Barclays sets out ten rules for luxury sector as growth model enters new phase Proactive uses images sourced from Shutterstock
Barclays has published a strategic framework for the European luxury goods sector, arguing that the recent slowdown marks a fundamental shift in consumer behaviour that demands a rethink of established industry playbooks.
The bank, which carries a ‘neutral’ rating on the sector, expects luxury companies to deliver a compound annual growth rate of just 4% between 2027 and 2029, a far cry from the double-digit expansion that characterised the post-pandemic era.
Multi-year price increases combined with insufficient product innovation have priced out or alienated a large part of the customer base, Barclays warns, and the current environment demands constant innovation at a higher speed than ever before.
The bank identifies ten rules it believes will separate winners from laggards. Companies need to be laser-focused on core luxury activities, with further divestments likely after recent examples, including Kering Beauté, DFS and Marc Jacobs by LVMH.
Brands must balance desirability and scarcity at scale to avoid ubiquity, while respecting regional differences through investment in local communities, collaborations with local designers and region-specific product editions.
On pricing, Barclays argues luxury companies should prioritise managing product mix and encouraging customers to trade up rather than relying on headline price increases, building granular price architectures that recruit new consumers at entry level while serving the high end.
With the era of rapid growth largely behind the sector, the bank says tighter cost control and leaner structures are essential. Artificial intelligence represents one of the few available cost-saving opportunities, with applications ranging from inventory management to consumer journey optimisation.
Barclays also urges investment in immersive brand experiences such as restaurants, museums and branded hotels, reflecting the shift in consumer appetite from goods towards experiences.