Luxury businesses need to be agile in reacting to the evolving market: luxury consumers are getting younger and younger and Asia is driving the market’s growth, according to the latest Bain & Company Luxury Study, realized in collaboration with Italy’s luxury goods makers group Fondazione Altagamma.
Personal luxury goods market grew 4% this year until to €281 billion, even with a 20% drop in consumption. Young consumers helped the growth. The nature of luxury customers is evolving fast: younger luxury buyers follow brands which will force them to innovate both business models and value propositions. Bain & Co partner and lead author Claudia D’Arpizio says: “Asian buyers were the main luxury drivers. Brands will need to pivot to a new model to respond to customers’ needs when it comes to buying, consuming and communicating”.
Today’s luxury consumers are increasingly Millennials, with those born between 1980 and 1995 now accounting for 35% of consumption. They’re expected to account for 45% by 2025. The even-younger Generation Z “ is poised to reshape the industry. By 2035 they could make up 40% of luxury buyers and they display behaviours that distinguish them from other generations”. Social responsibility is a priority of younger consumers. Bain & company study reports that 80% of luxury consumers prefer brands that are socially responsible and particularly noticeable among younger groups. Socially responsible doesn’t only mean “eco” but a raft of other issues too.