- Gen Z and millennials are the largest drivers of the luxury-goods market, per Bain & Co.
- Gen Zers purchase luxury items three to five years earlier than millennials, the study found.
- The luxury-goods market is valued at more than a trillion dollars and is expected to withstand a recession.
If luxury is timeless, that must mean it's able to withstand economic downturns, right? Well, as of now, millennials and Gen Z are the ones to thank for the luxury market's current resilience and growth, according to a luxury-trends report by Bain & Co., a management consulting company.
The luxury-goods market is forecast to be "recession-proof" in 2023, in part because of millennial and Gen Z consumers, who accounted for the growth of the market in 2022, the report found. The luxury market's consumer base is 400 million strong this year and is expected to grow to 500 million by 2030, Bain said.
Bain predicts the luxury-goods market will grow 21% this year, to 1.4 trillion euros — roughly $1.45 trillion.
A new crop of young, luxury entrepreneurs has sprouted up in recent years as a way to disrupt a market that hasn't been as sustainable, diverse, and tech-savvy as millennials and Gen Zers want, Insider reported. One entrepreneur, Brandon Blackwood, was on track to earn $300 million in revenue for his handbag line.
A trend is emerging as well: By 2030, Gen Z and Gen Alpha — those born between 2010 and the early 2020s — will make up a third of the luxury-goods market, and spending by these generations is predicted to increase three times faster than older generations, the Bain report states. It found that Gen Zers are buying luxury items at around age 15, which is three to five years earlier than millennials.
Millennials and Gen Z accounted for 72% of the global luxury market in 2022 compared with 2019, when millennials and Generation X made up most of the luxury-goods market, at 66% of market share, compared with Gen Z's 8% share.
The luxury market and industry appear more ready to withstand an incoming recession compared to past recessions. Luxury goods continue to be purchased at a consistent rate, according to Bain & Co.
The report points to several factors bolstering the luxury goods market's resilience, including savings accumulated over the COVID-19 pandemic; a "YOLO," or You Only Live Once, culture where consumers are chasing after experiences for fuller lives; a certain resilience built up after the 2008 financial crisis, and people purchasing luxury goods in order to invest or resell them.
The trends could also explain how wealthier populations are able to continue splurging on Ferraris, Gucci handbags, and expensive Champagne, as they are generally more insulated from inflation.
There is also a larger, more concentrated luxury-goods consumer base compared with years prior, the report states. The luxury industry is more "customer-centric" and "multi-touchpoint" meaning there are more ways to access the luxury market, including digital and virtual shopping experiences.