Luxury fashion groups are preparing to present their latest collections in Milan and Paris against a backdrop of weaker consumer demand, pressure on profit margins and concerns about the impact of the Middle East conflict on spending.
Investors are questioning the sector’s growth prospects as a sustained recovery remains uncertain. Higher inflation associated with the conflict is adding pressure to household budgets, while demand for some luxury products, including high-end handbags, had already weakened.
Shares in Kering (EU:KER), the owner of Gucci, have surrendered the gains recorded since chief executive Luca de Meo took charge a year ago. LVMH (E:MC), the world’s largest luxury group, has fallen 37% since the beginning of 2026.
Fashion weeks offer brands an opportunity to introduce new designs and attract customers, but the events also represent substantial investments at a time when companies face growing pressure to improve their financial performance.
Luxury Sector Recovery Remains Uncertain
Executives and industry advisers expect difficult trading conditions to persist as luxury brands contend with changing consumer behaviour and economic uncertainty.
Diego della Valle, chairman of Tod’s, told reporters in Milan on Friday:
“I believe this year and next year will likely be a holding period while the market stabilises and becomes more predictable again.”
The comments reflect concerns that a recovery in luxury spending may take longer than previously anticipated.
The Middle East conflict has added another source of uncertainty, with its inflationary effects putting additional pressure on consumers’ purchasing power.
For luxury companies, the challenge is to maintain sales and profitability while continuing to invest in products, marketing and customer relationships.
Fashion Shows Face Greater Financial Scrutiny
Major luxury houses are under pressure to demonstrate that spending on fashion shows can translate into stronger demand.
Industry experts estimate that staging a major runway presentation can cost as much as €10 million.
The expense comes as companies invest in new collections and creative strategies to attract shoppers whose enthusiasm for certain luxury categories has diminished.
Milan and Paris Fashion Weeks will provide an opportunity to assess how brands are responding through their latest designs and product positioning.
However, the commercial impact of these collections will depend on customer demand after the presentations.
Middle-Class Spending Declines as Competition Intensifies
Research by Bain and other consultancies indicates that middle-class consumers have reduced their spending on luxury products.
As a result, brands are competing more intensely for wealthy customers, increasing investment in stores, personalised services and exclusive experiences despite declining sales in parts of the sector.
Federico Bazzani, a partner at Deloitte Advisory, told Reuters:
“There is strong polarisation among brands: fewer than half are growing, while the rest are losing ground.”
He said companies must reconsider how they justify their pricing.
“Brands face a choice: either invest in innovation, customer experience and cultural relevance to justify their price positioning, or revise their pricing and accept lower margins.”
The comments highlight the different approaches available to luxury groups as they respond to weaker demand.
Pricing Strategies Come Under Pressure
Luxury brands have increased prices substantially in recent years, but industry advisers say even wealthy customers are becoming more sensitive to whether products offer value for money.
David Watts, a London-based luxury business adviser, said companies face difficult choices over pricing and production.
“They don’t want to reduce prices because that says we were overcharging you, and it loses them margin, but they don’t want to reduce production because that’s going to hit revenue.”
Lower prices could reduce profit margins and affect perceptions of exclusivity, while cutting production could limit sales.
Companies must therefore balance their pricing strategies with efforts to attract customers through product development and service improvements.
Prada (TG:PRP), which opens Milan Fashion Week with its runway show on Tuesday, has recently redesigned its flagship store in Milan to include private spaces for its highest-spending customers.
The investment reflects the wider industry’s efforts to develop more personalised shopping experiences.
Consumer Preferences Shift Towards Experiences and Wellbeing
Some industry executives believe changing spending priorities could delay a recovery in traditional luxury categories.
Renzo Rosso, chairman of OTB, the owner of Diesel, said at a conference in Milan on Monday:
“Consumers are changing.”
He noted that shoppers are increasingly directing spending towards wellness, health and longevity, as well as hotels and restaurants.
These preferences could intensify competition for discretionary spending, particularly if consumers choose experiences over fashion accessories.
Rosso does not expect an imminent recovery in the luxury sector.
His assessment adds to concerns that the industry’s challenges extend beyond the immediate effects of inflation and geopolitical uncertainty.
Milan and Paris Fashion Weeks Put New Collections in Focus
Prada is scheduled to open Milan Fashion Week on Tuesday.
Gucci, Dolce & Gabbana and Giorgio Armani will also present their latest collections during the week.
Paris Fashion Week begins on 28 September, with Dior (EU:CDI) and Louis Vuitton, both part of LVMH, among the major brands scheduled to show.
Chanel will present its spring/summer 2027 collection on 5 October.
The company has outperformed some competitors, supported by new designs from creative director Matthieu Blazy, according to the supplied report.
The forthcoming presentations will offer an indication of how luxury houses are adapting their collections and marketing strategies to changing consumer preferences.
Outlook
The luxury industry faces a combination of weaker demand, pressure on pricing and uncertainty surrounding the economic consequences of the Middle East conflict.
Research indicating reduced spending among middle-class consumers suggests that competition for wealthy customers could remain intense.
Brands are responding through investment in new collections, flagship stores and exclusive experiences, while some executives expect the market to require additional time to stabilise.
Milan and Paris Fashion Weeks will provide a platform for these strategies, although their effect on sales and profitability will become clearer only as the new collections reach customers.
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