The luxury goods market is expected to grow at a CAGR of 5% between 2022 and 2027 (source: Statista Outlook). This growth is due to the changing preferences of customers in developed and developing countries.
The luxury goods market is classified into four main segments – domestic, international, professional and high-end.
Domestic luxury goods are expected to grow at a faster rate than international luxury goods due to the expanding global economy.
International luxury goods are projected to grow at a slower rate as compared to domestic luxury goods, as demand for domestically produced products increases in developing countries.
Professional and high-end luxury goods are expected to continue increasing in demand due to the ever-growing popularity of these types of items.
The importance of the new markets
This growth will be driven by the increasing demand for high-end products and services, as well as by the development of new markets such as China and Africa.
In terms of product categories, the luxury goods market is expected to grow in all major product segments, with a focus on premium consumables, such as watches, jewels, and cars. In addition, new formats are also expected to emerge in the luxury goods market, such as e-commerce platforms that allow customers to purchase luxury goods without leaving their homes.
New actors in the arena
Luxury market feature new actors, such as Millennials who are inheriting the fortunes of their fathers and will become international players.
As the world becomes increasingly competitive, it’s important to have products that are both unique and trending. That’s where luxury markets come in—they offer a wide variety of products with a strong personality, associated with values as well. So what does this mean for Luxury business? Well, if you have a product that caters to Millennials, you have an advantage over your competitors. And in today’s market, this advantage is even more pronounced because there are so many Millennials who are interested in luxury products. Millennials have assumed numerical importance: they constitute, in fact, a quarter of the world population, approximately 1.7 billion people. In America they reach 70 million, in Germany 14 million and there are more than 11 million in Italy. Another particularly significant study which, recalls the importance in terms of numbers, is the analysis of the penetration of different generations in the top ten countries with the highest GDP globally (Capeci, 2017). In European countries (Germany, France, UK and Italy) Millennials reach an average of 20% of the population, while in other countries, with the exception of Japan, the percentage is even higher, reaching 26% in India.
Sales and marketing trends in luxury
One of the main growth drivers is China, whose market share has doubled in just two years to reach 60 billion euros, or more than 20% of the global market.
While the American continent accounts for 31% of consumption, everything suggests that China will become the epicenter of the luxury market in the years to come. But the expansion of the customer base is not limited to Asia. Another significant change concerns the local geography; so far, luxury brand customers have concentrated in large conurbations, which tends to be less and less true, particularly due to the relocation of many people to smaller cities. Brands are adapting accordingly, opening pop-up stores, but also developing online sales.
This broadening of the consumer base, and particularly its younger nature, is naturally having an impact on luxury brands. Their offer must evolve and move towards products that can be used on more than one occasion, such as casual shoes, sportswear, holiday items, etc. What changes is also the motivation behind the purchase of luxury products. It is not about showing off one’s wealth, but rather about showing one’s personality and benefiting from the brand image. Consumers are much more demanding about the brands they choose and the values they represent. Luxury companies are now realizing they need to be more transparent. Even if their plans are not always mature, they are communicating their commitments and outlining their strategies for sustainability.
Luxury and Sustainability
In the luxury market, the “golden decade” of sustainability has already begun. The pandemic has only accelerated paths in this direction and the target audience of many brands, Generation Z – i.e. consumers who will be most influential in the future – reward brands that have a positive impact on the environment and society. On the contrary, it is evident that they are beginning to distance themselves from those who do not have a position on these issues.
This is what emerges from the report “LuxCo2030: A Vision of Sustainable Luxury”, published by Bain & Company in collaboration with Positive Luxury. The study tries to outline the characteristics that a LuxCo must possess in 2030. Identifying five pillars on which to focus corporate strategies: the redefinition of the purpose of the brand, the decoupling of growth from volumes, the traceability of the supply chain, the maximization of environmental commitments and social and the creation of economic value from sustainability.
Luxury real estate market
In 2021, world wealth increased by two figures. Data from Wealth-X shows that the richest population in the world, the one with a net worth of more than $ 5 million – the so-called ultra-rich – grew by 19.8% to a total of 3,612,730 people. The combined wealth of this segment of the population increased by 20.4% to over $ 75 trillion. Growth rates in the United States in 2021 confirm this trend, with a 24.8% increase in total wealth. 70% of these own two or more real estate properties.
In 2021, sales of luxury single-family homes increased by 14.5% while prices grew by 20.3% compared to 2020. Sales of luxury homes increased even more significantly, by 29.6% on an annual basis, and a 16.6% price increase. Massive wealth creation, combined with a transformation in lifestyles that should last for generations to come, has led to insatiable demand for larger homes, sold out catalogs, and skyrocketing prices.
Luxury real estate with 221 Luxury
221 Luxury works with top-tier agencies and agents around the world, who have earned their status and reputation in the real estate industry.
Since its launch, some of the most prestigious international real estate brands have already joined, as well as some of the best performing top agents in the world.
Reality makes it easy, fast and affordable for real estate professionals to expand their contacts and build a powerful professional and collaborative network, which can increase sales while empowering them, with the ability to grow their local business and extend their their reach.
At the same time, it allows agents to expand their brand and reputation internationally through a global market platform integrated with tools that offer significant operational efficiencies. 221® therefore believes that a well-established network is able to increase profits, providing industry leaders and professionals with a fully integrated platform and a series of marketing and management tools, designed to promote cooperation, generate leads and increase The sales.
Premier agencies and top agents can extend their reach, enhance their brand and global recognition, while maintaining their autonomy. 221® provides real estate professionals, individuals and investors with a unique platform to buy, sell, rent and manage properties within a global market and a private network.