Why Are U.S. Consumers Turning Away From Luxury Goods?
Gen Z values and shifting definitions of luxury are proving that exclusivity may not be enough to keep the high-fashion dream alive.
The luxury fashion sector is entering a moment of contradiction. According to Bain & Company, the global luxury goods market contracted in 2024, shrinking for the first time in over a decade. This caused the worldwide customer base to fall by nearly 50 million people, though growth in Asia continues to outpace the rest of the world.
Meanwhile, the U.S., once the industry’s most dependable growth, is cooling. American consumers are pulling back as demand surges across Asia, where luxury spending patterns remain strong. At home, however, aggressive price hikes and tariff pressures have begun to push shoppers toward value-conscious choices. Younger buyers have become the demographic on which luxury depends, who are actively redefining what makes something “worth” the price at all. For Gen Z, ethics and longevity are growing in value, at the expense of logos and house names.
Now, the function of global luxury is changing, with a softening U.S. market pushing sales to Asia, and a growing fuss on the value of luxury goods, when the definition of “luxury” is a debate in itself.
Economic pressures have also reshaped how U.S. consumers interact with luxury. In the last five years, tariffs and price hikes have quietly but steadily inflated the cost of entry. U.S. Section 301 tariffs on Chinese goods raise the price of materials and manufacturing inputs, while ongoing trade tensions with Europe have threatened additional tariff spikes on luxury imports, creating constant pricing uncertainty.
At the same time, luxury houses themselves have implemented some of the steepest price increases in modern retail. Chanel has doubled the price of The Classic Flap bag since 2019, and now will raise costs 15-25% annually. Louis Vuitton increases their prices anywhere from 3-7% semi-annually, and even the ultra-expensive Hermès Kelly bag has seen annual hikes throughout the last 10 years.
The result is that items that were once coined as “accessible inspiration” now cost thousands more than they did before the pandemic. Unsurprisingly, American shoppers are signaling fatigue. McKinsey’s latest U.S. Consumer report shows more than 70% of shoppers are delaying or downgrading purchases in non-essential areas like apparel and accessories. This environment of economic uncertainty has made luxury feel like less of a feasible indulgence and more like inflation and careless spending.
Younger consumers are reshaping what luxury even means, and their preferences cut directly against the traditional model that powered U.S. sales for decades. Recent data from Deloitte’s annual Gen Z and Millennial Surveys show that these shifting values are measurable. In the firm’s 2024 global survey, 64% of Gen Z respondents said they’d pay extra for sustainably made products, making it clear that ethics and environmental impact matter. A year later, the 2025 report confirmed the trend that many young shoppers don’t feel financially secure and are finding more value in brand mission and principles rather than prestige or logos.
The boom in resale, with the U.S. secondhand apparel market growing 14% in 2024, is projected to reach $74 billion by 2029, with online resale alone expected to hit $40 million, as shown by ThredUp’s 2025 resale report. This growth is driven overwhelmingly by Gen Z and millennials, who use resale as both an economic strategy and a value-conscious form of consumption. Platforms such as The RealReal are leading this cultural shift in efforts to make luxury accessible again.
Simultaneously, the trend cycle sees this change similarly through a decline in demand for logo-heavy pieces and a growth in “quiet luxury.” This is especially true as popularity rises for simple brands like The Row, which focus on minimal tailoring and neutral palettes.
And while the U.S. pulls back, Asia is becoming luxury’s core. China’s shoppers are steadily regaining confidence, and sending across Southeast Asia continues to climb, giving brands the kind of growth they once relied on from American malls. In places like China and Korea, luxury buying is closely tied to gifting and celebrations, making it a more stable part of their everyday consumption. Plus, travel is reinforcing this trend. Asian tourists are returning to Europe’s shopping capitals, where better pricing and VAT refunds stretch their spending money much farther than what a comparable splurge would cost in the U.S. Taken together, the growing momentum means a luxury market that leans more heavily eastward than ever before.
At home, the luxury and high-fashion industries are losing to affordable-marketed brands, who are now thriving off of shoppers who still want small, high-quality indulgences without the commitment of thousand dollar investments. Alongside this, even experiences have become interconnected with status. Travel, concerts, and restaurants are absorbing more discretionary spending than traditional luxury goods, especially for younger generations who equate a memorable outing with the same prestige as a designer handbag. Luxury giants have taken notice, as groups like LVMH and Kering are pouring money into hotels and hospitality, investing in a future of luxury that values both experiences and items.
Luxury is entering a phase with fewer certainties and more pressure to justify itself as worthy of the “luxury” attribute. What luxury becomes next will depend on how well brands learn to become accustomed to consumers who now judge luxury by integrity and longevity.
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