Amid a slowdown in sales and the unprecedented phenomenon of “luxury fatigue,” the industry is rapidly evolving, according to a KPMG study published on Wednesday, July 2nd [1]. At the forefront of luxury brands’ new growth strategies are the expansion of product offerings — especially in perfumes and cosmetics — and the creation of highly personalized retail experiences. These initiatives are complemented by a stronger focus on sustainability, responsible practices, and the adoption of advanced technologies aimed at optimizing costs.
After several years of rapid expansion, the luxury industry is now facing a turbulent period marked by a slowdown in sales.. In the second edition of its dedicated luxury sector study — based on in-depth interviews and a quantitative survey of industry professionals — KPMG outlines the key strategies being adopted to navigate the current challenges.
Exclusive experiences
Confronted with a clientele increasingly less drawn to products whose perceived value is sometime declining, major luxury groups are shifting their focus toward crafting ultra-premium experiences.
“Luxury residences, gourmet restaurants and cafés developed in collaboration with renowned chefs, and exclusive travel experiences (such as cruises and luxury trains), etc.” are all part of a growing focus on “delivering unforgettable moments.” According to the study, luxury powerhouses are broadening their brand expression and positioning “hospitality as the ultimate embodiment of the luxury experience.”
The luxury industry’s growing interest in the hospitality sector is fueled by the strength of global tourism, according to the study. It cites examples such as Belmond, Cheval Blanc, Bulgari Hotels, and LVMH’s investment in Les Domaines de Fontenille. This trend also reflects a broader ambition to enhance brand desirability and deepen emotional connections with consumers.
Similarly, retail strategies are increasingly centered around delivering exclusive experiences, with a particular focus on Very Important Clients (VICs), i.e. the top 2% of customers who account for 40% of sales. Private lounges and appointment-only boutiques are tailored specifically to this elite clientele. More broadly, luxury brands are expanding their presence through destination boutiques in prestigious, high-traffic locations.
A strategy exemplified by Louis Vuitton, which — just months after unveiling its hybrid space ’LV The Place’ in Bangkok and a mega boutique in New York — has now opened a new 1,600 sqm hybrid venue on Wujiang Road in the heart of Shanghai’s central business district, combining a boutique, café, and exhibition space.
Beauty and wellness
At the same time, luxury groups are also positioning themselves in the luxury cosmetics and perfumery markets, “a development that allows brands to develop an accessible offering and reach a broader customer base” while benefiting from a dynamic market that could, according to some estimates, “double by 2027.”
Louis Vuitton (LVMH Group), already established in perfumery, is set to launch its cosmetics line in fall 2025. Jacquemus is entering the beauty sector through a partnership with the L’Oréal Group, while Balenciaga (Kering) is also expected to debut a makeup line later this year.
Finally, positioned “at the crossroads of beauty and experience,” the wellness sector is gaining significant traction. “Beyond traditional spas — now a standard feature in luxury hospitality — customer expectations are evolving toward extended, personalized retreats, targeted treatments for issues like insomnia, and even preventive health and longevity-focused care,” the study notes.
According to KPMG, this shift signals a broader transformation in luxury: “By continually expanding its scope, luxury is now investing in the promise of ‘beauty from within’ and ‘better living,’ moving beyond its image of superficial indulgence toward a more essential, meaningful form of luxury.”
