by 
-
Generations Y and Z accounted for all of the growth in the luxury market in 2022, according to a report from Bain & Company.
-
Younger generations are set to become the biggest buyers of luxury goods by 2030, the report says.
-
Gen Z and Gen Alpha spending is projected to grow three times faster than other generations through 2030.
Generation Y, Z, and Alpha consumers aren’t afraid to splurge when it comes to luxury, and their luxury bills should only go up.
The consumer base of the luxury market will reach 500 million by 2030, according to a report by Bain & Company released on Jan. 17. Bain’s study is based on information and data provided by the Altagamma Foundation, an Italian luxury goods body with more than 280 luxury companies as members.
The lion’s share of these luxury purchases will be made by younger consumers globally, according to the report: Generations Y, Z and Alpha will become the largest luxury buyers by 2030, accounting for at least 80% of global purchases.
Millennials born between 1980 and 1994 are dubbed Generation Y, while Generation Z refers to those born between 1995 and 2009. Those born after 2010 are part of Generation Alpha.
Not only will they be the largest spending group, but Generation Z and Generation Alpha spending is also expected to grow three times faster than other generations by 2030, occupying a third of the luxury market. This is a reflection of the generation’s “precocious attitude to luxury,” the Bain report says.
These changing trends have already become apparent. The Insider’s Nidhi Pandurangi reported in December that a vast number of young Americans between the ages of 18 and 29 are choosing to live with their parents — at a level not seen since the Great Depression era — which is likely freeing up disposable income for luxury spending. Insider’s Dan Latu and Kelsey Neubauer looked into the spending habits of young people and spoke with 20-somethings who live at home and wallow in cars, designer bags and nightclubs.
These habits may also be a result of the booming luxury resale market, where Generations Y, Z and Alpha treat luxury goods as valuable investments.
For example, a Chanel Medium Classic Flap bag sold for an average of $3,900 in 2011, based on data compiled by the Nasdaq. A decade later, the value has skyrocketed to an average of $7,800. A bag purchased in 2011 could have yielded a 200% return on investment in 2021.
By drawing a parallel with the S&P 500 index, a dollar invested in 2011 could achieve a return of about 149% in 2021, showing that some luxury goods are not just a fashion investment for self-indulgence, but have the potential to be profitable financial investments.
Apparel led the growth in personal luxury goods sales in 2022
Personal luxury goods performed well last year, with apparel leading the growth within the sector, the Bain report said.
Generations Y, Z and Alpha are spending more on luxury clothing due to the “post-streetwear” phenomenon. Some elements of post-streetwear include gender fluidity, inclusiveness, and a disregard for occasion. Instead of focusing on what’s trendy, younger consumers are more concerned with the techniques, materials and functions of clothing, according to the Bain report.
Bain notes record growth in luxury shoes, where Generation Y, Z, and Alpha aren’t splurging on iconic Nike Air Jordan 1 sneakers, but instead shop in Birkenstock-looking shoes, formerly known as “fussbett sandals.” These sandals typically have a raised platform sole that is made from a lightweight material and has straps or buckles to secure your feet.
Bain also said the luxury market will shift from traditional business models to virtual shopping experiences like Web 3.0 and the metaverse. This should make luxury goods much more affordable and boost sales to Generation Y, Z and Alpha consumers.
Read the original article on Business Insider
