This slowdown is particularly noticeable in the Generation Z group, whose interest in luxury brands is declining, resulting in a shrinking customer base of approximately 50 million over the past two years. However, Bain & Company reports that mainstream luxury customers are increasing their consumption, although they perceive that brands are losing exclusivity.
"50 million luxury consumers have either opted out of the luxury goods market or have been forced out of the market in the last two years. This is a signal to brands that it is time to readjust their value propositions. To win back customers, particularly younger ones, brands will need to lead with creativity and broaden the conversation topics. At the same time, they must keep their best customers in the spotlight, surprising and delighting them as they rediscover one-to-one human interactions. For all customers, it will be essential to double down on personalisation, leveraging technology to achieve this on a large scale," is the analysis of Claudia D'Arpizio, Partner at the consultancy.
What are the key issues luxury brands need to consider to continue to fuel growth? According to Federica Levato, Partner at Bain & Company and Head of Fashion and Luxury in EMEA, brands must rediscover their essence and build on pillars such as desirability driven by craftsmanship, creativity and distinctive brand values. In addition, they must create meaningful, personalised and culturally relevant connections and experiences for customers, and implement technologies such as artificial intelligence, which will play a pivotal role in most areas of their value proposition.
