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Long considered immune to economic storms, the luxury sector is confronting turbulence this summer. Slowing sales, shrinking profits and a drop in tourist spending are forcing luxury giants to recognize that even handbags costing thousands of euros are vulnerable to the current economic climate.
Tourism has long been the lifeblood of luxury, injecting vitality and a steady flow of affluent clients into prestigious fashion houses. Each summer, cities like Paris, Milan and Tokyo transform into prime destinations for wealthy international shoppers eager to find unique pieces and limited editions.
In 2024, the system worked smoothly: a strong dollar boosted American spending in Europe, while a weak yen opened Japan’s doors wide to Chinese buyers. But in 2025, the dynamics shifted. According to Travel and Tour World, the yen has strengthened, the dollar weakened, and tourist purchasing power has contracted. The result? Storefronts continue to dazzle, but cash registers struggle to keep pace.
At Kering, the impact is stark: a 16% drop in revenue in the first half of 2025 and a 46% plunge in net profit to €474 million (Vogue Business, Luxury Tribune). Gucci, a historic pillar, has seen sales decline by an estimated 25 to 26%, according to Vogue Business. Reflecting the sector’s fragility, S&P Global downgraded the group’s credit outlook to “negative” but kept its investment-grade rating (Reuters).
This trend also reflects deeper structural challenges: rising prices prompting even wealthy clients to tread cautiously and growing competition from online retail, which continues to gain ground despite luxury’s unique hurdles. Moreover, ecological and ethical concerns are increasingly shaping consumer choices, compelling brands to rethink their strategies.
In Lebanon, a regional hub for haute couture and jewelry, luxury faces similar headwinds. Economic instability, currency volatility and erratic tourism are forcing brands to reinvent themselves. Strategies now sharply focus on a select clientele: transient expatriates, affluent residents and loyal connoisseurs. Negotiations, sometimes reminiscent of traditional markets, have become common, alongside personalized services such as private appointments, bespoke presentations and secure home delivery. Here, luxury demands creativity, patience and a personal touch to maintain its shine.
Against these challenges, luxury giants are adjusting their course. Kering is restructuring its leadership, Gucci is betting on a new artistic director, and the sector as a whole is adopting a more nuanced approach: fewer automatic price hikes, more brand storytelling, immersive customer experiences, and that elusive spark reminding us that luxury is not just about price, but about dreams.
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