Luxury: lights and shadows on the future

Reflections and insights with Annamaria Tartaglia, CEO of TheBrandSitter, an agency specialising in the strategic growth of high-end brands in international markets and a leading expert in the luxury market

Milena Bernardi

The fact that the industry is undergoing a transformation was already anticipated by the latest Altagamma Observatory report. But how will the luxury market evolve and, more importantly, how will shifting geopolitical dynamics affect it? What steps should brands take to protect themselves?
While definitive answers remain elusive, one thing is now clear: the renewed importance of transformative experiences and the widening gap between accessible luxury – 50 million consumers lost in 2024 – and the accelerating rise of premium luxury.
One constant in the world of luxury goods is the role of packaging. As a symbol of brand exclusivity, it must not only ensure product quality but also evoke emotions, elevate gestures and tell a story.

Consumers are looking beyond physical objects, seeking unique and unforgettable experiences. Have we shifted from the cult of possession to the cult of experience?
We are indeed witnessing a profound transformation in consumer priorities and expectations. When we talk about the experience market, we encompass a wide range of worlds, from ultra-luxury goods like cars and yachts to furniture, fine dining, hospitality, and travel. Luxury is no longer just something to be purchased, but something to be fully experienced in an immersive and all-encompassing way.
These experiences create pleasure and lasting emotions that are no longer related to physical objects but to subjectivity. Key elements such as discovery, curiosity and surprise play a crucial role, along with time – an increasingly valuable luxury in itself – best enjoyed with carefully chosen people.
A luxury experience is not just something to be seen, it must be perceived, felt and internalised. This is why owning personal luxury goods tied to seasonality, fashion, and wearability is no longer the desirable status symbol it once was.

So, should brands focus on creating emotions to sell tangible products?
Indeed, this scenario requires brands to structurally rethink their approach, striking a balance between offering unique, immersive experiences and meeting the continued demand for traditional products.
How can this be achieved? By creating a purchasing experience that embodies the brand's values and identity, engaging consumers and immersing them in a larger ecosystem where luxury, ideas, design, art and culture are seamlessly intertwined. For instance, stepping into a store could mean finding a restaurant, an art gallery, or even a spa. Many luxury professionals have already embraced this approach, strengthening their relationship with consumers and creating value that extends beyond mere ownership of a product.

What role does packaging play in all of this?
While packaging may hold little significance in the realm of pure experiences, it remains fundamental when it comes to the goods. Packaging plays a crucial role in shaping the consumer's perception of a product's value. It's impossible to imagine a Hermes or Chanel handbag without an exquisitely designed box, crafted from refined materials, colours and details, which becomes a coveted item in its own right.
Packaging also has an experiential value. Take, for example, the phenomenon of “unboxing”, a ritual that has become a form of entertainment with countless videos shared on social media. The act of unboxing a luxury product evokes a childlike sense of excitement, a feeling that, in many ways, is mirrored when we watch someone else go through the same ritual on screen. This experience strengthens brand loyalty and encourages future purchases.

According to surveys by the Altagamma Observatory, young consumers, particularly Generation Z, seem to have moved away from luxury brands. Why is this happening?
We are talking about a generation with limited purchasing power. The real issue is that Generation Z influences so-called High Net Worth Individuals (i.e. very important clients for luxury brands). The actual buyers are often older customers, such as parents or grandparents of Gen Z. For these young consumers, the experiential aspect is what matters most – their interaction with the brand, in-store experiences, entertainment elements, gamification strategies, and engagement on social media. Brands must, therefore, rethink their approach to this demographic, which requires an authentic narrative built around values such as sustainability, inclusiveness and transparency.

According to statistics, by 2025, the Chinese will no longer be the top performers in the industry (+2%), but the Americans will take the lead (+4.5%). What does this mean in light of the new U.S. economic scenario?
We are facing a dual challenge: on one side, China's economic slowdown, and on the other, a tariff war that has proven far more impactful than expected.
For certain personal luxury goods, price increases may remain moderate, but for other segments, unfortunately, they could have a significant impact. I am thinking of yachts, cars, and handcrafted products made in Italy.
High-spending luxury customers who appreciate craftsmanship, uniqueness, and exclusivity will likely continue to invest. The real challenge, however, will impact market segments where prices have already risen significantly, in some cases to levels that seem almost out of control compared to the end consumer's perceived value of the product. It goes without saying that with the addition of tariffs and taxes, there is a risk of losing large portions of the premium, intermediate and accessible luxury markets.
Considering that, for many brands, a significant share of revenue comes not from ultra-luxury customers, but from these broader customer segments, this is a development that warrants serious reflection. Global luxury has, in fact, lost 50 million consumers – not from the upper echelons, which have actually grown, but from the intermediate echelons. These are consumers already struggling with inflation and rising prices, for whom luxury has traditionally been a pleasant complement to their lifestyle, which is now increasingly being called into question.

Could a possible strategy for brands then be to position themselves at the very high end of the spectrum?
Yes, it is. Absolute luxury remains a privileged space in which brands are increasingly investing. However, not all brands will be able to make this shift successfully, as much depends on consumer perception. If a brand has positioned itself within the affordable luxury segment, it is unlikely to be perceived as belonging to a certain type of consumption.

What will the 2025 performance of the luxury market depend on?
There remains a significant level of uncertainty not only for 2025 but also for 2026. It will largely depend on geopolitical and economic factors, particularly the movements of key players such as the United States, China and emerging markets like India, new African countries and South America. Another factor will be whether sanctions on Russia are eased, allowing the recovery of luxury customers who have shifted to Gulf markets due to higher taxation.