When Luxury Loses Its Luster: Why the Ultra-Rich Are Tightening Their Designer Belts in 2025

The Birkin bag used to be the ultimate flex for the wealthy—a reliable store of value that held its price like Bitcoin holds believers. But 2025 is flipping the script.

LVMH’s profits dropped 15% to $10.5B as of July 2024. Kering (Gucci, YSL, Bottega Veneta) is bleeding money after a decade of straight wins. The luxury sector, which seemed recession-proof even during COVID, is now “bombing across the globe,” according to Wall Street Journal fashion director Katharine K. Zarella.

What’s killing the golden goose?

The Math Doesn’t Work Anymore When private school tuition keeps climbing, stock portfolios are volatile, and mansion upkeep costs a fortune, even billionaires start doing ROI calculations. High-end handbags and jewelry are getting priced out of the wealth equation—literally.

Trump’s Tariffs Are the Kill Shot The new admin slapped 15% tariffs on European luxury goods and 39% on Swiss watches. Since most designer bags come from Italy/France and prestige watches from Switzerland, U.S. buyers are either eating the extra cost or walking away.

The Pivot Where’s the rich money flowing instead? High-end watches, art collections, jewelry, and “enriching experiences”—basically stuff that either appreciates or can’t be tariffed into oblivion.

TL;DR: When the Birkin starts feeling like a liability instead of an asset, you know something fundamental just shifted in how wealth actually works.