The State of the UK Luxury Sector in 2025: Premiumisation, Demographics, and the “New Normal”

The British luxury sector - encompassing high-end fashion, jewellery, accessories, automobiles, technology, hospitality, and more - continues to attract global attention. Yet, while prestige and exclusivity remain the hallmarks of this industry, external pressures are reshaping how luxury is produced, marketed, and consumed. Inflation, supply chain disruptions, geopolitical events, and rising consumer demands for transparency have converged, prompting brands to re-evaluate their business models and customer engagement strategies. Drawing on insights from McKinsey, KPMG, Deloitte, Savills, Bain & Company, and the Neo-Luxury 2025 trend study by Haus von Eden, this piece explores whether luxury brands will still grow in the UK, the demographic groups underpinning this growth, and the key marketing innovations steering the industry’s future.

A Climate of Complexity and Opportunity

Recent economic headwinds have heightened the need for operational resilience. Currency fluctuations, rising production costs, and ongoing regulatory changes introduce new complexities for British-based luxury brands and international players operating in the UK. According to KPMG, this combined uncertainty has sparked renewed interest in supply chain visibility, cost management, and innovations such as digital documentation and process automation.

Bain & Company’s global luxury research reveals that luxury’s resilience tends to persist through downturns, in part because affluent consumers sustain demand for what they perceive as “essential indulgences.” This is especially evident in the UK, where a heritage of craftsmanship and strong brand narratives resonates worldwide, reinforcing Britain’s reputation as a hub of high-end innovation and tradition.

Neo-Luxury and the Reframing of Premiumisation

Premiumisation has historically been linked to exclusivity and high price points. However, Deloitte’s consumer insights and Haus von Eden’s Neo-Luxury 2025 trend study both indicate that contemporary consumers expect more than just a steep price tag. They seek innovation, sustainability, and a brand mission that aligns with their personal values. The new era of “neo-luxury” fuses exceptional quality with responsible sourcing, authentic storytelling, and transparent business practices.

McKinsey’s data shows that today’s premiumisation extends into new domains such as bespoke technology offerings, limited-edition experiences, and immersive brand ecosystems. Notably, Rolls-Royce exemplifies this shift: once viewed purely as a motor company, the marque has repositioned itself as a comprehensive luxury brand (see below). Clients are encouraged to commission highly personalised vehicles that reflect their own tastes and aspirations, reinforcing the brand’s status as an arbiter of bespoke craftsmanship rather than merely a car manufacturer. These “value-adds” emphasise lifestyle integration, reflecting a broader consumer desire for meaningful ownership experiences.

Who Is Driving Demand?

Leaning on my long held opinions on segmentation, behavioural marketing and the over 50s, unpacking the UK’s luxury growth requires looking beyond high-net-worth individuals as a monolithic category. Looking at three generational cohorts illustrate how demand is diversifying and evolving:

Gen X (born 1965–1980)

Shaped by shifting family dynamics, emerging personal computing, and the gritty energy of punk music. Influenced by the Sex Pistols’ defiance and Bowie’s genre-bending artistry, they cultivated a self-reliant ethos, bridging analog traditions with a willingness to challenge convention.

• Heritage and Loyalty: With established careers and accumulated assets, Gen X often prioritises legacy, reliability, and brand consistency.
• Commitment to Quality: KPMG’s findings suggest that Gen X is inclined to invest in heritage labels—particularly those with a proven history of craftsmanship.

Millennials (born early 1980s–mid-1990s)

Came of age during the rise of the internet and social media. Cultural icons like Beyoncé and the emergence of streaming platforms expanded their global outlook, fostering a tech-savvy, collaborative spirit. Amid economic turbulence and rapid cultural shifts, they honed adaptability and an entrepreneurial drive, blending digital fluency with a strong sense of individual purpose.

• Experiential Pursuits: Deloitte’s research shows that Millennials crave immersive luxury experiences, whether that’s private shopping events or exclusive product previews.
• Social Media Amplification: Purchases and experiences are frequently shared online, expanding brand visibility and influencing peer groups.

Gen Z (born mid-1990s–2010)

Raised with smartphones in hand, they harness social media for constant connectivity and activism, while the introspective stylings of Billie Eilish and the genre-bending boldness of Lil Nas X mirror their fluid identities. Driven by global awareness, Gen Z embraces new possibilities and challenges the status quo with authenticity and innovation.

• Values-Driven Consumption: McKinsey reports that Gen Z expects verifiable commitments to diversity, sustainability, and responsible production—often verified by digital transparency tools like blockchain.
• Digital Natives: Seamless online experiences and interactive platforms are essential, with Gen Z judging brands by their social and environmental credentials just as much as by their heritage.

In all three cohorts, neo-luxury values—authenticity, ethical practice, and forward-thinking design—are becoming indispensable to a brand’s appeal.

Marketing and Advertising Tools for Growth in 2025

The Neo-Luxury 2025 trend study by Haus von Eden, alongside research from McKinsey, Bain & Company, and Deloitte, indicates that the competitive landscape now demands a multifaceted approach:

Experiential Marketing 2.0

• Immersive Environments: High-end pop-ups and showrooms allow consumers to witness craftsmanship first-hand, while VR/AR extensions capture global audiences. Balenciaga has launched a series of pop-up stores to celebrate creative director Demna’s Le Cagole line. These stores were designed to immerse visitors in a vibrant pink paradise.
• Collaborations: Cross-sector partnerships - imagine a famed British jewellery house working with an iconic fashion label or luxury hotel can broaden reach and reinforce brand narratives. A striking example of cross-vertical collaboration in luxury travel is the partnership between Regent Seven Seas and Aston Martin. By uniting maritime opulence with automotive prestige, this alliance redefines what it means to travel in style.

Omnichannel and Digital Mastery

• Seamless E-Commerce: KPMG’s findings confirm that affluent shoppers increasingly seek integrated online-offline experiences, from in-store browsing to streamlined app-based services. A leading proponent of immersive retail, Gucci has embraced virtual try-ons and augmented reality within its mobile app to enrich the online shopping experience underscoring how cutting-edge digital tools can deepen consumer loyalty in the evolving luxury landscape.
• Loyalty Programmes and Membership Models: Tiered benefits, priority launches, and limited-edition collaborations can galvanise brand advocacy. American Express has long excelled at delivering a refined, aspirational experience through its tiered card offerings, from everyday convenience to rarefied exclusivity. Providing elevated perks - from dedicated concierge services to distinctive travel and event privileges.

Influencer Engagement and Community Building

• Selective Influencer Collaborations: Deloitte’s consumer analytics indicate that authenticity and credibility matter more than follower counts. High-profile influencers must mirror the brand’s ethos. Chanel is now synonymous with Lily-Rose Depp becoming the face of the brand at the ripe age of sixteen and the partnership now spanning over eight years!
• Community-First Marketing: Brands actively nurturing online and offline communities - whether through social media platforms or exclusive clubs - forge longer-term loyalty.

Rolls-Royce and the Power of Bespoke

Rolls-Royce exemplifies how a luxury brand can transcend its original category - cars, in this case - and reimagine itself as a purveyor of bespoke experiences. By focusing on personalisation, artistry, and exclusivity, Rolls-Royce offers clients the freedom to co-create their vehicles, resulting in a product that reflects not just engineering prowess but also the owner’s personal style and story. This shift aligns with neo-luxury principles: meticulous craftsmanship, narrative depth, and environmental awareness.

While strict standards of quality remain unyielding, Rolls-Royce integrates new technology and design elements into its portfolio, ensuring it meets the evolving expectations of younger luxury buyers. Much like top-tier fashion houses or jewellers, the brand frames the automobile not as a functional item but as an artistic statement - an ethos that continues to resonate with a global clientele.

Beyond 2025: A Blueprint for Enduring Relevance

Looking ahead, Savills research suggests London and regional luxury hubs, such as Leeds, Edinburgh, Manchester, and Bath, will remain magnets for affluent audiences in search of unique retail and cultural experiences.

Scrutiny surrounding sustainability will intensify, necessitating granular disclosures about carbon footprints, labour practices, and waste management. Brands that innovate in these areas may convert potential risks into distinguishing features. As Rolls-Royce has demonstrated with its push for bespoke designs and advanced engineering, the opportunity lies in extending the brand story to encompass ethics, craftsmanship, and technology, all while safeguarding the timeless allure of luxury.

In an age of lightning-fast social media, complacency can quickly lead to brand stagnation or reputational harm. Agile listening, transparent communication, and the adaptability to recalibrate offerings in response to consumer sentiment will distinguish the industry’s long-term winners from those at risk of joining the “hall of shame.”

Conclusion

As we move through 2025, the UK’s luxury sector stands at a pivotal juncture. The traditional blueprint of exclusivity and heritage still has its place, but today’s consumers also demand sustainability, digital fluency, and authentic engagement. Haus von Eden’s Neo-Luxury 2025 trend study, alongside research from McKinsey, KPMG, Deloitte, Savills, and Bain & Company, paints a consistent picture: the future of luxury extends beyond price tags, embracing craftsmanship, technological integration, and ethical leadership.

Brands like Rolls-Royce typify this evolution, broadening their identities to become lifestyle and experience powerhouses, reinforcing Britain’s position on the global luxury stage. Ultimately, the UK’s luxury industry has the chance to redefine what “luxury” means in a new era - maintaining timeless traditions while boldly innovating in step with the changing world.

Thank you for reading. If you found these insights valuable, please share them with your network. We invite you to continue the conversation on how Britain’s luxury industry can prosper by uniting heritage, modernity, and social responsibility in equal measure.