nger a passing phase, but a new baseline. “As the expert on the luxury consumer, we know that uncertainty in the macroenvironment affects their intent to spend on luxury,” said Emily Essner, president and chief commercial officer at Saks Global. In response, brands are being forced to confront a foundational question: Is the idea of luxury still resonant in a world that feels increasingly uncertain, fragmented, and fast-moving? The cracks beneath the shine The mood among luxury shoppers has shifted.  Saks Global’s survey of affluent consumers, conducted in late April this year, reveals the sharpest drop in economic sentiment since tracking began two years ago. Just 28 per cent of respondents reported feeling optimistic about the economy, a 17-point drop from the same time last year. Calm and preparedness have also declined, with only 36 per cent feeling financially ready for what’s ahead. Even among those earning more than $200,000 annually, confidence is waning. Driving this unease is a potent mix of macroeconomic concerns. Beyond inflation and lingering fears of recession, respondents cite market volatility, geopolitical instability, and growing social unrest. Tariffs have further dampened sentiment. And while most luxury consumers still feel relatively secure in their personal finances, the link between external uncertainty and spending intentions is becoming more pronounced. The data bears this out. Only 47 per cent of consumers plan to maintain or increase luxury spending in the next three months, down 11 points from earlier this year. Among the wealthiest respondents, the drop is even steeper. More are now delaying purchases, waiting for improvements in their investment portfolios or broader economic indicators. Sales, special occasions, and unexpected windfalls remain triggers, but they are increasingly insufficient in the face of mounting caution. A sector losing its halo Luxury has historically been resilient, often the last to fall in a downturn and the first to rebound. But this time may be different. While in 2023 the personal luxury goods market reached €369 billion, that momentum slowed last year, to €364 billion. Bain & Company’s forecast for this year outlines three possible paths, and even its most optimistic scenario predicts only modest recovery. Its most likely model expects a contraction of 2 per cent to 5 per cent for the year. This slowdown is not uniform. Experiential luxury, ranging from boutique hotels and gourmet dining to cruises and private travel, continues to outpace its material counterparts. Consumers still crave moments that feel personal and memorable, even if they’re pulling back on watches, handbags or designer footwear. Brands like Saks are responding with hyper-personalised services and AI-driven clienteling platforms, aimed at deepening emotional connections and emphasising value beyond price tags. Yet deeper structural issues are surfacing. Many legacy luxury houses are facing creative fatigue, eroding their cultural capital just as younger generations, especially Gen Z, demand new narratives, new aesthetics and a new sense of purpose.  Digital engagement is down. Social-media followership and search traffic have fallen off a cliff. Bain & Co. stated that a staggering 40 per cent of brands are experiencing declining online engagement, despite having larger marketing budgets and more content than ever before. This fatigue is compounded by polarisation across income brackets and geographies. In the US and China, economic turbulence has softened demand. Europe and Japan face declining tourist flows, though local consumption provides partial relief. Meanwhile, bright spots are emerging in the Middle East, Latin America, and parts of Southeast Asia, where rising local affluence and new travel corridors are bolstering demand. Indonesia, Mexico, and the UAE are benefiting from both regional dynamism and the relative affordability of entry-luxury propositions. Back to (brand) basics Saks and Bain both have said that brands must go back to basics. This doesn’t mean retreating into heritage for heritage’s sake. Rather, it demands a renewed focus on product quality, creative excellence, pricing strategy and brand identity. Amid a sea of sameness, consumers are seeking clarity.  Multi-brand retailers like Saks also face a turning point. Long valued for discovery and curation, the channel is now under pressure as brands pull back distribution or favour direct-to-consumer strategies. For Saks, survival means reinvention: deeper clienteling, better curation, and more differentiated in-store and online experiences. Essner refers to this as ‘The Art of You’, a vision that fosters meaningful customer relationships that drive brand loyalty for years to come. “To navigate today’s uncertainty, brands must anchor themselves in their core strengths – prioritising quality, creativity and authenticity,” Claudia D’Arpizio, Bain & Company senior partner and global head of the firm’s Fashion and Luxury practice, said.  “Deeper consumer relationships are essential – shifting away from push marketing toward seamless, customer-centric experiences across every touchpoint.” Generations at the gate In the longer term, there is reason for cautious optimism. Over the next five years, Bain projects more than 300 million new luxury consumers will enter the market, half of them Gen Z or Gen Alpha. Wealth transfers and rising affluence in emerging economies will expand luxury’s addressable base. But capturing that opportunity means grappling with generational complexity. Gen Z wants authenticity and expression, but also financial value. Millennials are straining under economic pressures, yet are still willing to engage with brands that feel contemporary. Boomers, for their part, are shifting from goods to experiences, seeking meaning, not just merchandise.  “At the heart of this transformation is a redefinition of value and meaning that resonates across all generations – those shaping luxury today, and those who will define it tomorrow,” said Federica Levato, Bain & Company senior partner and leader of the firm’s fashion and luxury practice in EMEA. Further read: Why Kering is betting on an auto industry leader to steer its luxury empire.