In a luxury world expected to rise four percent to 1.3 trillion euros this year, its top priority is a Chinese, young customer—someone who lives in “the now” and is totally digital.
“Brands who understand this are set to grow. The consumer of today is all these things and wants to be listened to,” said lead Bain & Company luxury goods analyst, partner Claudia D’Arpizio, Thursday at the Altagamma 2019 Monitor presentation here.
This year the Chinese market will be the main driver of the personal luxury goods market, which is expected to rise to 282 billion euros this year, up from 262 billion euros in 2018, the report said. In the longer-term, one out of two personal luxury goods are expected to be purchased by individuals of Asian origin, Bain predicted.
Out of the total, 33 percent of personal luxury goods are forecasted to be represented by Chinese consumers, followed by Americans at 22 percent and Europeans at 18 percent.
Despite the socio-political situation that is “strongly impacting the economic dynamism of Hong Kong,” where traffic slumped 30 to 40 percent due to riots, tensions are expected to ease and China as a whole is expected to remain a buoyant market, D’Arpizio explained, noting that Chinese shoppers are expected to redirect spending to other Asian countries and Chinese cities where new local potential luxury hubs are expected to emerge.
Millennials and Gen Z shoppers, whose shopping habits are “phy-gital” are also main drivers. The term phy-gital refers to a phenomenon characterized by the consolidation of physical stores and the unstoppable path towards digitization.
“Back in the day, we asked ourselves what would happen with Gen Z and millennials would enter into the personal luxury goods market. They have definitely raised the bar,” D’Arpizio said.
By category, by 2020, the leather goods and jewelry segment are expected to lead growth with the latter rising five percent.
For companies like Bulgari, placing bets in China have paid off.
“2014 was a year of crisis and while others [like Tiffany] held back, we invested heavily in the region... which is why we expect to reap the benefits of that decision,” said Bulgari’s ceo Jean-Christophe Balbin.