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      How luxury brands adapt in a changing world

      The global luxury industry has been navigating a period of significant change, prompting fundamental questions about its future.

      Is the current turbulence a temporary cyclical slowdown, or does it signal deeper structural shifts? How can luxury brands respond effectively while preparing for recovery and long-term growth? Which opportunities should they pursue to remain relevant and high-performing, and how can they continue to innovate?

      To explore these questions, we engaged with a diverse range of industry professionals, including entrepreneurs, analysts, and designers. Their perspectives – rooted in experience, intuition, and deep knowledge of the sector – complement quantitative data to provide a comprehensive view of today’s challenges and opportunities.

      This report aims to shed light on luxury in the midst of change. It examines how brands can build resilience, embrace innovation, and integrate ESG and sustainability in luxury strategies while navigating macroeconomic, cultural, and societal shifts.

      Luxury Report

      KPMG Luxury Report 2025 

      Discover key luxury industry trends and insights in 2025

      Explore the future of luxury

      Key trends in the luxury industry 2025

      The luxury industry is entering a new era defined by innovation, sustainability, and shifting consumer values. In 2025, brands are moving beyond exclusivity to embrace cultural relevance and meaningful experiences.

      Digital acceleration and AI are transforming the luxury industry: virtual showrooms, immersive environments, and personalization of the shopping experience.

      • Innovation
      • Sustainability 
      • Transparent supply chains
      • New generation customers
      • Circular business models
      • Eco-conscious design

      Another key driver is the rise of global influence. Europe maintains its position as a cornerstone of luxury heritage, while parts of Asia and the Middle East are emerging as growth hubs. The United States, despite the tariffs, remains a country with very high potential. Switzerland, with its unmatched craftsmanship and exclusive know-how, continues to set globally recognized standards of quality.

      Swiss watchmaking – can centuries of heritage drive innovation?

      The Swiss watch industry has long been synonymous with precision, craftsmanship, and timeless elegance. Rooted in centuries of tradition, it represents not only the art of measuring time but also a cultural heritage that embodies sophistication and exclusivity. From the alpine valleys of the Jura to the ateliers of Geneva, Swiss watchmakers have cultivated a reputation for unmatched quality and attention to detail.

      Yet the story does not end with tradition. Today, Swiss watchmaking trends reveal a new chapter where heritage meets innovation. Cutting-edge materials, sustainable production methods, and digital integration are reshaping the sector while staying true to its artisanal roots. From advanced complications to smart features, the Swiss watch industry continues to push boundaries while preserving values that made it a world leader.

      This balance between past and future ensures that Swiss watchmaking remains not only a vital part of the Swiss luxury industry but also a symbol of enduring innovation, authenticity, and prestige in a constantly evolving world. By embracing both technology in luxury retail and artisanal mastery, it reinforces its position as a benchmark for excellence and a model for luxury diversification strategies.

      The real challenge is to innovate without compromising the identity of the brand or the watchmaking family. Innovation should never be a gimmick; it must strengthen quality, enrich craftsmanship, and improve the customer experience."
      Fabien Perrinjaquet

      Partner, Sector Head Luxury Goods

      KPMG Switzerland

      How Swiss brands balance innovation, heritage and global challenges

      Fabien Perrinjaquet, Partner and Sector Head Luxury Goods at KPMG Switzerland, shares his perspectives on the Swiss watchmaking industry, which is striving to balance innovation, heritage, and global challenges. (Interview in French with English subtitles.)

      The power of very important clients (VICs) in luxury growth

      In the luxury industry, customer experience is no longer just about the product – it defines the brand itself. Exceptional service, AI-driven personalization, and meaningful interactions create lasting emotional connections that transform customers into loyal advocates.

      However, luxury Maisons are not abandoning the hyper-luxury segment; on the contrary. Very Important Clients (VICs) remain key drivers of growth. Although they represent less than 2% of the customer base, VICs account for nearly 40% of revenue, highlighting the growing polarization within the sector.

      Leading groups like LVMH openly pursue strategies focused on the highest-end products and enhanced quality to maintain brand desirability. Examples abound: Hennessy recently launched a three-liter Paradis cognac designed by Ferruccio Laviani, priced at €9,900; Christofle offers bespoke pieces worth millions of euros; and Guerlain’s “Pièces d’Exception” – one-of-a-kind creations based on its iconic bee bottle – can fetch several hundred thousand euros.

      In fashion and leather goods, brands such as Gucci, Chanel, Dior, Bottega Veneta, Louis Vuitton, and Jacquemus have opened private salons or boutiques aimed at ultra-premium consumers to strengthen loyalty and exclusivity.

      For VICs, every touchpoint is carefully curated to exceed expectations – from private viewings and personalized recommendations to access to unique brand experiences. By combining heritage, innovation, technology in luxury retail, and craftsmanship and exclusivity, luxury Maisons ensure these top-tier clients remain loyal ambassadors of brand prestige.

      Mastering luxury pricing: Strategies and global challenges

      In today’s global luxury market, pricing is not just about covering costs – it is a central element of luxury pricing strategy that shapes brand perception, desirability, and exclusivity. Luxury houses must carefully balance market demand with prestige to preserve their pricing power without compromising their brand value or the bond of trust with customers.

      Key considerations include:

      • Global tariffs and trade policies

        Fluctuating import duties, regional tax differences, and currency shifts add complexity to pricing and supply chain decisions.

      • Dynamic pricing strategies

        Many luxury brands adjust prices for scarcity, limited editions, and market trends to optimize margins.

      • Data-driven insights

        Leveraging analytics and technology in luxury retail helps refine pricing strategies and respond to consumer behavior in real time.

      • Heritage and brand positioning

        Maintaining prestige while innovating ensures long-term value and reinforces desirability.

      By combining these strategies, luxury Maisons can navigate global challenges, maximize profitability, and maintain their position as aspirational and exclusive brands in a rapidly evolving market.

      Second-Hand market: Opportunity or risk?

      The second-hand luxury market, once niche, has become a defining force in consumer behavior. Valued at an estimated €48 billion in 2023, it is expanding rapidly. In the Swiss watch industry alone, the number of consumers likely to purchase a pre-owned watch doubled between 2020 and 2024.

      The main driver of this growth is sustainability. Consumers seek to reduce waste, adopt circular purchasing habits, and support ESG and sustainability in luxury. Our research confirms: 51% of industry professionals cite sustainability goals as their main reason for embracing second-hand products, followed by meeting the expectations of younger generations (38%).

      Scarcity also fuels demand. Iconic products like Hermès’s Birkin bag highlight how resale value can reinforce exclusivity, with some models reselling for over 250% of their original price. Vintage items further attract buyers through provenance and history, offering unique value beyond the primary market.

      For luxury Maisons, the resale boom presents both opportunity and challenge. It can boost visibility, align with luxury diversification strategies, and appeal to younger consumers, but it also requires strict control over pricing, product flow, and counterfeiting risks.

      Managed well, the second-hand segment strengthens brand equity and supports the long-term desirability of luxury goods.

      FAQs

      In 2025, luxury is defined by digital innovation, sustainability, and the evolving values and purchasing habits of consumers. Virtual experiences and AI personalization are transforming customer journeys, while eco-conscious design and circular models are now business essentials.

      Generation Z and Millennials are driving the demand for authenticity and exclusivity, while growth in certain regions of Asia and the Middle East complements the heritage hubs of Europe, such as Switzerland. The United States is also keeping pace, despite the tariffs imposed on all luxury goods exports.

      Swiss watchmaking is evolving by blending tradition with innovation. While preserving its centuries-old heritage of craftsmanship and precision, the industry is embracing new materials, sustainable production methods, and digital features.

      This balance ensures Swiss watches remain timeless symbols of excellence while meeting the expectations of a new generation of luxury consumers.

      In 2025, luxury goes beyond exclusivity – it stands for authenticity, sustainability, and meaningful experiences.

      Consumers value brands that combine heritage with innovation, offer personalization, and reflect cultural relevance in a fast-evolving world.

      Personalization is essential, as today’s consumers expect more than products—they seek experiences tailored to their identity and lifestyle.

      By offering bespoke services, targeted recommendations, and unique storytelling, brands create deep emotional connections, reinforce exclusivity, and build lasting loyalty.

      The secondhand market is more an opportunity than a threat. It opens luxury to new audiences, supports sustainability, and enhances brand visibility.

      Visionary houses are embracing resale platforms and certified pre-owned programs to build trust and capture sustainable growth. However, it is crucial to tightly manage this market to protect brand image and avoid risks related to pricing and counterfeits.

      The future of luxury brands depends on their ability to balance heritage and innovation. While traditional craftsmanship and historical heritage remain essential to their legitimacy, brands must adapt to stay relevant.

      This involves embracing evolving consumer behaviors, attracting a younger clientele, diversifying their offering, and exploring opportunities such as the secondhand market. Strategic choices that blend tradition and innovation will ensure long-term desirability and growth.

      The future success of the luxury sector lies in its responsiveness, flexibility, and creativity in facing external constraints.

      Haven’t found what you were looking for?

      Download our Luxury Report 2025 to access key findings, Swiss market insights, and strategies to stay ahead in a changing industry.

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      Luxury in transition: KPMG Luxury Report 2025 

      Discover key luxury industry trends and insights in 2025: innovation, sustainability and customer shifts.

      Download Full Report PDF

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      Fabien Perrinjaquet
      Fabien Perrinjaquet

      Partner, Head of the Market Region Neuchâtel, Jura and Bernese Jura, Sector Head Luxury Goods

      KPMG Switzerland

      Stéphane Nusbaumer
      Stéphane Nusbaumer

      Partner, Sector Head Consumer Goods, Audit Corporates Western Switzerland

      KPMG Switzerland