Luxury players, markets, trends, and how to crack the cases
The main luxury groups, the key markets of China, the Gulf, Europe, and the US, the slowdown and stabilization of 2024 to 2026, regulation basics, and case prompts.
Industry brief, with a one-minute summary: Luxury and fashionFirm processes and online tests change from year to year and differ by office. Use this to prepare, and confirm the exact current steps on the firm's own careers page.
Key takeaways
- Luxury demand moves with a small number of wealthy clients and with where they travel.
- Common traps in luxury cases: Recommending discounts to lift volume, which can damage the brand for years.
- A slow recovery is expected.
- China: weaker local demand in 2024 and 2025 hurt many brands.
Key idea
Luxury demand moves with a small number of wealthy clients and with where they travel. A good luxury answer asks who the client is, where they buy, and whether the brand is gaining or losing desirability.
| Group or partner | Examples of brands or role | Sourced facts |
|---|---|---|
| LVMH (France) | Louis Vuitton, Dior, Tiffany, Sephora, Moët Hennessy | Revenue of about EUR 80.8 billion in 2025, down 5 percent as reported; fashion and leather goods down 8 percent as reported |
| Hermès (France) | Hermès | Revenue of about EUR 16 billion in 2025, up 9 percent at constant exchange rates, with a recurring operating margin of about 41 percent |
| Other groups | Kering, Richemont, Chanel, Prada, Moncler | Performance varied widely by brand in 2024 and 2025 |
| Gulf partners and travel retail | Chalhoub Group; Dubai Duty Free | Chalhoub says it is a retail partner for more than 450 brands in the region, many of them international luxury brands, plus its own brands; Dubai Duty Free reported record 2025 sales of AED 8.68 billion |
So-what
In a slow market, the strongest brands kept growing while others shrank: luxury is polarized.
Markets and trends from 2024 to 2026 (checked September 2026)
- The market paused. Bain and Altagamma estimated personal luxury goods at about EUR 358 billion in 2025, down about 2 percent at current exchange rates from about EUR 364 billion in 2024, after years of growth. Clients shifted spending toward experiences such as travel and dining.
- A slow recovery is expected. Bain's June 2026 update expects personal luxury goods to grow about 2 to 4 percent in 2026, to about EUR 365 to 373 billion, led by the Americas, with Europe and the Middle East a drag and jewellery the strongest category.
- China: weaker local demand in 2024 and 2025 hurt many brands. China turned Hainan island into a special customs zone from 18 December 2025, widening duty-free and zero-tariff policies, which supports travel retail there.
- The Gulf: a strong market with many wealthy residents and tourists, served largely through partners such as Chalhoub. Dubai Duty Free had a record 2025. The regional conflict from 28 February 2026 disrupted travel and tourist shopping: Bain estimated that the number of Gulf luxury clients shrank by 15 to 25 percent in early 2026, with tentative signs of recovery in May. Check current trading.
- Europe and the US: tourist shopping in Europe depends on currency and flights; Bain reported that US demand, including younger clients, led the 2026 recovery.
Brands protect trademarks and designs and fight counterfeits through customs and courts. Import duties and tariffs change price gaps between countries. Tourists can claim sales tax refunds in many countries (the UK ended this for most tourists in 2021). Duty-free shops operate under special customs licences. Selective distribution (choosing which shops may sell the brand) is allowed under EU competition law within limits. From 19 July 2026, large companies in the EU may no longer destroy unsold clothing, accessories, and shoes. Labour and sourcing rules require checks on supply chains.
| Prompt | Case type | Structure hint | First driver to check |
|---|---|---|---|
| A luxury brand's sales in China fell 15 percent | Profitability | Local versus tourist demand, channel, product, price, competition | Split between Chinese clients buying at home and abroad |
| Should a European fashion house open flagship stores in Riyadh? | Market entry | Client base, partner or own stores, real estate, brand fit | Whether to enter through a regional partner or directly |
| Should we raise prices 10 percent this year? | Pricing | Brand strength, elasticity by client group, competitor prices, price gaps | Sell-out rate and waiting lists of core products |
| A premium fashion brand has too much stock | Operations and process improvement | Buying depth, allocation, reorder speed, markdowns | Full-price sell-through by product line |
| Should a luxury group buy a heritage jewellery brand? | Mergers, acquisitions, and due diligence | Brand heat, client overlap, production capacity, price | Growth and margin of the brand's own stores |
So-what
Luxury cases usually turn on brand desirability, client location, and channel control.
See the Pricing, Market entry, and Mergers, acquisitions, and due diligence case-type modules for the full method. The Retail module covers store economics that also apply to fashion chains.
Recommending discounts to lift volume, which can damage the brand for years. Reading reported growth without checking currency. Assuming all luxury brands move together, when the market is polarized. Treating the Chinese client as only a buyer in China, when many buy while travelling. Applying fast fashion logic (volume, speed) to a luxury house, or the reverse.
Why might a luxury brand's sales in Europe rise while its sales in China fall, with the same clients?
What is the main risk of heavy discounting for a luxury brand?
In Bain's 2026 update, which region led the expected luxury recovery?
Sources for this lesson (13)
- Bain & Company and Altagamma: luxury market study (November 2025)
- Bain & Company: luxury study spring update (June 2026)
- The Fashion Law: LVMH 2025 results (January 2026)
- LVMH: key financial figures 2025, including gross margin
- World Footwear: Prada Group full-year 2025 results (2026)
- Hermès International: 2025 full-year results (February 2026)
- Inditex: FY2025 results, 1 February 2025 to 31 January 2026 (March 2026)
- H&M Group: full-year report 2025 (January 2026)
- Government of China: Hainan island-wide special customs operations begin (December 2025)
- Dubai Media Office: Dubai Duty Free record 2025 sales (January 2026)
- Chalhoub Group: business overview
- European Commission: ban on destruction of unsold clothes and shoes enters into application (July 2026)
- Euronews: strikes on Iran disrupt regional and international flights (28 February 2026)
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