According to Bain & Company, innovative trends are about to radically change the luxury market and create new values
According to a recent study by Bain & Company, "The Future of Luxury: A Look into Tomorrow to Understand Today", the luxury market posted sales of EUR 2018 billion in 1.171 and is expected to continue to grow by 2025. Luxury goods and cars have the largest market share with a total of 64%.
The consumption of personal luxury goods should be the main driver for future development.
Source: Bain and Company
Five disruptive trends define a “new normal”, which should continue to grow until 2025
Luxury in 2025 - 5 Macro Trends:
- Digitization of the value chain: The share of online retail in the luxury market should increase from 10% today to 25% in 2025 and cannibalize traditional sales channels. 100% of all purchases are influenced by online and social media. Digitized shopping models in the offline segment, e.g. through virtual reality or innovative shopping apps, will revolutionize the shopping experience in the store.
- Millennials & Generation Z: More and more young people around the world are enthusiastic about high-priced accessories, cosmetics, jewelry or clothing. Luxury is increasingly becoming an attitude towards life for millennials and Generation Z. In 2025 they are expected to make up 55% of the total market and contribute to 130% of growth.
- Communication & sustainability: According to the author of the study and partner at Bain, Claudia D'Arpizio, sustainability and transparency will be indispensable success factors in the future. Young buyers in particular want to be involved in corporate communication. The topics go further than pure product and brand information. Rather, it is about the environment, human rights, animal welfare and transparency. Brands that internalize these aspects as part of their business DNA would be able to participate disproportionately in market growth.
- Chinese buy their luxury goods domestically: the desire of the younger generation in China for luxury drives the sales of premium brands. Despite the luxury tax, more and more Chinese buy their favorite products directly in China and no longer abroad. The market share is expected to increase to 2025% by 46.
- Adaptability & flexibility: The profitability of companies is to be increasingly influenced by digitization. Future sales will be achieved through volumes rather than price increases. In order to achieve stable margins, companies must be able to adapt quickly and flexibly to changes in the market. “The best brands are already winning tomorrow's customers today,” emphasizes Bain partner and luxury goods expert Serge Hoffmann.
You can find more about the study under www.bain.com