Luxury goods are products that give a status of prestige to those who can enjoy them, they are characterised by excellent quality, a higher price, exclusivity and for the emotional and involvement component during the purchase and which remains for the possession of the asset. The number of consumers of luxury goods is constantly growing.
However, the pandemic has certainly put this sector to the test, albeit transversal, considering that some aspects of consumer habits have changed and that new evolutionary trends are underway that will have a positive impact for those who will be able to grasp them and adapt their own business model.
Some trends completely reshape the market and the entire luxury industry. Among the most significant are the following:
Importance of local consumption
The decreasing foreign demand has benefited the focus on the local consumer, a strategy on which we will continue to focus in this new normal scenario, even in the event of a stoppage of flows due to travel for tourism. China remains the only growing market in 2020 (+ 45% compared to 2019), thanks to the sharp increase in local consumption. Europe recorded a worse decline (-36% compared to 2019), due to greater exposure to international tourism, while the United States recorded a reduction of -27%, however recovering in the second half of the year. European and American consumers showed strong resilience during the year, despite the long periods of closure of the shops. Compared to 2020, all luxury product categories posted relatively similar increases in sales (c.25-30%) in 2021. Jewelry brands continued to implement their development plans successfully in 2021, and saw sales rise very substantially and one of the highest year-on-year revenue increases in 2021, compared to both 2020 and 2019, showing a very robust growth. Fueled by robust demand in Asia and the United States, the luxury market rebounded strongly in 2021. Within the personal luxury segment, only shoes (€23 or $26 billion), jewelry (€22 or $25 billion), and leather accessories (€62 or $70 billion) will beat 2019 results, up 5%, 3% and 4% respectively.
Considering the moment of great indecision due to the current crisis, in the coming months we will be able to see its impact on the luxury market.
It is the younger generations, in particular Generation Z, defined as the first mobile-first generation in history and the one of one-click operations, which will soon represent the largest share of the market, starting from 2025, and will be those who will influence in the most consistent way the evolution of the luxury market with the purchasing habits and values that distinguish them. Euromonitor research predicts that Millennials and Generation Z together will account for more than 40% by 2025, reaching 80% of consumption by 2035. This increase will, in large part, be the direct result of the economic maturity of those who now belong to Generation Z. Generation Z will represent at least 70% of market demand by 2025 as opposed to a little over 60% in 2021. Brands that are able to meet their expectations in terms of authenticity, technology and social and gender equality will benefit from this increasingly influential consumer segment. For luxury brands it becomes essential to have a vision in tune with consumers, constant interaction with them, defining and sharing their values, being authentic and transparent in the creation of products.
Explosion of the digital channel
the world of luxury has responded to the pandemic by exploiting the potential of a channel not fully used before. Companies in the Personal Luxury Good sector have faced the crisis by moving to digital sales channels and artificial intelligence to manage demand, thus adapting production and improving stock management, as evidenced by a Deloitte survey. In 2020, the online channel doubles its weight on the luxury market (from 12% in 2019 to 23% in 2020), thanks above all to the direct channel of luxury brands and the performance recorded in Asia (China above all). It is estimated that by 2025 the channel will weigh more than 30% of the market value. Altagamma Bain's analysis also emerges: the global pandemic has catapulted luxury brands into the digital age at an unexpected speed. It is estimated that more than 85% of luxury purchases in 2021 are due to digital influence. However, human contact in the luxury industry remains important and, both in stores and remotely, real contacts will continue to play a pivotal role in customer loyalty. This is especially true for some sectors such as the Watches & Jewelry segment which remains strongly linked to traditional sales channels but which, however, even if slowly, begins to reshape itself according to new trends.
Ethics and sustainability issues
The growing attention of consumers and companies towards ethical issues (inclusion, unconventional beauty) and sustainability, which is also reflected in greater control over the production chain and the business model of companies, gives way to new scenarios in the market of luxury. Consumers always ask brands to be attentive to their social impact and expect luxury companies to demonstrate a real and constant commitment to issues of diversity, inclusion and sustainability.
NFT and blockchain technology
To give greater impetus also in the area of sustainability, companies in the luxury sector are increasingly approaching NFT and blockchain technology that are able to provide solutions based on traceability, transparency, authenticity and security. Thanks to these technologies, each product is unique and certified in all its aspects, an even greater sense of exclusivity, which has always been associated with luxury goods.
As for the jewelry sector, the main trends that are characterizing the sector are the increasing interest in high jewelry of nationally and internationally recognized brands, online sales channels, attention to consumer sensitivity towards values such as ethics and sustainability and the personalization of the product which increases its sentimental importance and value. The new technologies that can support the consumer's request for an evident need to have a safe, sustainable and authentic product are becoming more and more interesting and indispensable even for the world of jewelry, which can no longer neglect its benefits.
Wanting to be part of a future, where every single element of production, from raw material to processing, is traced and transparent, we have decided to give our brand an important mission: to create jewels of the highest quality and with a refined design, where the value of the stones and metals, used together with the craftsmanship, marry the most advanced technologies to merge into a highly innovative reality.