Luxury brands have withdrawn their exclusive safe spaces, exploring new ways to win customers during Covid. The only problem is that to win and retain the next generation of shoppers, they have to keep an elusive need with consumers who want to share everything online.
These companies have no time to waste. According to a spring update from Bain & Co, the industry is losing speed relatively quickly.
Research released Thursday showed that the industry’s value was 1.5 trillion euros ($1.7 trillion) in 2024, although the estimated Q1 2025 quarter is 3% compared to last year.
Even last year, Personal luxury goods It is one of the categories that marked the most significant slowdown, falling from €369 billion in 2023 to €364 billion in 2024. This marks its first contraction in 15 years, a notable exception to the pandemic.
The authors’ writers Claudia D’Arpizio and Federica Levato added that the gap between winners and losers in the luxury sector is also increasing.
The gap between the 75th percentile in the first quarter and the lowest 25% performers increased by 1.5 times compared to the same period last year, while market leaders continued to charge for the lead, while the lowest 20% to 30% of the industry continued to report a decline.
Part of the question is that consumers are fighting with what Bain & Co describes as “value equations” – basically, are they gaining enough experience, social and cultural honors, or craftsmanship, or buying at a high price?
D’Arpizio tells wealth. This does reinforce in some categories “starter items like streetwear, sneakers and even beauty – all categories that may be more relevant to young people, and those who spend less on certificates.”
She added that the strategy is “overcorrected” and brands rely too much on iconic designs or experiences, reducing their pace of innovation, thus making consumers questionable If their spending is really worth it.
“So, last year, our customers lost a lot – less than 50 million customers bought luxury products – especially among the younger generation, and the decline in customer advocacy has dropped dramatically,” D’Arpizio continued. “Now these brands are trying to solve this problem and trying to reignite the relationship without losing proprietary.”
Exclusiveness in the online era
When younger consumers are called social media because of their tendency to post online, returning to the issue of exclusivity is a more difficult problem.
Gone are the days of celebration without cameras, and the designer handbag rear room does not allow shooting: it can be provided on your page at the moment of the end.
“Luxury has always been a show-off,” continued D’Arpizio, head of Bain & Co. “The previous generation is showing off wealth and showing off what you have accomplished in life, and now it shows off your personality more Or your ability to choose aestheticsyour quality of life.
“In Generation Z, there is a great demand. This sharing means expressing their personality…but it is also a desire to conform. This is two contradictory forces, but it is actually an important driving force for luxury consumption, because luxury brands can provide this conformity, but then in luxury brands, in luxury brands, mix and match, match their own style, create their own style, create their own style, create their own self-expression, and thus create their own performance.
She continued: “Social media provides a huge impulse for luxury consumption because the potential to share with a larger audience not only creates more customers but also enhances their communication strategies, so they have a wider range.
“So, yes, they want to be exclusive, but they know the power of social media.”