Shift in Luxury Shopping: Gen Z Takes the lead as younger shoppers driving sales upward

Luxury consumers are becoming wealthier and younger. Over the coming ten years, some of the newest consumers’ purchases are projected to expand three times faster than those of older groups.

According to a Bain & Co. study, Generation Y, also known as millennials, and Generation Z were responsible for the luxury market growth in 2017. Through 2030, spending by Gen Z and the even younger Generation Alpha, or those under 13, is anticipated to account for one-third of the luxury market, indicating “a more precocious attitude toward luxury” among the younger generation.

Available data suggest that Gen Z consumers are beginning to purchase luxury items at the age of 15, including watches, jewelry, apparel, and more.

The report predicted that by 2030, younger generations (Generations Y, Z, and Alpha) would account for 80% of all luxury expenditures worldwide.

The slowing economy, high inflation, and rising interest rates have mainly had little effect on luxury sales. According to Bain, global sales of luxury personal goods will increase 22% in 2022, reaching 353 billion euros, or approximately $381 billion.

Depending on how well the economies of the United States and Europe are doing and how well China recovers, luxury purchases are predicted to increase this year by 3% to 8%.

With a 25% sales growth and total sales of 113 billion euros, or roughly $121 billion, the U.S. reclaimed the top position for luxury sales in 2022, surpassing China. Luxury purchases in China fell 1%, primarily due to Covid lockdowns. At 27%, Europe also experienced significant growth, which was significantly aided by American tourists’ summer purchases of upscale products there.

Sales of luxury products are anticipated to continue to be driven by accessories, with handbags taking the lead in 2022.

Sales of leather goods increased significantly last year, with growth of 23% to 25% compared to pre-Covid levels, driven largely by price increases. While new product models contributed to some of this growth, the biggest factor was higher prices, such as in the case of the Chanel small Classic Flap bag, which is now priced more than 60% higher than before the pandemic. According to Bain, around 70% of the sales growth in leather goods in 2022 was due to these price increases.

According to analysts and luxury executives, social media and the recent boom in wealth creation are responsible for the attraction of luxury brands to younger and younger consumers.

Buying luxury shoes and handbags online has become much more accessible in recent years as luxury brands have embraced online sales.

Bain predicted that Web 3.0, which includes the metaverse and non fungible tokens (NFTs), will further boost future luxury sales to younger customers.