The Future of Luxury Retail: Key Trends Shaping 2025

February 26, 2025 | By RetailME Bureau

Driss IZIKI, MEA Director for Cegid

“Luxury is no longer just about the product—it’s about the experience,” says Driss IZIKI, MEA Director for Cegid. “Retailers that successfully blend digital convenience with physical exclusivity will lead the industry. Leveraging the right technology as soon as possible will enable a luxury retail brand to expand into profitable new markets and grow its customer base. Luxury brands need to understand and analyse the risks to focus on the most important compliance topics in their regions.”

Luxury retail is undergoing a seismic transformation as brands respond to shifting consumer behaviours, technological advancements, and global economic shifts. According to the latest Cegid Luxury Retail Trends 2025 report, four major forces are shaping the industry:

1. From URL to IRL: Luxury Retail Becomes Experiential
While e-commerce continues to dominate retail, luxury brands are investing heavily in immersive in-person experiences. High-end fashion houses are transforming their flagship stores into multi-sensory destinations, offering museums, private members’ clubs, and bespoke services. Dior’s Paris flagship now includes a museum, restaurant, and even an apartment where guests can stay overnight. Dunhill’s Mayfair store features a cinema, spa, and barbershop. With only 13.9% of luxury retail sales occurring online, in-store visits remain crucial—31% of luxury shoppers visit stores monthly, and 68% prefer face-to-face service.

2. AI Takes Center Stage

AI is revolutionizing luxury retail, from predictive analytics for trend forecasting to personalized in-store recommendations. Luxury brands are integrating AI into supply chains to optimize inventory and reduce waste, while digital tools enhance customer interactions. Burberry has already implemented AI-driven supply chain monitoring to detect slow-selling items and adjust distribution. AI-powered design tools, like those used in Moncler’s collaboration with Lulu Li, are helping brands create cutting-edge fashion faster than ever. Luxury brands are also leveraging AI for multilingual customer service. Cegid Pulse, the suite of intelligent agents within Cegid’s unified commerce platform, can, for example, instantly analyze purchase history and preferences while simultaneously translating in-store conversations in real time. However, 60% of luxury companies cite a lack of expertise as a major barrier to adopting analytical AI, while 30% remain concerned about security and compliance risks.

3. Sustainability and the Rise of Pre-Loved Luxury

The second-hand luxury market is booming, with brands launching resale programs and pre-loved platforms. Second-hand sales are forecasted to comprise 10% of the overall fashion market by 2025, reaching $197 billion. In the luxury sector, resale could account for up to 20% of a brand’s revenue by 2030. Luxury resale platforms such as The RealReal and Vestiaire Collective are growing rapidly, while brands like Balenciaga and Gucci have launched official resale initiatives. However, sustainability efforts beyond resale remain slow. A recent report found that 94% of the world’s top 250 fashion brands lack public renewable energy targets, and only 3% disclose financial support for workers impacted by the climate crisis.

4. Emerging Markets Take the Spotlight

As China’s economic slowdown affects luxury spending, brands are shifting focus to high-growth regions like Latin America, Southeast Asia, Africa, and the Middle East. The luxury market in Saudi Arabia alone is projected to reach $2.84 billion by 2029, growing at 2.42% annually. The rise of the middle class in these regions is evident as cities like Ho Chi Minh City, New Delhi, and Istanbul now feature some of the world’s most expensive shopping streets. Luxury sales in China have also been impacted by a weaker yen, prompting Chinese shoppers to seek better deals in Japan, leading to a boom in Tokyo and Osaka’s luxury retail sectors.

Looking Ahead
Despite economic headwinds, the luxury sector remains resilient. The wealth transfer from baby boomers to younger generations—estimated at $84 trillion by 2045—along with technological advancements and evolving consumer priorities, is set to redefine luxury retail in the years ahead. Brands that embrace innovation while staying true to craftsmanship and exclusivity will emerge as industry leaders.