Luxury and mid-range brand retailers in EMEA (Europe, Middle East and Africa) are adjusting their strategies in response to the cooling post-pandemic environment, according to one of the latest reports from Colliers “EMEA Retail – Retailer performance & response to changing market conditions“. It sees a clear slowdown in revenue growth in the luxury goods segment, continued consumer caution and operational changes driven by evolving trade relations and supply chain challenges.
Luxury brands: from stability to segment contraction
After years of growth driven mainly by price increases, the luxury goods retail sector is showing signs of fatigue. Kering and Chanel reported revenue declines in 2024, while Hermès and Prada delivered double-digit growth, helped by pricing discipline and brand strength. But even these leaders are not immune to the overall slowdown.
“The luxury goods trade is entering a new phase“, said Damien Harrington, Head of Research, Colliers Global Capital Markets & EMEA. “The post-pandemic boom was driven by price inflation, not volume. That model is now under pressure – consumers are reaching their limits and global confidence is weakening due to new international trade relations. We are also seeing indirect effects – tourists’ spending on luxury goods is also down in 2025.“
Profit margins are shrinking everywhere. Burberry reported a negative margin in 2024 and is cutting 1,700 jobs globally. Kering is selling prime real estate in Paris and New York to free up capital, and Capri Holdings is selling Versace to Prada for $1.38 billion in a deal at a discount due to tariff risks.
Tariffs test retailers’ pricing power
The introduction of US tariffs further complicates the picture. Before the EU-US trade deal was concluded in late July, Hermès said it had the capacity to raise its prices in the US. Richemont and Chanel said they would keep them on hold to avoid a slump in demand. The strategies of Swiss-based retailers were challenged by the news on August 1, 2025, that the US would increase tariffs on the country to 39%.
“Retailers are in a delicate position,“ commented Nicolo Suardi, Head of Retail Space and Capital Markets, Colliers Italy. “They have to compensate for their costs by taking into account the price sensitivity of consumers. The success of achieving this balance varies greatly depending on the brand and product category.“
Mid-range brands: prices under pressure
Retailers in the mid-range and low-end fashion segment are also feeling the strain. H&M, Inditex and Primark are all reporting slower growth, with Primark’s UK and Ireland sales down 4% year-on-year in the first half of 2025. Consumer surveys show a 20-point drop in expected clothing spending in Europe over the next six months. However, some operators remain optimistic about the US market – Primark plans to double its US store count by 2026, while Inditex will maintain its current price levels.
Supply chains are moving closer to home
Supply chain resilience is emerging as a key differentiator. Inditex leads with a diversified nearshoring model, sourcing mainly from Morocco, Turkey and the Iberian Peninsula. In contrast, H&M and Primark remain heavily reliant on China and Bangladesh, although H&M is signaling a shift towards regionalisation. “Retailers are rethinking their operational structures,“ said Colliers’ Uwe Fosse. “Those with flexible, regionalized supply chains are better positioned to respond to geopolitical and economic shocks.“
Consumer sentiment: fragile but positive
The EU consumer confidence index hit -14.8 in July 2025, and retailer sentiment also remains cautious. While lower interest rates may support spending, uncertainty around tariffs and inflation continues to weigh on non-essential goods. “Retailers are navigating a complex landscape,“ added Harrington. “The winners will be those who can adapt quickly – whether through pricing, flexibility in supply chains or more focused brand positioning.“