Germany’s luxury market is experiencing headwinds due to sustained economic uncertainty and associated cautious consumer spending. Almost half of Germans, in fact, agree that rising living costs make buying ‘dupes’ of luxury products more appealing, placing pressure on brands to justify their value proposition.
A key industry impact is the increasing shift toward experiential luxury that enables brands to evolve beyond products. The biggest opportunity lies in creating unforgettable community-building experiences that no copycat can replicate. Beyond that, in-store experiential investments are meeting rising consumer demand for unique shopping experiences.
Significant potential lies with Gen Zs and Millennials, who are keen luxury shoppers and a primary target for luxury brands. Looking ahead, ensuring loyalty among Gen Zs and winning over Gen Alpha will be key. Opportunities exist to address younger generations’personalisation needs and interest in customisation options (eg with exclusive co-creation experiences).
This report looks at the following areas:
- How consumers define ‘luxury’
- Purchase of luxury products and experiences in the last year
- Motivations and barriers to luxury purchases
- Interest in luxury shopping concepts
- Attitudes and behaviours towards luxury
The luxury value proposition is under scrutiny; brands that harness the power of experiential luxury and meet younger generations’ personalisation needs will stay in the game.
Dr. Jennifer Hendricks, Principal Analyst – Consumer Lifestyles, Germany
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EXECUTIVE SUMMARY
- What you need to know
- Market predictions
- Opportunities
- Harness the power of experiences
- Ensure brand loyalty among Gen Z
- Explore strategies to counter dupes’ influence
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THE MARKET
- Ongoing economic uncertainty affects consumer sentiment
- Graph 1: key economic data, in real terms, 2020-27
- Inflation has eased, but cost-of-living pressures remain an issue
- Households’ financial situations improve, with saving a priority for many
- Graph 2: current financial situation, 2024-25
- Domestic in-store purchases of luxury goods are prevalent
- Graph 3: where luxury branded items were purchased in the last 18 months, 2024
- Demographic shift: younger generations hold a smaller share
- Graph 4: population, by generation, 2020-30
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THE CONSUMER
- How consumers define ‘luxury’
- Luxury loses its prestige
- Graph 5: consumer definition of luxury (selected aspects), 2022 vs 2025
- Highlight superior quality to attract luxury shoppers
- Graph 6: consumer definition of luxury (top 3), by luxury products/experiences purchased in last 12 months – NET, 2025
- Ways of conveying premium quality
- Make brand synonymous with success to attract young consumers
- Purchase of luxury products and experiences
- Gen Zs and Younger Millennials continue to drive demand for luxury
- Tap into Gen Zs’ rising demand for luxury domestic appliances
- Leverage small luxury purchases to address cautious spending behaviour
- Count on experiences to build strong brand connections
- Motivations and barriers to luxury purchase
- Self-indulgence is the main driver for luxury purchase
- Position luxury as a reward to appeal to older consumers
- Graph 7: consumers who have purchased a luxury product/experience in the last 12 months to treat themselves, by generation, 2025
- Make community experiences the real luxury
- Perceived lack of value and unaffordability are key barriers to luxury purchase
- Graph 8: reasons for not purchasing any luxury products/experiences in the last 12 months – top 3, 2025
- Germans’ favourable view of dupes challenges the luxury market
- Interest in luxury shopping concepts
- Astonish consumers with experiential shopping
- Cater to younger generations’ demands for customisation
- Graph 9: consumers most interested in customisation options when shopping for luxury products, by generation, 2025
- Golden Goose champions customisation with its co-creation services
- Leverage brand collaborations to expand reach
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INNOVATION AND MARKETING
- Bottega Veneta: craft is our language
- Miss Dior pop-up café, Hamburg
- Mercedes-Benz was the official automotive partner of League of Legends Worlds 2025
- Launch of Keren Sierra spa at Breuninger Stuttgart
- Porsche x Smeg: a collaboration that redefines the interface between automotive prestige and interior design
- AI-powered in-store terminal concept
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APPENDIX
- Report scope
- The consumer
- Consumer research questions
- Consumer research methodology
- Germany’s generation groups
- Abbreviations
- A note on language
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