Is the luxury sector selecting better customers, or is it depleting its future customer base more quickly?

Since 2022, the luxury segment has lost about 70 million customers, but the market is still worth more than it was then. This isn’t necessarily a sign of strength: prices and product mix can prop up revenue even as margins, purchase frequency, and the future customer base deteriorate.

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According to Bain and Altagamma, in the comprehensive update published in December 2025, the number of active customers in the personal luxury goods sector is estimated at approximately 330 million, down from 400 million in 2022; 20 million customers left the market in 2025 alone, representing a loss of more than 15%. During the same period, the market grew from 345 to 358 billion euros, following a peak of 369 billion in 2023. Dividing the market value by the number of active customers yields a figure ranging from approximately 860 to 1,080 euros; thus, the market value has held up much better than the customer base that drives it.

The sector’s financials reveal the cost of this resilience. Bain estimates average EBIT margins for 2025 at 15–16%, down from 21% in 2022, with the profit pool having shrunk by about 20% over the past two years. Inventory as a percentage of revenue is 3–4 percentage points higher than in 2019. Sales made through markdowns and discount channels now account for 35–40% of the sector’s revenue, about five percentage points higher than in 2015. The result: lower profits and more capital tied up in inventory.

For brands, the most reassuring takeaway is that marginal customers have dropped off and the best ones have remained. But customers spending more than 20,000 euros a year—who now account for over 46% of spending in the personal luxury goods sector, up from 30% in 2019—did not increase their absolute spending in 2025. Their share grew because the rest of the market shrank. And according to BCG and Altagamma, 70% of respondents have foregone a purchase at least once because they considered the price unjustified; more than half stayed with the same brand or in the same sector. Price isn’t just filtering spending power—it’s testing what customers consider to be value.

The shrinking customer base, in and of itself, is not negative. It becomes problematic when the average transaction value grows more slowly than the decline in purchase frequency and customer numbers, while fixed costs, inventory, and service costs remain inflexible. In that case, the increase in apparent value per customer does not indicate customer selection; it signals a growing dependence on average transaction value and product mix. Revenue stability isn’t enough: the margin must absorb a cost structure that is shrinking more slowly than demand. And while every price increase can support average transaction value and product mix, it risks reducing volumes and the active customer base—meaning that in the next cycle, even higher average transaction values are needed to sustain the same cost structure.

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Aeffe—the parent company of Alberta Ferretti, Moschino, and Pollini—shows what happens when customers leave faster than costs do. In the first half of 2025, revenue plummeted by nearly a third, from 138.6 to 100 million; costs fell much more slowly, and the income statement ended up in the red. In the fall, the group entered the legal proceedings reserved for companies in crisis, and in July, the shareholders contributed 2 million out of their own pockets to cover current expenses, while waiting for offers from new investors. Not everything can be explained by a shrinking customer base, but the pattern is textbook: revenue plummets, while the structure remains.

The Lanvin Group has chosen the opposite path: downsizing before the crisis forces it to do so. It sold the Caruso tailoring business, closed unprofitable stores, and streamlined Sergio Rossi, which lost nearly a third of its sales in a year, with revenue stagnating at 29.5 million. Different choices, same logic: reducing the company’s size until it aligns with the remaining demand.

Missoni represents a potential happy ending, with one caveat: the numbers are still just projections. The FSI fund—which came on board in 2018 and now holds a controlling stake, following the family’s exit and the entry of the German firm Katjes—reports in a press review on its website that revenues have doubled to approximately 130 million and forecasts an operating profit of close to 20 for 2026. If confirmed, this will demonstrate that a mid-sized brand can succeed when a recognizable identity meets patient capital. It is no coincidence, as the Bain summary notes, that over 70% of the brands that grew in 2025 were niche players.

Three stories, three responses to the same pressure: those who failed to adapt, those who scaled back, and those who staked everything on their specialty. And this is where the real selection becomes apparent—the choice between business models. Top-tier firms can sustain a high-service structure only when absolute margin, retention, and relationship value offset the cost of customization. A small specialist can avoid some of the costs of an international network, provided it maintains access to the client. The most vulnerable point remains the middle ground: brands worth tens or a few hundred million, with the costs of a large corporation and demand that increasingly resembles that of a niche market. A specialist, it must be said, possesses a craft, a product, or a recognizable identity that can transcend markets and generations: this is different from being the favorite brand of a specific class of wealthy individuals, whose clientele may change their tastes and spending priorities.

Every board of directors should ask itself four simple questions. How many customers are needed, at current margins, to cover fixed costs? How much of the margin comes from new or re-acquired customers over the past three years? What happens to the bottom line if the customer base shrinks by another 10% and average transaction value grows by only 5%? And which costs can actually be cut in a year or two without compromising the product that justifies the price? Without these answers, increasing value per customer does not demonstrate customer segmentation. It may even mean that the brand is eroding the very customer base that used to pay for its operations.

The luxury sector won’t run into trouble because the wealthy will disappear. The decisive selection will concern business models even before it concerns customers: ultra-luxury has the conditions to hold its ground, the small specialist can remain small, and the mid-market player must demonstrate that its specialization increases margins, sales productivity, or loyalty enough to sustain the break-even point. If it fails to do so, the price will not have selected better customers. It will have merely bought time.