As reported by Bain & Company, the overall Luxury industry grew by 5% in 2017 and forecasts says it will continue growing at a 4%-5% annual rate over the next three years. In particular, the market of personal luxury goods represented the core of this positive trend. Last year, it experienced a growth worldwide, thanks to more solid local consumption and stronger tourist purchases and, moreover, it is expected to increase to a value of 295-305 billion € by 2020.
Bain report and recent researches, like The True Luxury Global Consumer Insight, by Altagamma Foundation and Boston Consulting Group, depict also some of the major trends, which are driving the future scenario of Luxury at global level.
Experiential products and Customization
Restaurants, winery, hotel, design and furniture represent the so-called experiential products. Even though premium-quality goods and highly-valued craftsmanship remain a “must have” (mainly because of the status they come with), consumers now drastically move their attention on how luxury makes them feel and value intangible qualities over personal luxury items. Consumer expectations about Luxury are changing, as well. Indeed, the focus has shifted from standardization to customized services and tailor-made products.
Have mono brand stores passed their peak?
Physical mono brand stores are still the real playground for the luxury industry. However, the rise of digital platforms is challenging the entire shopping experience and the traditional customer journey. In 2017, online sales increased by 24%, with accessories (mainly, handbags and shoes) representing the top category. Besides online spending, omnichannel is gradually emerging as one of the dominant trends in this area. Actually, consumers do not simply walk into stores, but their purchasing choices are becoming digitally oriented: they want luxury brands to engage with them through several touchpoints and to link physical stores to on-line shopping experience.
Made in Italy
Around 80% of consumers are reported to regularly check the country of manufacturing when buying luxury goods. In particular, “Made in Italy” is taking the lead worldwide, followed by France and the US (which is mainly appreciated by Americans). Researches show that fashion apparel and footwear are the key assets boosting Italian manufacturing, while perfumery and jewelry have gone through a modest decrease.
Millennials’ new consumption model
As Bain & Co. points out, 85% of luxury growth in 2017 was boosted by the generation shift, and precisely, by Millennials and Generation Z. The former set an unprecedented challenge for luxury brands. Indeed, Millennials think and shop differently from previous generations. Being part of the digital revolution and having different perceptions of time and opportunities, Millennials attach greater importance to self-expression and experiences than to tangible things. Moreover, they are inspired by an entrepreneurial spirit, which pushes them to create their own products and brands if the existing ones don’t meet their expectations. Therefore, luxury brands should embrace the new “Millennials state of mind” in order to successfully go through this phase of transformation.