US, China lead luxury demand as market heads to $700b

Emotional connection overtakes status as a key purchase driver.

The global luxury market is expected to reach $700b by 2030, with the United States and China remaining the industry's key growth drivers, according to McKinsey & Co’s State of Luxury report.

The report, based on a survey of more than 2,000 luxury consumers in the US and China, found that buyers are placing greater value on emotional connection, personalised experiences, and digital discovery than on traditional status symbols.

Emotional connection is now the leading factor influencing brand desirability in both markets, surpassing craftsmanship, heritage, and exclusivity. Consumers increasingly prefer brands that reflect their identity and values.

In the US, 68% of respondents said challenger brands better represent their identity than established luxury labels. In China, consumers continue to favor established brands because of their reputation, trust, and customer service.

The report also found that consumers no longer equate exclusivity with limited product availability. Instead, exclusivity is increasingly defined by insider recognition, personalised access, and premium experiences.

In the US, shoppers value early access to product launches, limited-edition collections, and membership-style benefits.

Chinese consumers, on the other hand, associate exclusivity with bespoke services, private shopping appointments, and trusted relationships with sales advisers.

Respondents in both countries were more likely to describe challenger brands as exclusive than long-established luxury labels, reflecting growing demand for cultural relevance and distinctive brand identities.

Luxury brands are also facing increasing competition from experiences for consumers' discretionary spending. Travel ranked as the top discretionary spending choice in both countries, reflecting growing demand for memorable and personalized experiences.

The report recommends that brands strengthen customer engagement through exclusive events, personalised services, and long-term loyalty programs.

Chinese consumers continue to view physical boutiques as central to the luxury experience, placing greater value on personalised service, private shopping events, and immersive retail environments that build emotional connections.

Additionally, artificial intelligence and resale platforms are reshaping how consumers shop for luxury goods. Consumers increasingly use AI to compare products, research features, and receive personalised recommendations before making purchases.

In the US, AI is influencing product discovery and purchase decisions, particularly among high-spending consumers. In China, AI serves a more practical role by helping consumers compare specifications and verify product quality.

The report suggests brands should combine AI tools with high-touch customer service to enhance consumer confidence rather than replace human interaction.

Moreover, resale is also becoming an important channel for luxury shoppers. US consumers view resale as a way to find rare and collectible items, whilst Chinese consumers prioritise authenticity and trust when buying secondhand luxury goods.

“Across the United States and China, consumers are redefining what luxury should deliver: more emotional meaning, insider recognition, memorable experiences, and rewarding discoveries,” the report said. “The next generation of luxury leaders will be those that deliver on those intangible, irreplaceable elements that consumers value as much as the products themselves.”