RECESSION IMPACT ON LUXURY - In 2023, the global recession impact would be lesser on luxury market because of top end customers who are less sensitive to downturns.
MARKET SIZE OF LUXURY- The customers of luxury goods will increase from 40 crore in 2022 to 50 crore by 2030.Top end customers contributed 40% of market value in 2022 compared with 35% last year. These top end consumers are hungry for unique products and experiences.
COUNTRWISE PERFORMANCE - The USA market did well in 2022. Europe did well despite Covid 2019 because of shoppers from USA & Middle East.
Chinese market was adversely affected in 2020 & 2021 because of Covid 2019. Luxury market in China grew by 18% in 2022. China’s luxury market is expected to recover by the second half of 2023. In 2022 Japanese luxury market increased by 7%.
In 2022 Indian luxury market grew by 8%. Even though India constitutes only 2% of global market its luxury market could expand to 3.5 times today’s size by 2030, propelled by younger customers and an expanding upper and middle class.
FUTURE TRENDS IN LUXURY- Following are the future trends for the luxury market across the globe.
1. Future is female
2. Young customers
3. Dominant China
4. Immortal brick & mortar
5. Affordable luxury
7. New cities
9. Cultural sensitivity
1. Future is female- In future majority of luxury buying decisions will be taken by females. e.g. In India female employment rate has gone up to 25% in 2020-21 from 19% in 2018-19.
2. Young customers- According to Bain & Co. by 2025, millennials (1981-96) & Generation Z (1997-2012) together will account for 75% of luxury purchases. Absolut luxury (Term coined by Bain & Co. for very high- end brands i.e. Hermes in handbags & Patek Philippe in watches) will attract young consumers
3. Dominant China- By 2025, Chinese consumers will constitute at least 50% of the global luxury market. 75% of sales of Chinese customers will come from China.
4. Immortal brick & mortar- Luxury will be one of the few sectors to focus on physical interaction rather than online transaction. In future maximum 20% of the sales will happen online for the luxury goods. Luxury stores will be the third places for learning & entertainment.
5. Affordable luxury- This is also described as accessible luxury, democratic luxury or masstige. e.g. In India a leather accessory brand Hidesign is considered a affordable luxury brand.
6. Premiumization- This term is coined by the spirits industry to describe trading up i.e. increasing the price. e.g. In 2022, Starbucks opened 5200 square feet Starbucks Reserve in Fort area of Mumbai which serves exclusive food & has a cocktail bar.
7. New cities- According to Mckinsey report luxury brands are looking at underexplored places to increase their sales. e.g.- Luxury brand doubled their outlets in Chengdu & Nanjing of China.
8. Storytelling- Storytelling can be done by company’s history culture, employees, customers and celebrities etc. e.g. According to advertising research agency BrandTotal report (2022) top 3 brands involved in storytelling were Louis Vuitton, Gucci & Chanel.
9. Cultural sensitivity- In future brands will have to be very sensitive to the local culture. e.g. In 2018, in China , D&G had put a video of Asian woman struggling to eat Italian food. Because of this there was a adverse effect on sales of D&G.