With the release of another report on the present state and prospects for the luxury sector, has come renewed concern that the most prestigious brands haven’t done enough lately to appeal to Generation Z audiences. Indeed, it has been suggested that luxury players largely forgot about such younger consumers in the years immediately following the COVID-19 crisis. 

The publication in question, issued by Bain & Company, found that luxury expenditure worldwide was expected to stay relatively flat compared to 2023. While global luxury spending looks set to reach almost €1.5 trillion this year, this would only equate to an estimated growth rate of between -1% and 1% on a year-over-year basis. 

Luxury brands have lost 50 million customers in just two years 

The latest projections set out by the American management consulting firm – in partnership with Altagamma, the industry association for Italian luxury goods manufacturers – indicate that the personal luxury goods market is on track for its first slowdown since the Great Recession, excluding the COVID-19 pandemic. 

Bain anticipates that by the end of 2024, the market will have remained flat year-on-year at constant exchange rates, and eroded by 2% at current exchange rates, to $363 billion. 

Especially worrying for high-end brands’ longer-term prospects, is the news that the luxury customer base has shrunk by a magnitude of around 50 million over the past two years. 

According to Bain, this trend has been partly fuelled by Generation Z audiences, “whose advocacy for luxury brands continues to decline”. 

Observers call for prestige players to adjust their strategies 

Claudia D'Arpizio – the study’s lead author – said that with so many luxury customers having “either opted out of the luxury goods market or been forced out of it in the last two years”, this should signal to brands that it is the right moment for them “to readjust their value propositions.” 

She continued: “To win back customers, particularly the younger ones, brands will need to lead with creativity and expand conversation topics.” 

A recent Business Insider report sheds light on how luxury brands “took their eye off the ball with Gen Z” in the years after the COVID-19 crisis. Instead of making younger and aspirational consumers a priority, many high-end players drove up prices to make the most of inflation, and placed a heavy focus on providing VIP experiences to their wealthiest clients. 

The findings of the Bain & Company report suggest this strategy has already backfired on such brands. However, the stellar growth in recent years of the second-hand luxury market – which reportedly reached $47 billion in 2023 – indicates that while luxury players may have alienated Gen Z, this younger cohort has never forgotten about luxury. 

For the strained luxury brands of today, then, there could be routes to getting Gen Zers back on board. Those pathways may include – but are not necessarily limited to – dedicating a greater number of initiatives to second-hand, entering into partnerships with resell companies, and releasing more affordable products that resonate with younger consumers. 

An alliance with our creative, digital, and marketing professionals could help you unlock growth 

As a specialist digital marketing agency for luxury brands at Skywire London, we would be pleased to discuss with you how we could help your business deliver consistent digital excellence and drive sustained growth through 2025 and beyond. 

Please feel free to get in touch with us to learn more. 

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