“No need to run, you have to leave in time,” said the slow tortoise that had beaten the fast hare in Aesop’s fable. A warning to treasure the lesson inherent in slowness and slowdown, potential sources of interesting innovations. After 20 years of uninterrupted growth, and being blocked by the pandemic, the luxury market is regaining strength. However, given that one cannot bathe in the same river twice, even if the luxury industry and its consumers are recovering, they have inevitably changed during this year and a half of slowness and reflection. The profile of this evolution is at the center of Altagamma’s Consumer Insight, an event now in its eighth edition and which with the report True-Luxury Global Consumer Insight, created by Boston Consulting Group, translates these changes into trends and numbers.
The great return of luxury experiences: + 70% in 2021
Taking into consideration 12 thousand luxury consumers (who spend an average of 33 thousand euros a year) in the top 10 countries in the world for high-end consumption, the study highlights how they are returning to greedily buy both personal goods, therefore luxury items, and experiences (travel, starry dinners, well-being): the first segment is expected to grow by 20-30% compared to 2020 and the second, more penalized by the pandemic, by 60-70%. Driving this recovery are the two highest segments of the pyramid of luxury customers, about 2 million people who allocate between 20 thousand and 50 thousand euros a year to luxury and who during the pandemic have seen their wealth increase further: if in 2019 they represented 6% of luxury consumers, in 2020 their share doubled to 12%. By 2025 it will be them, along with the other customer segments true luxury (who spend at least 5 thousand euros a year on luxury) to generate as much as 30% of the growth of the luxury market.
The opportunity of China, which however no longer travels
China and the United States are confirmed as the countries driving this recovery, but in different ways: if the United States is also benefiting from government support, and the dynamics of consumption are more solidly defined, the tendency to shop will strengthen in China. within national borders, which will lead brands to invest more intensively in their presence in the country, with new stores but also on the digital front. If in 2019 56% of Chinese luxury spending was carried out abroad, in 2020 it fell to 14%. But in this shock, which also opens up new perspectives on retail development in target markets, there is also an opportunity: to go back to shopping for local consumers, which in fact has returned to grow, with more refined and innovative services.
The shop becomes a stage in the purchasing process
For luxury brands this is not the only challenge in the Asian area, since they are also called to respond from a creative point of view to the Chinese preference for more flashy proposals, for logos, recognition, while Western customers continue to prefer sobriety and heritage values. Yet another evolution plan is linked to the sales channels: the store has by no means been killed by the e-commerce boom in the months of the pandemic, but is giving up its primary role in the path of the shopping experience to become a stage. a point of contact, especially crucial in the after-sales purchase phases. In 2023, omnichannel sales will rise to 60% (+ 5% compared to 2020), while offline sales will drop to 15% from 25% in 2020.
The new frontier of video games and livestreaming
Furthermore, digital is increasingly a laboratory of new ways of interacting with customers: in addition to e-commerce and social commerce, video games are the new frontier of interaction and sales (moreover, the industry has reached a value of 178 billion of dollars in 2020, surpassing cinema) and livestreaming is becoming increasingly important, which has a conversion rate in purchases of 70% among those who follow these live events, mostly young people. Millennials and Gen Z will represent 60% of luxury customers by 2025 and are also increasingly important in defining the new values of the entire industry, with sustainability in mind, which is leading to a marked increase in second hand and rental. The youngest will also be consumers of luxury items in the NFT (Non Fungible Token) version, therefore intangible and unique, an experimental but fast-growing segment.