‘Precocious’ teens are set to become the biggest buyers of luxury goods by 2030 as the demographic of shoppers in the sector get younger and wealthier.
According to the latest Bain & Company–Altagamma Luxury Study, Gen Y — those born between 1982 and 1994, also known as millennials — and Gen Z — those born from the mid-90s to the mid-00s — accounted for the entire growth of the market in 2022.
With Gen Z already hooked on high-ticket items from the age of 15 — and their successors Generation Alpha expected to do the same — the personal luxury market is set to climb to around€540-580 billion by the end of the decade, a rise of 60% or more compared to 2022.
The report added that “in coming years, the spending of Gen Z and Gen Alpha is set to grow three times faster than for other generations until 2030, making up a third of the market.” Younger people are shopping earlier in their lives for high-end goods, the analysis showed, making their first big purchases three to five years earlier than their millennial equivalents.
But despite they have a seemingly captive audience, Claudia D’Arpizio, partner and leader of Bain’s Global Luxury Goods and Fashion practice, said brands would have to innovate: “Thenouvelle vague— the new wave — of the luxury goods market will demand evolution amid disruption, adaptation amid uncertainty, and an expansion of creativity in all of the basics — all while new trends and concepts develop.”
Luxury brands are already looking to the next phase of their transformation, investing in their future growth now despite concerns over economic headwinds. The result has been marginally lower profits across the sector as organizations reinvest.
The demographic change comes at a time of shifting sands for the world’s biggest luxury goods corporation, LVMH, as the industry waits to see who will take over Bernard Arnault’s empire. In a management reshuffle last week, the luxury kingpin installed his only daughter as head of the Dior fashion house just days after he was named the richest person on the planet.
Federica Levato,partner at Bain & Company and leader of the firm’s EMEA Luxury Goods and Fashion practice, added: “In their path to 2030, luxury brands will need to leverage their culturalavant-gardeposition and insurgent excellence to overcome the challenges ahead and shape the world. Just as they recently did through excellent products and human-centric engagement, they must now deal with new priorities: ESG, creativity chain, technology and data. These domains are rich with opportunities for luxury brands — but investments for future growth are crucial.”
What are common luxury items?
According to Luxe Digital, which compiled a list of luxury fashion, beauty and ‘hard’ luxury items like watches and jewelry, Gucci was the most popular fashion brand online.
The rest of the list — which took into account factors such as brand value, search share of voice, and social media analytics — is made up of Dior in the number two spot, followed by fashion brands Chanel, Louis Vuitton and Hermes.
Jewelry brands appear further down the list, with Rolex and Tiffany — also owned by the LVMH corporation — taking the numbers six and seven spots, before a return to fashion with Prada, Versace and Ralph Lauren rounding out the top 10.
Hard luxury, leather and apparel sales lead the resurgence of luxury brands following the pandemic, with revenue driven up by an ‘elevation strategy’ of progressive price increases. Without damaging volume growth, steady ticket inflation has lead to 60% of the growth of the sector from 2019 to 2022.
In one example, in 2021 the price of Chanel’s Classic Flap Bag increased three times. In January, it was reportedly $6,800 before leaping to $7,800 in July. By November it was $8,800.
According to Women’s Wear Daily, Louis Vuitton has also upped the price for its popular Pochette Accessoires Monogram Canvas bag, which went from $630 at the start of 2021 to $1,050 a year later.
“What has changed is the affluence level of the U.S. customer, and the prevalence of social media that tells the customer what is cool, ” Jan Rogers Kniffen, CEO of retail consulting firm J Rogers Kniffen WWE, told CNBC. “The generation before the Z’s pushed the age of first luxury purchase to 18 to 20. Wasn’t 15 to 17 the next logical stop? Is that the bottom? Probably not.”
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FAQs
Gen Z are starting to splurge on luxury shopping as young as 15 — up to 5 years earlier than their millennial counterparts did. 'Precocious' teens are set to become the biggest buyers of luxury goods by 2030 as the demographic of shoppers in the sector get younger and wealthier.
What does Gen Z splurge on? ›
This trend, the firm said, was most evident among Gen Z and Millennials. According to Business Insider, these younger cohorts ranked splurging on groceries higher than plans to splurge on any other category, including restaurants, bars, travel, beauty and personal care, apparel and fitness.
What are the shopping habits of Gen Z? ›
While Millennials and past generations were loyal to brands, Gen Z is more interested in shopping around and prioritizing value. They'd rather browse multiple brands at department stores than one at a flagship store. Marketers must keep an eye on these differences and other Gen Z buying habits.
What generation buys the most luxury goods? ›
Although their purchasing power may be lower compared to older groups, Millennials tend to allocate a larger proportion of their income to luxury products and experiences.
What do Gen Z spend most on? ›
46% of Gen Z spent more on fashion than anything else in 2022 (5WPR) Gen Z was the only generation to have clothing and fashion as their top spending category. 30% of Gen Z spent more on beauty and personal care than anything else, far more than any other generation.
Is 15 a Gen Z? ›
Gen Z is the generation born in the 15-year span from 1997 to 2012. In 2024, they will turn between 12 and 27 years old. This is the newest generation to gain influence in the world, from joining the workforce to being old enough to vote.
What attracts Gen Z the most? ›
Gen Z is all about gaming, showing higher engagement rates compared with previous generations. This generation's media habits reflect a clear shift toward digital experiences and interactive content.
What products does Gen Z buy the most? ›
According to a recent survey of Gen Z's shopping habits, the top products consumers in this age group (defined as those aged 18 to 24) purchase online are those in the clothing and shoes category.
What motivates Gen Z to buy? ›
Gen Z is not just interested in buying a product to own it – they're also motivated to buy items to create social media content around it. Zoomers go above and beyond to get in on these kinds of trends.
What is Gen Z Favourite food? ›
Young people, like people of all ages, enjoy burgers, pizza, chicken, sandwiches, salad, and fruit. And the younger they are, the more simple they like it, according to restaurant-hospitality.com. From middle school and beyond, their tastes broaden to include more flavors, combinations, and global variety.
Gen Z is bringing back '90s grunge, '70s boho chic, and '60s mod aesthetics, driving the revival of vintage clothing. But they've added their own touch. The cool thing about vintage fashion is that it doesn't just give you freedom of expression—it's also good for the environment.
What are Gen Z lifestyle problems? ›
Gen Z Struggles With Mental Health
Social media, which many Gen Zers have used for most of their teenage and adult life, exacerbates these issues — no other generation has had such immediate and unfiltered access to the news for most of their lives, which can lead to stress, anxiety, and other mental health issues.
Why do Gen Z buy luxury? ›
While the overall affluent cohorts of the world value their families and physical wellness more than any other area, and, along with exclusivity, look for loyalty benefits which help them here, for the Gen Z consumer overall loyalty is more value- and purpose-based and tends to relate more to brands that support the ...
What is the best luxury brand for Gen Z? ›
In the world of handbags, luxury brands continue to reign. Coach leads the pack with a notable 19% preference among Gen Z teens. Louis Vuitton and Kate Spade follow closely with 11% and 10%, respectively. This reaffirms the influence of luxury brands, amplified by social media, particularly TikTok.
Which generation is the wealthiest? ›
Millennials stand to become the richest generation in history, after $90 trillion wealth transfer | CNN Business.
What is the age group for luxury products? ›
Among the age groups of 18-24, 25-34 and 35-44, shoes were the most popular category for luxury purchases at 40%, 41% and 43% respectively. Beauty products came in second for the youngest group at 33%, while 38% of both older groups had fashion accessories behind shoes when it comes to luxury purchases.
Are Gen Z and millennials driving growth in the luxury goods market? ›
By 2026, Millennials and Generation Z are expected to account for 75% of luxury goods buyers. This striking evolution is reshaping the luxury landscape, driven by younger, higher-spending, more demanding consumers. It also brings new trends to the forefront, such as the resale and rental of luxury goods.
What age are Gen Z shoppers? ›
The generation referred to as millennials technically refers to those born between 1981 and 1996, while Gen Z refers to those born between 1997 and 2012.
Are Gen Z less loyal to brands? ›
3 They are less likely than other generations to be brand loyal as traditionally defined. If brands are slow to engage or break their promises, then Gen Zers will quickly switch to a competitor. Brand loyalty and brand enthusiasm are often incorrectly used interchangeably.
