Spending on luxury items is growing faster than ever, fueled by pent-up pandemic demand and shifting demographics as younger, more diverse consumers shop for tiny handbag and post-streetwear trends, a new study finds.
Global sales of personal luxury goods, including leather accessories, apparel, footwear, jewelry and watches, are expected to grow 22 percent this year, from EUR 290 billion to EUR 353 billion in 2021, according to the Bain advisory study commissioned by the Italian association of high-end producers Altagamma.
“Consumption is back to pre-crisis levels but it is also a rebirth as there is a new consumer base that is younger and some consumer groups that have been unlocked during Covid are staying and growing like subcultures and ethnic groups in the US” , said Bain partner Claudia D’Arpizio, co-author of the study.
The record growth comes after 2021’s strong rebound from global pandemic lockdowns, which created strong performance despite the recession specter next year, which has been blamed on higher commodity and energy prices. Bain predicts the sector will grow to between €550 billion and €570 billion over the next five years.
Ms D’Arpizio warned that the sector is not recession-proof but is more resilient than it was in the 2008-2009 financial crisis when luxury sales fell.
Factors that have made the luxury industry more resilient include an enlarged customer base and stronger relationships between brands and consumers, both developed through social media and an increased focus on the shopping experience in branded stores.
Mature markets in the United States and Europe are the strongest performers, each growing by about a quarter. US sales are expected to reach 113 billion euros this year, while Europe is the second largest market in the world with sales of 94 billion euros.
The disappearance of the Russian market following the invasion of Ukraine, which led to Western sanctions, had “almost no impact,” Bain said.
The market accounted for 2 percent of sales before the war.
Chinese consumers are strong drivers despite the impact of ongoing Covid-19 lockdowns, but their overall weight has been reduced by the emergence of strong new markets including South Korea and Mexico, Ms D’Arpizio said.
While Bain previously predicted that Chinese buyers would account for half of all luxury consumers by mid-decade, the new study estimates they will account for about 40 percent by 2030.
The median age of luxury shoppers is also declining, with half of all purchases being made by people in their mid-20s to early 40s, while the emerging Generation Z, now in their teens to mid-20s, account for nearly 20 percent of luxury sales.
Trends like mini handbags that can carry little more than a credit card or lipstick are made for young consumers, Ms D’Arpizio said.
https://www.independent.ie/business/world/luxury-sales-are-resilient-even-as-economy-turns-sour-42147087.html Luxury sales are resilient even when the economy turns sour