Luxury’s Generation Gap

(businessoffashion.com) - The luxury goods market is expected to return to growth this year, driven by domestic spending in China and tourism in Europe, according to the latest Bain & Co. Luxury Study, released in May 2017 in collaboration with the Fondazione Altagamma. While luxury goods sales fell last year to €249 billion ($280 billion), from €251 billion in 2015, spending is expected to grow by 2-4 percent this year. And over the next three years, Bain predicts that millennials and Gen-Z will boost the value of the luxury goods market to €290 billion ($324 billion), with the generations accounting for 45 percent of the market by 2025. This presents a challenge for many brands, however, as traditional business models do not accommodate Gen-Z and millennials' values and expectations. In the past, a luxury brand’s goal was to create a superior product that encapsulated ideals of exclusivity and aspiration. Now, brands must consider the values of younger generations, for whom community, authenticity and transparency play an important part in how they purchase luxury goods.