BCG Releases its True-Luxury Global Consumer Insights, 7th Edition
On June 23, 2020, Boston Consulting Group (BCG), in collaboration with the Italian luxury brand association Fondazione Altagamma, released its 7th edition of the True-Luxury Global Consumer Insights report.
Global Luxury Market
The report focuses on so-called true-luxury consumers. On average, these consumers spend more than 39,000 Euros (~US$46,000) on luxury goods and luxury experiences per year (excluding smartphones, smartwatches, cars, yachts, and aircraft). According to BCG, there are approximately 435 million luxury consumers in the world. Around 4% of them or about 19 million of them are classified as true-luxury consumers by BCG. For the report, the authors polled over 12,000 true-luxury consumers in 10 countries with high luxury spending.
The forecast for 2020 is a drop in sales between -35% and -45% for the global luxury market. Given the nature of the worldwide pandemic, the impact is higher on experiential luxury. Luxury goods sales are expected to drop between -25% to -45% in 2020; experiential luxury is expected to see a decline of -40% to -60%. Experiential luxury encompasses food and wine, fine dining, hotels, exclusive vacations, as well as furniture.
The growth projections for 2020–2022 are 21% per year for personal luxury and 33% per year for experiential luxury. Hence, a return to 2019 sales levels is expected in 2022/2023.
Diverging Directions between the West and China
Most European and American True-Luxury consumers stated that they prefer brands that are understated, timeless, and represent craftsmanship and heritage. In contrast, most Chinese consumers polled for the report indicated that they prefer luxury products with brand visibility and iconic patterns. The BCG / Altagamma report concludes that the luxury world is traveling in two different directions.
Another differentiation between Western and Chinese consumers is that the former appreciate sustainability and are increasingly thoughtful about their consumption habits. More than half of the respondents in the True-Luxury survey indicated that sustainability will be more likely to impact their purchasing behavior than before the crisis.
During the pandemic, consumers paid attention to how much luxury brands contributed to society and appreciated those brands that donated money, took steps to protect their employees, etc. About 60% of the survey respondents said that those actions had a positive impression on their perception of the brands.
Rise of Second Hand and Rentals
In recent years there has been a rise in second-hand sales and rental. While COVID-19 has temporarily halted it, it is expected to resume after the pandemic. Overall, 62% of the consumers surveyed expressed interested in purchasing second-hand products, while 45% showed interest in renting luxury goods. In terms of actual transactions in the past 12 months, the findings were as follows. About 33% have sold a luxury item, 25% have purchased a second-hand item, and 16% have rented a luxury item in the past 12 months.
There is a business opportunity for luxury brands, as 70% of second-hand luxury consumers would like to buy second-hand products directly from the brands.
The full report can be downloaded with the link below.