Has the Luxury Recession Bottomed Out?
Q3 earnings point to some stabilisation, but differentiation remains pronounced and highly correlated with brand storytelling effectiveness
The research team at It’s A Working Title LLC released its latest white paper Has the Luxury Recession Bottomed Out? The paper reviews the latest luxury industry results and presents econometric model-based forecasts for what to expect in 2026 and 2027.
Some key takeways include:
The luxury industry appears to be emerging from its deepest downturn since the 2008 financial crisis. After six consecutive quarters of contraction, Q3 2025 delivered the first signs of stabilisation, with marginal but positive revenue growth across the sector. While this shift does not yet signal a robust recovery, it suggests the market may have finally reached its bottom.
Beneath this aggregate improvement, however, the competitive landscape remains sharply fragmented. As the report shows, the spread between top and bottom performers remains at historic highs, with brands like Miu Miu, Coach, and Hermès sustaining strong momentum. In contrast, Gucci, Versace, and Thom Browne remain in negative territory. Even with some compression in Q3, the industry still reflects a level of performance divergence without precedent in the pre-pandemic era.
Regionally, the dynamics are equally uneven. Asia’s return to slight positive growth marks one of the quarter’s most notable shifts, given its role as the primary drag on global luxury demand over the past several years. The United States continues to provide a stable anchor, delivering comparatively strong growth, while Europe remains flat, offering little directional pull for the sector overall.
Across all these patterns, one theme consistently emerges: content strategy has become a structural determinant of performance. The pandemic accelerated the industry’s long-delayed digital transformation, placing new weight on a brand’s ability to create compelling, scalable, cross-channel narratives. Brands that invested early in digital storytelling, e-commerce, and content-led marketing architectures are now benefiting from strengthened consumer loyalty and sustained revenue resilience. Those that delayed these investments are struggling to differentiate themselves in an increasingly digital luxury landscape.
The IWT Content Strategy Excellence Index makes this relationship visible. It highlights a strong correlation between content quality—defined by narrative design, channel fit, and shoppability—and commercial outcomes. Leaders such as Miu Miu, Hermès, and Coach combine high index scores with strong revenue performance, while laggards cluster at the low end of both measures. The widening gap between these groups underscores that content is no longer an accessory to luxury strategy; it is a primary driver of brand and business performance.
Curious how content strategy and narrative architecture can drive luxury industry growth and minimise operational complexity and cost? Explore our work at It’s A Working Title LLC to learn about our content strategy, content operations, and behavioural economics-informed approaches to brand storytelling.