The year 2021 was a better year than the previous one, for the world of luxury. In all, worldwide sales reached $1.3 trillion USD, which was an important increase over a difficult year. That said, everyone knows that the luxury industry is more resilient than most others, so it should not be a big surprise that it came back stronger, faster than other industries. With that in mind, let us take a look at what is rising in luxury, for 2022 and beyond.
As we move on to a new year, we find luxury goods sitting on the throne, with a growth of 29% over the precedent year, compared to a 14% rise for the luxury industry as a whole. This will probably change as the world goes back to a new normal, at least for some continents and countries. That said, the early part of the year should continue to see people buy a chinchilla fur coat, fashion designers jewellery or high-end watches at a higher rate than travelling to luxury resorts. This movement is explained by the simple fact that it is easier to acquire an item (especially online) then to travel, these days. Therefore, expect luxury goods to retain its number one status inside the luxury industry, for at least a little while longer.
What is probably the most notable element on this list, today, is the fact that luxury is evolving. Whereas before it was mostly about status and logos, now it has become purposeful. It wants to be part of the conversation and be heard for its own positions. It has become socially involved, and that should only increase over the years to come. It will happen in many different ways. First, through their own online presence, such as their social media accounts and their website. But it will also speak through influencers. However, they will be modified in the future, as brands will move into the world of fiction and of technology, through fiction characters, robots and avatars, in order to deliver their message. But there is no doubt that they have decided to take on part of social responsibility, partly because customers require it from them. It will be interesting to see if it becomes a factor of growth for the luxury industry, in the long run or a new difficulty to navigate through.
The Lockdown periods were not easy on most industry. Especially the first one. However, it can be said that luxury brands were one of the less prepared for such an event. Why? Simply because “experience” was the key word, at the center of their world. Why would you want to sell a $10,000 watch online, when the person buying it is actually looking to be pampered inside a beautiful store setting? It did not make much sense for high-end brands to focus on online sales. In fact, what they wanted was for their clientele to go into their stores anywhere, as they traveled the globe, looking for a good time. So when midnight rang, and the only way to reach customers and provide them with their products was through the internet, luxury brands had to turn around rapidly and build-up their online stores in the blink of an eye, all the while learning this new business at lightning speed. But now, after two years of COVID-19, this industry is soon to join others, where the highest percentage of their sales will be happening on the internet (30% to be precise).
Within three years, studies show that Millenials and Gen Z will become the biggest buyers of luxury items. That is an important data, since their mentality will have to be taken in account by luxury brands. They already are, of course. It is, indeed, one of the very important factors that brought brands to become more social and to take positions on various subjects that are particularly important to them (environment, gender equality, etc.). In 2025, they should represent as a whole, over 70% of the sales taking place inside the whole universe of luxury, creating a market growth of over 130%. But not all luxury brands know how to talk to them yet. In fact, it is quite difficult for the most conservative ones to take that 180° turn. That is why they will have to look for specialists to handle it for them. Sometimes, they will come on social media platforms, but at other times, it will be done through collaborations with other brands, that know better how to speak to these new buyers.
As you can see, the change is already in place, and the wheel keeps turning faster towards the future. In fact, that in itself is an issue the luxury world has to tackle: The faster the growth, the more the industry will need to adapt.