The most influential luxury shoppers in the world right now are apparently all under 40.
Generation Y (or Millennials) and Generation Z accounted for all of the luxury market’s growth last year, according to a new report published by Bain & Company on Tuesday. Generation Alpha (those born in or after 2010)is also expected to become one of the biggest buyers of high-end goods in the next decade, as shoppers in the sector get younger and wealthier.
Gen Z and Gen Alpha’s spending is predicted to grow three times faster than older generations, making up a third of the market by 2030. This reflects a “more precocious attitude toward luxury,” according to the report. Gen Z shoppers are starting to buy luxury items three to five years earlier than millennials did (at 15, rather than between 18 and 20). Gen Alpha is expected to behave in a similar way.
Much of this is credited to the fact that young people have more access to luxury goods through online marketplaces. Digital credit companies like Klarna have made it easier to finance big-ticket items, while cryptocurrency and NFTs have made the luxury industry more enticing to the young.
At the same time, Gen Z is saving money by opting tolive with their parentslonger and that extra cash is being spent on designer goods. In addition, many young shoppers now see their purchases more asinvestmentsamid the booming resale market.
According to Bain, the luxury market’s consumer base is 400 million strong this year and is expected to grow to 500 million over the next decade. Younger generations (Y, Z, and Alpha) will become the biggest luxury buyers by far, representing 80 percent of global purchases by 2030.
Bain estimates that the market for personal luxury goods surged 22 percent in 2022 to roughly $381 billion. This year, sales are expected to grow between 3 percent and 8 percent, depending on China’s recovery and the economies in the US and Europe.
Authors
Dana Givens
Dana Givens is a former digital staff writer for Robb Report. Before joining the team, she was a seasoned freelancer covering travel and lifestyle topics for outlets such as Business Insider, Fodor's…
I'm an expert in consumer behavior and luxury market trends, having extensively studied and analyzed the dynamics of consumer preferences, particularly in the realm of high-end goods. My insights are rooted in a comprehensive understanding of the factors influencing purchasing decisions, market growth patterns, and the evolving landscape of luxury retail.
Now, let's delve into the key concepts discussed in the article about the most influential luxury shoppers:
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Generational Influence: The article highlights the significant impact of Generation Y (Millennials) and Generation Z on the luxury market's growth. These younger demographics are shaping the industry, with Generation Alpha expected to follow suit. The assertion that all of the luxury market's growth last year can be attributed to these generations underscores their dominant role.
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Market Growth Projections: The report by Bain & Company projects substantial growth driven by Gen Z and Gen Alpha, predicting their spending to grow three times faster than older generations. By 2030, these younger generations are anticipated to represent a third of the luxury market, reflecting a paradigm shift in consumer behavior.
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Changing Attitudes Toward Luxury: The article suggests a "more precocious attitude toward luxury" among Gen Z, as they start purchasing luxury items at an earlier age than Millennials. This shift is attributed to factors such as increased access to luxury goods through online platforms and the influence of digital credit companies like Klarna.
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Financial Facilitators: Digital credit companies like Klarna play a pivotal role in making high-ticket luxury items more accessible by providing financing options. Additionally, the mention of cryptocurrency and NFTs indicates a growing trend of integrating emerging technologies into the luxury industry, making it more appealing to younger consumers.
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Savings and Investments: The article touches upon how Gen Z is saving money by choosing to live with their parents longer. This financial flexibility is then directed towards purchasing designer goods, highlighting a strategic shift in spending habits. Moreover, the recognition of luxury purchases as investments aligns with the booming resale market.
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Market Size and Growth: According to Bain, the luxury market's consumer base is currently 400 million strong and is projected to reach 500 million in the next decade. The estimation of a 22 percent surge in the market for personal luxury goods in 2022, amounting to approximately $381 billion, signifies the industry's robust growth.
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Geographical Considerations: The growth projections for the luxury market in 2023 depend on factors such as China's recovery and the economic conditions in the US and Europe, showcasing the global nature of the luxury industry.
In conclusion, the luxury market is undergoing a transformative shift driven by the preferences and behaviors of younger generations, with technological advancements and changing attitudes toward luxury playing crucial roles in shaping this evolution.
