- Don-Alvin Adegeest |
Luxury is shifting its focus from material wealth to a new appreciation - and appetite - for the experiential. A global report published by Euromonitor says mindfulness is the new luxury, with millennials driving spending on experiences, rather than personal goods.
Global luxury performance
There is no slowdown in the demand for luxury. Global performance of luxury goods grew 14 percent online and 5 percent in-store, with a total value in excess of 1 trillion dollars.
Global sales remain driven by Asia Pacific, with China spending 68 percent of Asia-specific sales. Western Europe saw a slowdown, due mainly to politcial instability in key markets.
Regional outlooks for growth show the strongest growth forecast for Asia Pacic, which saw 9 percent growth in 2018. Eastern Europe is also on the rebound with resurgent spending in Russia. North America continues to underperform, while Latin America is seeing more positive growth due to Mexico and Brazil.
Political instability impacts luxury
The regional takeaway is political instability and terrorism could mean a cull on global travel spending, which impacts luxury sales.
New sectors within luxury are gaining traction, including hospitality, experience and luxury cars. This is underscored by the LVMH acquisition of luxury hotel group Belmond this week. Experience luxury is expected to grow 27 percent over the next five years.
In the UK tourist spending on luxury goods has increased 41 percent since 2014. The Chinese are the biggest single international spender on luxury goods in the UK, favouring designer fashion and accessories.
China is further set to overtake the US and German to be the world’s largest source of outbound tourism, and many luxury brands and retailers will look to continue to benefit from Chinese tourists desired to travel and shop for luxury.
Disruptors in luxuryThere is a shift in consumer attitudes and buying habits, with wellnes, ethical living and experiential luxury becoming key industry drivers. In a shift in market frontiers, there is a demand for unique trips, such as the SpaceX trip around the moon in 2019, estimated to cost 35 million dollars per ticket.
Exclusive yet inclusive
There is more room for affordable luxury and premiumisation, with many middle class households not seeing improvement in their living standards.
Furthermore, there is a fundamental shift in consumer values towards luxury experiences over things that bring happiness and wellbeing. Brands are going authentic, local, immersive, stimulating and social. They are embracing their imperfections to help counteract over-choice.
The world's interest in luxury shows no sign of slowing down but will be less about wealth and more about mindful luxury.
Photo credit: Louis Vuitton store interior by Gzen92, WikiMedia Commons, license free; Article source: Webinar Luxury Goods: Global Trend Watch, December 2018, Euromonitor International