According to the latest edition of the Bain & Company study in collaboration with the Altagamma Foundation, there are several key aspects to remember from the luxury market in 2019.
Despite geopolitical and economic uncertainties, the luxury market experienced a positive global dynamic. The sector was estimated to have grown by 4% at constant exchange rates, reaching a value of €1.3 trillion. It also attracted 390 million customers, with the segment of personal luxury goods experiencing a similar growth rate and reaching €281 billion.
Chinese consumers continued to lead the market, both in cross-border purchases and within the country. This can be attributed to reduced tariff differentials and the emergence of a new middle class. Mainland China saw a significant growth of 26% this year, while Hong Kong experienced a decline of 20% due to ongoing political tensions. Other Asian countries, such as Japan, also showed enthusiasm for luxury with a 4% growth.
The rise of e-retail was another notable trend in the luxury market. Online retail now accounts for 12% of global luxury consumption. However, this does not necessarily mean the decline of brick-and-mortar stores. The study suggests that digital advancements could inspire new omnichannel strategies, and the network of physical stores may peak in 2020.
Luxury brands are facing new consumer expectations. Customers are becoming influencers and drivers for the brands they prefer. It is crucial for brands to adopt new models to meet customer expectations in terms of experience, purchasing methods, consumption, and communication. Millennials currently represent 35% of the market, and this number is expected to rise to nearly 45% by 2025. Gen Z is also emerging as an important consumer group, with the potential to account for 40% of luxury product purchases by 2035. Their consumption behaviors differ significantly from their predecessors, as they prioritize product experience, physical stores, and authentic brand interactions.
Sustainability is another key factor influencing the luxury market. Customers are increasingly seeking brands that demonstrate social and environmental commitments. This has led to the growth of the second-hand luxury market, which reached €26 billion in 2019. Luxury brands should view this market as an opportunity rather than a threat and strategically analyze its potential to capture new target customers and expand their clientele.
To learn more about the profiles of today’s and tomorrow’s luxury consumers, there is an upcoming event on January 28th called “Generations & Tribes” organized by JDL. It will delve into the topic of Gen Z and provide further insights into the luxury market.
Useful links:
1. [Bain & Company study](https://www.bain.com/insights/global-luxury-goods-market-2019/)
2. [Altagamma Foundation](https://www.altagamma.it/homepage_en)
