Euromonitor International has released its World Market for Luxury Goods report, which unveils key insights into how the working-from-home culture post-pandemic is leading to a rise in luxury lifestyle spending.
Working from home is leading to rising luxury lifestyle spending as consumers put much more emphasis on the spaces they live, work and relax, according to research by Euromonitor International. Fflur Roberts, Head of Luxury Goods at market research firm Euromonitor International, said that since the COVID-19 pandemic, perspectives on home, wellness and lifestyle have undergone a vast transformation.
“The home has become a central hub for a wide range of activities, meaning consumers now attach greater significance to the key spaces where they work, relax and reside. This shift has luxury and fashion brands diversifying into untapped revenue streams within curated lifestyle areas such as homewares, soft furnishings and cleaning products,” explains Roberts.
Global dining revenue from luxury and fashion brands is set to grow by 19% by the end of 2023, with an additional 19% sales growth for the next five years. Additionally, the luxury hotel category is set to outpace the non-luxury hotel segment between 2023 and 2028 at 29% and 25%, respectively.
Roberts commented, “This growth will mainly be driven by consumers looking for novel experiences with good examples coming from Tiffany & Co’s café, Prada’s dining ventures and Kitzune’s Café Kitsune.”
Consumer attitudes and value shifts are also leading to demands for purpose-driven, environmentally friendly products and services. Roberts added, “With the luxury goods industry facing growing ‘greenwashing‘ accusations, companies have no choice but to operate as transparently as possible to show integrity.”
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The proportion of online sales jumped from 11% in 2019 to 19% in 2023 due to consumer demand for digital tools
Shifts in consumer lifestyle have led to an e-commerce and social commerce surge. Euromonitor’s latest data shows online sales of personal luxury goods accounted for 11% of all sales in 2019, but due to a switch in habits, this is set to increase to 19% by the end of 2023.
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Roberts said, “In order to adapt to fast-changing consumer needs, technology continues to reshape luxury through various mediums such as AI-driven initiatives, virtual sampling, Web3, the metaverse and virtual fashion shows, all of which offer new possibilities for digital commerce.”
Gen Z and Gen Alpha will account for 45% of the global population by 2030
The evolving preferences of Gen Z and Gen Alpha are set to shake up the market. By 2030, these consumers will account for 45% of the global population and will be the largest target segment for personal accessories brands.
Roberts said, “The upcoming generations hold differing values to their predecessors, such as being more socially conscious, preferring experiences over products and desiring brand authenticity. Therefore, companies are being challenged to adapt offerings, marketing methods and operations in order to effectively engage with future consumers.
“Gen Z will arguably be the most important consumer group in the medium term as they gain purchasing power, therefore forming the backbone of economic growth and consumption over the next ten years.”
For further insights into the Luxury Goods Market, see the report here.
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