Altagamma: future of luxury between top-tier, aspirational clients and high-potential countries like India and Thailand

Milan - Multi-brand retailers are facing a crisis. This is particularly true for those focused on clothing and leather goods, but not those in beauty and watches and necessitates an ever-closer relationship with customers. The luxury sector is experiencing a period of stagnant growth. There is also disaffection among aspirational consumers. This overview of the luxury market emerged this morning in Milan during the eleventh edition of the Altagamma Consumer and Retail Insight. Matteo Lunelli, president of Altagamma, emphasised in his speech that market uncertainty remains unresolved. Tariffs will play a significant role. Among the countries with the greatest potential for luxury companies are India, Indonesia and Thailand.

"We face many challenges at the European level," said Lunelli, "from sustainability to Artificial Intelligence, and we must address these challenges at a European level." Recently, a study on the impact of the European luxury industry was presented to the European Parliament by ECCIA, the European Cultural and Creative Industries Alliance.

Meanwhile, the eleventh edition of the Altagamma Consumer and Retail Insight presented a qualitative analysis of luxury consumers and new trends in retail.

"The Boston Consulting Group study shows that 35 percent of aspirational consumers have reduced their purchases. This is due to the loss of spending power and the decline in consumption in China. On the other hand, the highest segment of the pyramid, which represents 0.1 percent of the total in numerical terms, has increased its spending. This now generates 37 percent in value. For the next 18 months, 75 percent of aspirational consumers say they will maintain or increase their spending. This percentage rises to 85 percent for top-tier clients. To seize this opportunity, companies will have to continue to invest in an increasingly personalised and effective relationship with customers. They will need to consolidate the relationship of trust with them, based on a solid sharing of values. They will also need to leverage the excellence of their creations and their innovative services," explained Lunelli.

Aspirational consumers represent over 74 percent of the total market value

The process of democratisation has generated extraordinary growth. Aspirational consumers now represent over 74 percent of the total market value. This segment is now showing some fragility. While still representing 61 percent of the high-end market, it has recorded a decrease of 13 percentage points compared to 2013. Among the causes is certainly the decline in purchasing power due to the global situation of uncertainty and the geopolitical crisis.

Top-tier clients, with an annual spend of over 50,000 euros on luxury goods and services, are the market protagonists

Top-tier clients, with an annual spend of over 50,000 euros on luxury goods and services, are the true protagonists of the market today. This is not only in categories such as yachts or jets (in which they represent the entirety of the segment). It is also across a wide variety of purchases. These include design, wines and spirits, cars, wellness, watches and jewellery, which constitute the majority of the value of their consumption. They have a predilection for experiential luxury and for the new "health as wealth" trend. This considers wellness, aesthetics and the care of personal spaces as priority dimensions. Spending is expected to increase by around 10 percent in the next 18 months.

The "True-Luxury Global Consumer Insight" study, conducted by BCG in collaboration with the Altagamma Foundation, highlighted that top-tier clients represent the absolute top of the spending scale. They have an average annual spend of around 360,000 euros and a minimum threshold of over 50,000 euros. Although they constitute less than 0.1 percent of luxury consumers, in 2024 they generated over 23 percent of total market spending, excluding luxury mobility and wellness/longevity, and 37 percent including them. They exert a significant influence on the direction and dynamics of the entire sector.

Looking ahead to 2025, the personal luxury market will continue to face headwinds, with growth expected to be flat or slightly down. The scenario reflects a combination of critical factors: slowing demand in China, persistent macroeconomic uncertainty in the US, and continued contraction of the aspirational segment. These are all signs of a market in full transition.

What are the causes of the slowdown in the personal luxury market?

Among the most cited causes of the recent slowdown in the personal luxury market is the slowdown in luxury goods consumption by aspirational consumers. But what is really happening? This year's edition of True-Luxury Global Consumer Insights delves into the historical evolution of luxury, going back to its origins in the nineteenth century, when it was intended exclusively for a wealthy elite. Over the last century, however, luxury has progressively opened its doors to a wider audience. The process of democratisation has generated extraordinary growth, with aspirational consumers, those who spend less than 5,000 euros a year, coming to represent over 70 percent of the total market volume.

However, the segment that once fuelled growth is now showing its fragility. The spending of aspirational consumers has proven to be extremely sensitive to macroeconomic cycles. While top-tier clients tend to spend counter-cyclically, supported by the positive performance of financial markets and immune to general economic volatility, aspirational spending is closely correlated with global GDP trends, with a correlation of 0.97, according to the study.

Due to this strong market volatility, the aspirational segment now represents 60 percent of the luxury market, down 13 percentage points from 2013.

In the last year alone, about 35 percent of aspirational consumers have reduced or stopped spending on luxury goods. This percentage rises to 45 percent in China and to about 30 percent in Europe and the US. The main factors behind this shift are price increases, loss of perceived value and greater financial caution. The three main categories towards which consumers are reallocating their budget are: savings or financial investments (22 percent); wellness/longevity and personal care (13 percent); and second-hand luxury (13 percent).

Top-tier clients are preparing to increase their luxury purchases

"Today, aspirational consumers are focusing on investments in timeless products and are increasingly critical of price increases that are not justified by innovation or quality. Half say they prefer to buy iconic or timeless pieces and three out of four have given up on a purchase because of a negative perception of the price-quality ratio," the study continues.

It is not just a matter of economic caution, but probably a real redefinition of the very meaning of luxury for this segment.

The outlook for 2026 remains cautious for aspirational consumers: 50 percent still feel financially vulnerable (compared to 10 percent of top-tier clients) and 60 percent say they are concerned about macroeconomic pressures (such as tariffs). Overall, 25 percent expect a further reduction of between 5 percent and 25 percent in the next 18 months, while 40 percent of these expect their spending on luxury goods to remain stable.

In contrast, top-tier clients are preparing to increase their luxury purchases, with 51 percent expecting growth of between 5 percent and 25 percent in the near future, while 34 percent expect to maintain their spending.

What is the impact on luxury brands? Today, for brands heavily dependent on this segment, the consequences are clear: brands that count more than 50 percent of their clientele among aspirational consumers are experiencing the most marked declines, with significantly lower performance in the last three years and, in particular, in the last 12-18 months. In contrast, brands that have maintained their loyalty to the core of top-tier clients (the 0.1 percent of the clientele responsible for 37 percent of market value (including the luxury mobility and wellness/longevity categories) are not only weathering the crisis, but are experiencing a period of strong growth.

Who are the top-tier clients?

At the heart of the true-luxury sector is a small but extremely influential group: top-tier clients who, despite representing just 0.1 percent of the total clientele, have an annual spending capacity of over 50,000 euros and alone contribute to a considerable slice of the luxury market. The relevance of these clients is closely linked to a solid and constantly expanding demographic segment: high net worth individuals (HNWIs). In 2024, globally, the HNWI population exceeded 940,000 individuals and is expected to grow with a CAGR of 9 percent in terms of numbers and 8 percent in terms of wealth by 2030. In just six years, in fact, the wealth held by this segment will increase from 68 to 103 trillion euros.

North America remains the heart of global HNWI wealth, holding 46 percent of total wealth and continuing to drive the market. At the same time, however, new growth areas are emerging: regions such as India and Southeast Asia are seeing a significant acceleration in wealth creation. India, in particular, will see the number of HNWIs increase with an estimated CAGR of between 11 percent and 15 percent until 2034, supported by an increasingly international and dynamic clientele.

This article was translated to English using an AI tool.

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