Remember when every influencer seemed to be flexing a new designer bag, even if it meant skipping rent for two months? That era feels almost nostalgic now.
After the wild post-pandemic spending spree, something quietly broke in the luxury world. The people who used to stretch their budgets for that one statement piece simply stopped showing up. And two years later, the ripple effects are still shaking boardrooms from Paris to Milan.
But here’s the twist nobody saw coming: 2026 might actually be the year the sector finally stabilizes—and some corners of it could absolutely thrive. The catch? Not everyone gets to win.
The Vanishing Middle That Changed Everything
For decades, luxury houses quietly relied on two very different types of customers. At the top, you had the ultra-wealthy who think nothing of dropping six figures on a watch. At the bottom—well, the much larger bottom—you had millions of aspirational buyers. Teachers, mid-level managers, young professionals who would save for a year to own something with the right logo.
That second group has almost entirely disappeared.
It’s not that they fell out of love with fashion. They just ran out of spare cash. Higher rents, grocery bills that make you gasp at the checkout, student loans that never seem to shrink—suddenly a $3,500 leather tote started feeling irresponsible instead of rewarding.
“The aspirational buyer who used to treat themselves after a promotion or a bonus? They’re basically gone for now.”
– Michael Zakkour, founder of a leading luxury-focused digital consultancy
The numbers back him up. Categories like leather goods, ready-to-wear, and even entry-level shoes have seen sales slide for quarters on end. Meanwhile, “hard luxury”—think fine jewelry and Swiss watches—continues to post gains. The customer who can comfortably spend $30,000 on a necklace didn’t feel the same squeeze.
Why 2026 Actually Looks Different
After two painful years, most major analysts now agree: the worst is probably behind us. J.P. Morgan, UBS, and several boutique research houses all forecast the global luxury market returning to growth next year—somewhere in the low to mid single digits.
That might not sound thrilling after the 20% jumps we saw in 2021, but after flat or negative growth, it feels like oxygen.
Two big drivers are finally lining up:
- Chinese consumers are spending again (cautiously, but noticeably)
- Brands have woken up to “consumer fatigue” and are pushing genuine product innovation instead of just bigger logos and higher prices
China deserves its own paragraph, honestly. For years it was the rocket fuel of the industry—then it wasn’t. Stimulus packages, easier visa rules for travel, and a new generation of shoppers who actually have money again are changing the math. Department store traffic in mainland China has turned positive for the first time in ages.
Jewelry Keeps Winning—Everything Else Has to Fight
If you want to understand where the smart money is flowing right now, look at who’s buying the sparkle.
Brands heavily exposed to high jewelry and complicated watches are the clear outperformers. Think Richemont (Cartier, Van Cleef & Arpels) or the usual Swiss heavyweights. Their customers are less sensitive to mortgage rates or grocery inflation.
On the flip side, the “soft luxury” names—handbags, clothing, shoes—are in a dogfight. Some will make it. Many won’t look pretty doing it.
Here’s a quick snapshot of where analysts stand going into 2026:
| Category | Expected 2026 Performance | Analyst Sentiment |
| High Jewelry & Watches | Strong growth | Very bullish |
| Iconic Handbags (heritage lines) | Modest recovery | Neutral to cautious |
| Entry-level luxury & fashion | Flat to slight decline | Bearish |
| Outerwear & niche monobrands | Potential upside surprises | Selective optimism |
The Stocks Analysts Are Betting On (and Against)
Stock picking is going to matter more than it has in a decade. Blanket “luxury is back” trades won’t cut it anymore.
Top picks across the Street right now include:
- Richemont – Cartier and Van Cleef are basically printing money
- Moncler – premium outerwear still resonates when the product feels worth it
- Prada – quiet turnaround gaining momentum
- LVMH – too big to ignore, and Dior/Louis Vuitton remain fortress businesses
One name that’s splitting opinion hard? Burberry. Some see a classic British turnaround story. Others think the easy fixes are done and the next leg looks brutally hard. Recent downgrades reflect that tension.
Risks That Could Still Derail the Recovery
Let’s not get carried away. Plenty can still go wrong.
First, the wealth effect cuts both ways. U.S. consumers have been remarkably resilient, buoyed by rising stock and home prices. If markets throw a proper tantrum—especially if the whole AI narrative cracks—those discretionary dollars could evaporate fast.
Second, China’s rebound is real but fragile. One policy misstep, one property sector scare, and confidence could freeze again.
Third, brands themselves have to stop the price-gouging hangover. Customers noticed that bags went up 60% while quality barely budged. Innovation isn’t optional anymore; it’s survival.
“We’ve reached peak logo fatigue. If the product doesn’t feel special at the new price point, people just walk away.”
– A European luxury goods analyst, November 2025
What This Means for Regular People (Yes, You)
You might not own luxury stocks, but this shift affects more than just Wall Street.
Second-hand and rental platforms are exploding because aspirational buyers haven’t vanished—they’ve just gotten smarter. Why save for a new bag when you can rent the exact same one for a weekend at 5% of the retail price?
Quiet luxury (think The Row, Loro Piana, Brunello Cucinelli) keeps growing because it whispers instead of shouting. Turns out when logos feel try-hard, understated cashmere suddenly looks cooler.
And perhaps most interestingly, some heritage houses are finally experimenting with lower price points again—carefully. Not the logo-plastered entry lines of the past, but genuinely well-made pieces that feel worth it. Early signs are promising.
The Bottom Line for 2026
The luxury market isn’t dying—it’s maturing, painfully.
The days of every brand growing 15% a year just because they slapped a logo on something are over. From here, performance will diverge wildly. Some companies will come out stronger, leaner, and more creative. Others will spend years trying to figure out who their customer even is anymore.
For investors, that creates opportunity—but only if you’re picky. For the rest of us, it might just mean the stuff we buy (new or second-hand) finally has to earn its price tag again.
Frankly? After years of absurd price hikes, that doesn’t sound like the worst outcome.
