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As The Luxury Market Rises, Brands Are Starting To Cater To The Wealthy
The luxury market has been on the rise in 2018. A study done by Bain & Company shows that the luxury market increased five percent this year, rounding out to an estimated $1.37 trillion worldwide.
Companies can thank travel for that, cruise ships specifically. Expedition cruising has grown by seven percent. High-end hotels are up five percent, as they are “evolving into social venues in-sync with the city.” “Last year, we saw the global luxury market return to healthy growth, albeit at a more moderate pace than in the past,” said study lead author Claudia D’Arpizio. “That trend continues in 2018, reinforcing the ‘new normal’ we predicted, led by flourishing luxury demand from Chinese consumers, the continued rise of online channels, and increasing influence from younger generations of consumers.”
These reports are good news for companies looking to focus more on the upcoming wealthy generation. Bain found that young luxury shoppers, ranging between teenagers and young adults in their early twenties, are already showing that they care less about the brands. As Generation Z continues to rise, luxury brands will be focused on innovating their product offering and market strategy. “In 2018, Generations Y (the millennials) and Z contributed 100 percent to total luxury market growth, compared with 85 percent in 2017,” D’Arpizio said. “Generation Z and millennials will represent approximately 55 percent of the 2025 market and will contribute 130 percent of market growth over the period.”
A white paper called “Strategies to Win the High Net Worth Market” predicts that the new growth in wealth will have a dynamic impact on luxury spending and will help developing economies in the next few years. Written by Euromonitor International, the paper suggests this rise in global wealth is due to the spending habits of high net worth individuals, or HNWIs. By definition, an HNWI is someone with more than five million dollars in assets, with more than half of the world’s HNWI’s living in United States, France, China, the UK, and Canada.
This overly wealthy market is still small in number as the study reveals that brands still strategize in their favor. Traveling on the regular and with big budgets means they are your standard big spenders, which is great for brands since they are eager to try new products and services. Market strategies include“money can’t buy” services, product customization and being authentic. The last, and most profitable, is promoting a “healthy lifestyle.” High net-worth consumers are chasing the holistic trend, living beyond physical health and looking more into their mental and spiritual well-being.