fallen by nearly half since 2014.

Why Shoppers Are Pulling Back

The slowdown is tied in part to the retreat of middle-income shoppers. Bain & Company research cited in the report estimates that middle-class consumers account for more than half of luxury purchases worldwide. This group—around 330 million people—spends up to $2,100 per person annually, mainly on bags, clothing and jewellery.

Two pressures are driving the change:

• Rising prices have made luxury goods harder to justify, while inflation and higher costs for essentials such as fuel leave consumers with less discretionary income.
• Spending priorities are shifting toward health, well-being, longevity and experiences such as hotels and restaurants.

OTB chairman Renzo Rosso says he does not foresee a quick recovery for the sector.

A Strategic Dilemma for Luxury Companies

Cutting prices could erode the exclusivity that underpins luxury brands’ appeal. But maintaining premium prices means offering products that customers feel are genuinely worth the cost. Brand names still matter, but they may no longer be enough on their own to persuade shoppers.

Presenter and Contributors

• Presenter: Palki Sharma
• Quoted: Renzo Rosso
• Research cited: Bain & Company