The luxury industry is broad and multifaceted. Typically, it encompasses several key sectors, catering to affluent and aspirational consumers who want exclusivity, fine craftsmanship, investment potential and prestige. In this piece, I look at the leading sectors making up the industry and determine which can expect a fruitful 2025 and which could be heading into choppy waters.
It is widely agreed that the luxury industry comprises the following sectors:
Fashion and Apparel
Leather Goods
Jewellery
Watches/timepieces
Beauty and Fragrances
Footwear
Hospitality and Travel
Automotive
Wine and Spirits
Furniture and Home Décor
Technology and Gadgets
Below, using the latest data and trend reports, reading the opinions of experts working in the luxury industry, factoring in potential economic and political headwinds, and diving into pretty much everything else that might be helpful, I’ve listed the sectors that I expect will perform the best in 2025 and those could find things ‘tough going’.
The Luxury Sectors I Expect to Perform the Best in 2025
Based on my research, I have singled out five sectors of the luxury industry that should stand out in 2025.
[1]. Jewellery
Industry analysts’ reports predict that the sector will experience relatively healthy growth of 4% to 6% annually from now until 2027. Jewellery always performs well because it is a “hard luxury” item that is seen as a status symbol. Importantly, in this day and age, it also has investment potential.
[2]. Leather Goods
Leather goods, particularly handbags, will also do well because they are timeless and have the ever-present brand prestige aspect. The growth in the leather goods sector is expected to be fuelled by increased production volume rather than the rising prices seen in recent years.
[3]. Luxury Fashion
The luxury fashion sector, which encompasses apparel and footwear, is projected to grow between 5% and 6% annually between 2025 and 2027. This growth will depend on their being no significant ripples in key markets like the U.S. and China. It should also be mentioned that the potential of tariffs could throw this and all the other predictions out of the window.
Of the brands operating in the luxury fashion sector, those deliberately targeting aspirational buyers could face a more challenging time in 2025.
[4]. Watches and Timepieces
Another sector where I expect to see growth is the luxury watch market. Reports and industry forecasts indicate that this sector could grow by up to 3% this year. As with the jewellery sector, some watches are seen as value-retaining assets and appeal to collectors, which should provide a stable base for the sector.
[5]. Experiential Luxury
Experiential luxury encompasses experiences, services, and high-end goods that prioritise unique, personalised, and immersive moments over material possessions. Examples could include watching the sunset from a luxury tent in the desert or doing the same on a private yacht while a chef creates a delicious meal for you.
The focus is on the experience itself and is often tied to emotion, storytelling, or a sense of rarity.
I expect the experiential luxury sector, which includes travel and hospitality, to be the best performer in 2025. High-net-worth individuals are increasingly prioritising exclusive, culturally rich experiences over material goods.
The driving force will be a mixture of affluent spending, younger consumer influence, and a shift toward value and experience over mere ownership.
The Sectors that ‘Could’ Experience Choppy Waters in 2025
Beauty and Fragrances
After years of growth, the luxury beauty market, particularly perfumes and cosmetics, could experience a slowdown as consumers reduce their spending in response to economic uncertainty. However, many analysts still predict that with a good following wind, the sector could still experience a growth of between 1 and 3%.
Automotive
Of all the sectors making up the luxury industry, automotive is the one I am most pessimistic about. The high costs and slow transition to electric vehicles, which many manufacturers have been forced to base their business models on, will weigh heavily on the shoulders of some of the most prominent European and Japanese motoring brands.
In addition, the introduction of solid-state battery technologies, particularly from Chinese car manufacturers, plus the potential for higher interest rates and interruptions to supply chains could see some well-respected brands struggling to hit even the lower end of their sales estimates.
However, although I have painted a somewhat gloomy outlook for the automotive sector, I expect some low-volume, top-tier, performance-focused brands to still perform well this year.
Furniture and Home Décor
The sector I expect to perform the best in 2025 is Experiential Luxury, as high-net-worth individuals appear to be prioritising experiences over material purchases. Due to long lead times, luxury, designer, bespoke furniture products and home décor sectors will likely bear the brunt of this mindset shift.
Another thing that could impact the performance of this sector is how the real estate market performs. If there is a noticeable slowdown in the real estate market, primarily from higher interest rates, it will undoubtedly negatively affect this sector further.
Technology and Gadgets
Luxury tech, which is regarded as a niche sector, could find trading tough due to its reliance on innovation and novelty. Sales could be difficult if new releases don’t capture attention or prices outpace perceived value. The sector is also vulnerable to competition from mainstream tech brands, who can offer premium alternatives at lower costs, pushing down growth in the sector.
Final Thoughts
My views on which sectors of the luxury industry will perform the best are based on the available information and assumptions. As far as I am aware, no one has yet been proven to be able to predict the future, and therefore, the above must be taken as an opinion.
We are living in changing times, and many factors, including geopolitical tensions, the potential for tariffs, inflation, and an increase in the appetite for experiential luxury, could alter any of my predictions by 180 degrees.
The brands that are more reliant on aspirational buyers are likely to feel the brunt of the above, whilst those that focus on the ultra-wealthy will likely fare better, as their buyers tend to be insulated from economic dips.