(Source: Inside Retail Philippines | 13 April 2017)
The younger generation will be key for the luxury industry in the next decade as it enters a “new normal” characterized by lower growth, new research shows.
To find success, brands will need to refocus on their customers to better anticipate and cater to their needs, according to US global consulting company Bain & Company, which ran the research for luxury fashion e-commerce group Farfetch.
The research estimates that millennials will represent 40 percent of the global personal luxury goods market by 2025, and the characteristics of millennial behavior are already seeping through to older generations, which accounted for 73 percent of luxury purchases last year.
The resultant “millennial state of mind” is characterized by three main traits including uneasiness, urgency, and uniqueness.
Online interactions are now influencing 70 percent of luxury purchases, which means at least one digital interaction has taken place with the brand or the product before those purchases.
For consumers between 18 and 24 years old, 14 per cent make their first luxury purchase online, and digital traffic to websites of luxury brands is double the number of store visits.
By 2025, says the research, online and monobrand stores will become the two largest channels for luxury sales, each accounting for 25 per cent.
Bain & Company believes that stores will continue to play a critical role in the luxury market, accounting for 75 per cent of purchases by 2025.
Asian consumers will continue to account for more than half of the luxury market, with generation Y (millennials) and generation Z accounting for 45 percent.