The luxury market is in the middle of a transition, with young customers who are changing their perception of luxury products and services. A 2024 report by Bain & Company highlights a major shift: by 2030, Gen Z consumers, born between 1997 and 2012 are likely to contribute around one-third of luxury purchases while millennials who are likely to be born between 1981 and 1996 are likely going to contribute over half of these purchases.
Gen Z: It is time to introduce another fresh face to the luxury powerhouse
The U. S based Piper Sandler company has suggested that Gen Z shall be the biggest generation and also the richest. For this demographic, luxury is poised not only to push up sales – across sectors ranging from retail to travel and technology – but they are also rewriting the luxury rule book.
Jason Dorsey, a leading Gen Z researcher and author of Zconomy: In How Gen Z Will Change the Future of Business, pointed out that Gen Z’s transition to adulthood is fast-tracking their purchase power in the luxury industry. ‘While they currently spend less than Gen Y, they will be great spenders in the future,’ Dorsey told Yahoo Finance.
The Push-Pull of Demographics in Luxury
Opportunities, as well as threats, are emerging from the changing profile of luxury consumers are discussed below. According to a Morning Consult poll that involved 2,203 adults in the USA, today’s luxury consumer wants ‘elegantly made goods, top-notch travel, and delicious food today. ‘ The focus therefore remains on quality, which Tassin notes however is a hazard for luxury brands who rely so much on their brand and heritage.
Another measure Claire Tassin tying them to retail and e-commerce reveals that have less brand-capture than the older generations. According to McKinsey’s survey, more than 50 percent of Gen Z in both the US and the UK are willing to change the brand they are using if offered a similar product or service at a cheaper price or of better quality. ‘This generation is a very brand-loyal generation, but it does not tolerate brands that it feels do not represent its identity,’ Dorsey contends.
Striking a Chord between Being Real and Aping the West
Luxury branding management is thus as much about authenticity as it is about glamour. Though the youth today seek the authenticity of ‘real’ brands and products that are chic, they are equally inspirational as far as luxury consumption is concerned. Tassin simply points to the problem that luxury marketers face in trying to sell to both the core and the merely upward-mobile, especially so as Gen Z assumes greater importance.
Dorsey’s advice to the brands is not to underestimate Gen Z and to value their interaction and richer viewpoints. Gen Z spends most of their time on digital platforms hence brands should target the trusted source of information and trend resources of Gen Z.
Consumer patterns that indicate the future of luxury spending In terms of consumers, it is very crucial to identify the patterns of luxury spending for the future.
Currently, the luxury market is expected to be around €1 billion and will rise according to the above-given figure. From €5 trillion ($1.67 trillion) the current value of the assets is €2. Up to $5 trillion ($2.79 trillion) by 2030 the nominal value will increase, the Bain & Company forecasted. New loyalties mean that brands have to be attentive to new age targets and tradition and avant-garde trends in luxury expenditure.
Altogether, it is clear that the factor that Gen Z brings to the luxury sector is profound, and to adapt to it brands must focus on such key aspects as; The trend and The real Self-brand building strategy.
