The luxury sector has regained its luster after a year of stagnation, boosted by millennials and fashion-conscious Chinese consumers, according to a report.

The overall luxury market, which includes both goods and experiences, grew by 5 percent to approximately €1.2 trillion ($1.4 trillion) globally this year, a survey by consultancy Bain & Company found.

Some 85 percent of growth in the sector was due to millennials – those born from the mid-1980s through to the 1990s, and generation Z, those born between the mid-1990s and 2000s.

Meanwhile, "increasingly fashion-savvy Chinese customers" caused sales in China to skyrocket by 15 percent this year, with the total market now worth €20 billion.

Brands are "changing the rules of the game to embrace ... the customer," Claudia D'Arpizio, a partner at Bain & Company and one of the lead authors behind the report, published last week, told CNBC Friday. "Treating all the consumers like local customers" and "not in a transactional way" was the key to success, she explained.

The rest of Asia, excluding mainland China and Japan, grew by 6 percent, the report said. The Europe market also grew by 6 percent, reaching €87 billion of retail sales while North and South American sales saw growth of 2 percent.