Bain & Co Luxury Goods Worldwide Market Study, Fall-Winter 2016

Bain & Co Luxury Goods Worldwide Market Study, Fall-Winter 2016

The 15th edition of the Bain Luxury Study, published annually by Bain & Company, underlined in statistics what we've all known for some time; we are in the middle of a shift in luxury spending away from luxury goods and toward luxury experiences, such as travel and gastronomy. Indeed, the travel sector grew faster than luxury goods by at least 5 percentage points last year. 

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The Luxury Futures Report by The Future Laboratory, posits that much of this change is being driven by demographic shift,"Baby Boomers have been the dominant force in luxury consumption, but by 2025, 85% of luxury spending will be in the hands of Generations X, Y and Z. This demonstrates a consolidation of power and influence among those under the age of 52 who have very different priorities to their older counterparts. Younger Millennials and Generation Z – what we refer to as Generation D, or Generation Digital – demonstrate attitudes that are in some ways incompatible with the current articulation around luxury."

We asked some of our favourite luxury brand managers for their View on the redirection of luxury spending worldwide, and how established brands can meet the challenge of appealing to these younger consumers without alienating their traditional core.

News Views

Analyst's  View

"Younger Millennials do not hold the old codes of luxury close to their heart, and switch off when brands identify themselves too strongly as a heritage brand, or create campaigns about the craft-based, artisanal nature of a product. For them what status and luxury means has shifted. Old signifiers do not necessarily mean anything anymore. Gucci is a good example of a heritage luxury brand successfully transforming into a brand loved by younger consumers. Its approach is now playful, experimental and painfully on trend. Take its Instagram campaign using memes, which successfully tapped into the younger generation’s appetite for net culture. This shift is also perfectly encapsulated in the Louis Vuitton collaboration with skate brand Supreme on its AW17 menswear collection. Streetwear is inspiring luxury, whereas luxury used to inspire high street trends. Both brands have embraced audiences who would traditionally be considered outside the luxury industry, and who wouldn’t be the perfect luxury consumer. They understand that the luxury consumer is now a multifaceted being – one might be into skateboarding, while another might be into art."

 PR View

"Nowadays people don’t buy because they can’t do it themselves, they buy because they don’t have time or don’t want to do the task. Millennials will pay good money for a personal trainer or a private chef, so why not a travel advisor? Would you attempt to cut your own hair? NO! There has been a shift in mind-set to ‘why would I do it myself if someone will do it so much better than me?’, so, as an industry, we need to communicate the value of the experience travel advisors bring to the equation and that it doesn’t necessarily come with an extra cost."

ILTM View

"As the younger generation arrives into adulthood, the luxury sector will continue to search for new opportunities for growth using strategies that emphasize the transformative qualities of new experiences. The great digitization of everything rolls on at pace, and the world is looking to travel to provide the antidote. For this reason, the migration of spending from goods that gave status, to experiences that give peace of mind will keep gathering speed. Great news for our industry and even better news for the people who have been so passionately trying to explain this for years!"

Exhibitor View

"The new generation of luxury consumer is more international and curious in spirit. This interest in global cultures has shifted their understanding of luxury, which has at once become less formal, more inviting, and more of an immersion into a destination. They are seeking out a genuine discovery, which naturally inspires a desire to travel and to delve into locations across the world. Luxury hotels have evolved with time to celebrate these different preferences and attitudes, and have become more malleable in their experiences so that each guest can enjoy a truly personalized stay. For The Set it is as much about fusing the rich legacy of our properties with modern design touches, remarkable experiences, and unmatched service, as it is about successfully creating a luxury experience in the some of the worlds’ most sought after cultural destinations. We need to create environments where both younger consumers and our more longstanding guests will continue to want to return, which is a true hallmark of success in hospitality."

Influencer View

"Classic techniques such as sponsorships and partnerships have to be re-examined. Creating the right partnerships and joint ventures allows you to scale. Anything is possible when the right people work together in the right ways, and your business will adopt the characteristics of the people and organisations you partner with. Partnerships don’t need to be with corporations, but instead, real human beings. By harnessing people who love your brand, and encouraging or incentivising them to share their opinions online, you’ll provide a source of authentic information that millennials and generation Z are likelier to trust."

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