Luxury Industry Normalizes, Prioritizes Relevance Over Scale

Kearney report finds luxury brands must earn consumer engagement through creativity, value, and data-driven insights

Mar. 17, 2026 at 11:34am

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A new report from management consulting firm Kearney finds the global luxury industry is entering a 'normalization phase' after a year of creative resets, pricing adjustments, and operational discipline. The industry is expected to see 2-4% growth in 2026, but unevenly distributed across regions, categories, and client tiers. Key trends include selective splurging by consumers, increased value scrutiny, stabilizing growth in China, the growing importance of AI, and a focus on earning relevance over scale or price escalation.

Why it matters

The luxury industry has faced significant challenges in recent years, including the impact of the pandemic, shifting consumer preferences, and increased competition. This report provides valuable insights into how the industry is adapting and the strategies luxury brands must employ to remain relevant and successful in the years ahead.

The details

The report finds that luxury spending is becoming more concentrated and intentional, with the top 2% of clients now accounting for nearly half of total spend. Technology, particularly AI, is becoming foundational, with competitive advantage shifting toward brands that can industrialize AI while preserving human-led creativity. The report also notes that luxury growth will remain concentrated in top clients and experiences, while aspirational consumers continue to redefine how and when they engage with luxury brands.

  • The Kearney 2026 Global Luxury Industry Outlook report was released on March 17, 2026.

The players

Nora Kleinewillinghoefer

A Kearney partner and the firm's global lead for fashion and luxury.

Katie Thomas

The lead of the Kearney Consumer Institute, which conducted consumer research for the report.

Kearney

A leading management consulting firm and trusted partner to three-quarters of the Fortune Global 500 and governments around the world.

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What they’re saying

“Luxury isn't entering a downturn. It's entering a normalization phase.”

— Nora Kleinewillinghoefer, Kearney partner and global lead for fashion and luxury

“There isn't just one stereotypical luxury consumer. Our research identified three discrete profiles: aspirational consumers who selectively participate in the category, selective splurgers who balance restraint with continued engagement, and traditionalists who spend freely and live a full luxury lifestyle.”

— Katie Thomas, Lead of the Kearney Consumer Institute

What’s next

The report predicts that global economic volatility will persist, keeping margin pressures elevated. However, continued price increases will raise the bar for perceived value, and luxury growth will stay concentrated in top clients and experiences.

The takeaway

The luxury industry is undergoing a significant transformation, with brands needing to prioritize creativity, value, and data-driven consumer insights to remain relevant and successful. The industry is moving away from a focus on scale and price escalation, and towards earning consumer engagement through innovative offerings and a deeper understanding of evolving consumer preferences.