The luxury market has encountered difficulties due to recent events in Hong Kong, however, the global luxury market is showing resilience with promising opportunities for growth. The most recent Bain & Company Luxury Study, conducted in collaboration with Fondazione Altagamma, indicates that the personal luxury goods market has seen a 4% currency-neutral growth this year, reaching a total value of €281 billion. Despite a significant 20% decrease in consumption in Hong Kong, the rise of young consumers, especially in Asia, has been a driving force behind the market’s growth. As the luxury consumer base becomes younger, it is imperative for brands to adapt to the changing landscape of the industry.
The report highlights Millennials and Generation Z as influential players in shaping the future of the luxury sector. Millennials currently represent 35% of luxury consumption and are projected to make up 45% by 2025. Generation Z, born between 1995 and 2015, exhibit unique consumption patterns and preferences that will impact the luxury market significantly. They prioritize social responsibility and value authentic connections with brands.
Regional variations have also been observed in the luxury market landscape. Mainland China experienced a remarkable 26% growth in the luxury market, amounting to €30 billion, with Chinese shoppers contributing to 90% of this growth. In contrast, Europe witnessed slower growth rates due to factors like social unrest and economic deceleration. On the other hand, Japan and other parts of Asia demonstrated positive growth in luxury consumption. Online sales channels are becoming increasingly important, constituting 12% of the market.
A rising trend in luxury consumption is the emergence of the secondhand market, which achieved a worth of €26 billion in 2019. Luxury brands have a unique opportunity to leverage this market to attract new customers and widen their clientele. Categories like jewelry, footwear, leather goods, and beauty have displayed robust growth, while the watch segment has lagged behind.
Despite the challenges faced, the luxury market is anticipated to expand to encompass 450 million consumers by 2025, propelled by the burgeoning middle-class population in Asia. This growth will spur the development of entry-level segments and discounted sales channels, presenting fresh avenues for luxury brands to innovate and engage with evolving consumer preferences. To remain competitive in the industry, luxury brands need to be flexible in responding to the evolving dynamics of the market.
For further information on the luxury market statistics, you can check out the latest report by Bain & Company Luxury Study here. Additionally, to explore more insights into the luxury market trends and consumer behavior, visit the Fondazione Altagamma website here.
