How can luxury brands defend pricing power as growth slows?

Spending shifts toward experiences as brands rethink pricing and customer engagement.

Luxury brands face slower growth as shoppers become more selective, spending shifts towards experiences, and artificial intelligence (AI) changes how products are discovered and bought.

Kearney expects the global luxury market to grow 2% to 4% this year—below broader industry expectations of 3% to 5%—after brands spent the past year adjusting prices and tightening costs.

In a March report, the management consulting firm said the sector is moving into a period of “normalisation” after years of rapid expansion, with brands relying less on product sales alone and more on experiences, services, and broader customer ecosystems.

The US, Europe, and China are expected to remain the biggest luxury markets because of their concentration of affluent consumers. However, growth is increasingly shifting towards parts of Asia.

Mainland China’s luxury spending is projected to rise 13% to $89.8b in 2026 from 2023, whilst India is forecast to grow 20% to $22.6b, according to Visa, Inc.’s May report.

Momentum is also building in Southeast Asia, with Indonesia and Thailand expected to grow 9.8% and 12% to $3.1b and $3.3b respectively.

Kearney said luxury spending is becoming more concentrated amongst ultra-high-net-worth and high-net-worth consumers, whilst aspirational shoppers are becoming more selective with discretionary spending.

Many are redirecting spending towards jewellery and luxury experiences instead of broad-based product purchases. The consultancy warned that continued price increases could weaken loyalty amongst noncore shoppers.

AI is also becoming embedded in forecasting, design, customer targeting, and service operations.

Kearney said the rise of AI-driven shopping assistants and automated buying tools could change how consumers discover and buy luxury products.

In this environment, visibility will increasingly depend on trust, clarity, and data integrity rather than brand prestige alone, according to the report.

Luxury houses are also undergoing significant creative leadership changes as brands try to refresh their image and reconnect with consumers. Kearney said creative director transitions in 2025 were three times higher than historical levels.

“Looking ahead, 2026 will be all about earning relevance—where growth is driven by resonance across product, experience, and ecosystem, not by scale alone,” it added.

Questions to ponder:

• How will luxury brands remain exclusive whilst expanding digital engagement and AI-driven services?
• Will luxury spending continue shifting from products towards experiences and personalised services?
• How much pricing power can luxury brands retain before aspirational shoppers cut back further?