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HS BCG Navigating What's Next 2023
HS BCG Navigating What's Next 2023
A Pulse Check
Of the Luxury Consumer
& As presented at the ‘Navigating What’s Next’ event in January 2023, New York City 1
NAVIGATING WHAT’S NEXT – A PULSE CHECK OF THE LUXURY CONSUMER
Contents
&
Preface
Comparing general
luxury consumer with
the Cultural Pioneer
The New Luxury provides an ongoing comparison between a general luxury
consumer and the Cultural Pioneer consumer —someone who is younger and
more ahead of the curve.
10x 93%*/60%**
More than average % aware of 6 or more
USE RESALE /
MOBILE PLATFORMS SELF-IDENTIFY AS CREATIVE
2 2
~30%* 1 in 2*
~20%** 1 in 4**
% of fashion and luxury Cultural Pioneers vs
purchases in 2019 overall luxury consumers
THE NEW LUXURY - 2018 CULTURE CULTURE CULTURE - 2019 LUXURY 3.0 - 2022
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NAVIGATING WHAT’S NEXT – A PULSE CHECK OF THE LUXURY CONSUMER MARCH 2023
What is the
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NAVIGATING WHAT’S NEXT – A PULSE CHECK OF THE LUXURY CONSUMER
“Stories over
product; knowledge
over possession;
community over
crowds; participation
and experiences
over observation.”
Navigating
What’s Next
For this instalment of the New Luxury, we seek to give a data-driven pulse
check on how the luxury consumer is feeling right now.
We want to understand:
&
NAVIGATING WHAT’S NEXT – A PULSE CHECK OF THE LUXURY CONSUMER
Methodology
n =2 2,041 for US, n = 2,146 for UK, n = 2,504 for France, n = 2,571 for
Germany, unweighted
CULTURAL PIONEER SURVEY
n = 566; region: 50% eu / 38% n.a / 12% other; age:70% 18-34 / 30% 35+
&
Chapter 01
General Outlook
NAVIGATING WHAT’S NEXT – A PULSE CHECK OF THE LUXURY CONSUMER MARCH 2023
True Luxury
As of 2022, personal luxury (e.g., apparel, footwear, accessories, leather goods,
beauty, jewelry) spending had recovered to pre-COVID levels. While
experiential luxury (e.g., furniture, food & wine, ne dining, hotel, exclusive
vacations) has been growing.
43%
Note: Personal includes apparel, footwear, accessories, leather goods, beauty, jewellery (branded and unbranded) and watches /
Experiential includes furniture, food and wine, ne dining & hotel and exclusive vacations
& Source: BCG Fashion & Luxury Market model as of Dec 2022; BCG Analysis 14
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NAVIGATING WHAT’S NEXT – A PULSE CHECK OF THE LUXURY CONSUMER MARCH 2023
20-25%
TRUE LUXURY PERSONAL GOODS MARKET (€B)
~350
BABY BOOMERS
23%
AND SILVER
50-55%
~75%
GEN. X 37% OF TOTAL
MARKET
MILLENNIALS 35%
15-20%
GEN. Z 4%
2019 2026F
~550-560
Rest of World +6%
TRUE LUXURY PERSONAL GOODS MARKET (€B)
24%
24% China
US +7%
19%
11%
China +16%
2019 2022 2026
Note: Personal includes apparel, footwear, accessories, leather goods, beauty, jewellery (branded and unbranded) and watches /
Experiential includes furniture, food and wine, ne dining & hotel and exclusive vacations
& Source: BCG Fashion & Luxury Market model as of Dec 2022; BCG Analysis 16
NAVIGATING WHAT’S NEXT – A PULSE CHECK OF THE LUXURY CONSUMER MARCH 2023
“WOULD YOU SAY THAT YOU (AND YOUR FAMILY LIVING WITH … MOST ARE SPENDING MORE
55%
YOU) ARE BETTER OFF OR WORSE OFF FINANCIALLY THAN YOU … FEW ARE EARNING MORE
WERE 6 MONTHS AGO?” … MANY ARE SAVING LESS
today… AVERAGE
1. Net Change = Percentage of respondents spend a lot less or somewhat less minus percentage spend somewhat more or a lot more
2. 2. Data sourced from i360 Longitudinal Consumer Survey in Lighthouse Source: BCG Recessionary behavior Consumer Sentiment Survey,
& 3. Aug 2022 (n = 2,041 for US, n=2,146 for UK, n=2,571 for France, n= 2,504 for Germany, unweighted) 17
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NAVIGATING WHAT’S NEXT – A PULSE CHECK OF THE LUXURY CONSUMER MARCH 2023
Overview
The State of Luxury ‘at a glance’.
• NEXTGEN HERE: MILLENNIAL AND GEN-Z TO • BIFURCATION OF CONSUMERS: HIGH-INCOME AND • RESET OF DISTRIBUTION ECOSYSTEM
REPRESENT 75% BY 2026, BUT RENEWED FOCUS PIONEERS STILL SPENDING – INCREASED BRAND-OWNED STORES
ON OLDER MILLENNIALS AND GEN X TOP TIER – MARKETPLACES OUTPACING OVERALL DIGITAL
CONSUMERS GROWTH
• SUSTAINABILITY & DEI ARE TABLE STAKES
– SOCIAL COMMERCE GROWING
• STRENGTH REMAINS IN US AND MIDDLE EAST;
EU RECOVERY SLOW; CHINA IN STOP-START • PRICE INCREASES AS INFLATION IS "PRICED • NEW BUSINESS MODELS (SECOND HAND
RECOVERY (IMPORTANT TO LUXURY OVERALL) IN" (AND SUPPLY CHAIN CHALLENGES CONTINUE) COMMERCE AND RENTAL)
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Chapter 02
[High]Income
consumers (thus far)
exhibit a resilience
to the current climate,
feeling more
optimistic about the
recession and
expecting to spend
more.
&
NAVIGATING WHAT’S NEXT – A PULSE CHECK OF THE LUXURY CONSUMER MARCH 2023
Fashion &
Luxury Brands
High-income consumers are predictably more resilient in the face of the recession, planning to spend more in the future and maintain their preference for luxury
goods / experiences.
1 2
Net sentiment on consumer spending1 Di erence between high-income and general consumer
Note: High-income consumers include individuals having annual income >$150,000 and savings >$150,000
1. Net change represents the difference between the no. of individuals spending a lot more / somewhat more and somewhat less / a lot less; Question text: "In the next 12 months, how much do you expect your TOTAL spend on clothing, footwear,
and accessories to change compared to this past year for each of the following types of brands?";
& Source: BCG Recessionary Behavior Consumer Sentiment Survey, August 2022 (n = 9263, and n = 301 for high-income consumers; for apparel and footwear questions, n = 3115, and n = 105 for high-income consumers) 21
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NAVIGATING WHAT’S NEXT – A PULSE CHECK OF THE LUXURY CONSUMER
The Cultural
Pioneer thinks
and act ‘rich’
Whilst the de ning trait of the cultural pioneer is not high income, we see this
consumer exhibit a similar optimism, resilience and preference for luxury as
the high-income consumer. This is because the cultural pioneer is less worried
about the macro economy and more focused on their personal aspirations.
Feel less worried about Have booked travel Expect to spend the
the impact of COVID-19 plans within the last 6 same amount or more
now. months. over the next 6 months.
The Pioneer is
embracing
mindful spending
Pioneers are consciously evaluating their purchases beyond the traditional lens
of values. In addition to a preference for quality and other traits deeply
associated with luxury, the cultural pioneer shirks impulse for consideration,
seeing the brands they buy as an extension and expression of who they are.
Occasions
High-income consumers are more likely to spend on fashion & luxury for
social occasions, both at home and elsewhere, as well as travel-related ones.
Other occasions such as hanging around at home (4%) or participating in work
events after work (2%) haven taken less priority for their planned spend.
1. Net = Percentage of respondents answering a lot more or somewhat more minus percentage
somewhat less or a lot less, versus total US average of 1%
Note: Rounding differences may occur; Question text: “In the next 12 months, how much do you expect your
TOTAL spend on clothing, footwear, and accessories to change compared to this past year for each of the following types of occasions?”;
Source: BCG Economy Consumer Sentiment Survey (August 2022); N Tot = 3115; N US = 669
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NAVIGATING WHAT’S NEXT – A PULSE CHECK OF THE LUXURY CONSUMER
72% 39%
2
86%
Quality
64%
Functionality
& SOURCE: HIGHSNOBIETY, CULTURAL PIONEER PULSE CHECK, DECEMBER 2022
NAVIGATING WHAT’S NEXT – A PULSE CHECK OF THE LUXURY CONSUMER MARCH 2023
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Chapter 04
Luxury as Lifestyle
NAVIGATING WHAT’S NEXT – A PULSE CHECK OF THE LUXURY CONSUMER
&
NAVIGATING WHAT’S NEXT – A PULSE CHECK OF THE LUXURY CONSUMER MARCH 2023
US Travel
Post-COVID consumers in the West are returning to travel, with the high income consumer expecting to travel more often and for longer periods of time in the
next year. This is primarily due to the lifting of restrictions, with consumers wanting to make up for the lost time in 2020-2021.
+4% NET CHANGE IN NO. OF CONSUMERS EXPECTING TO TRAVEL 20+ NIGHTS MAKING UP LOST TIME THE #1 REASON FOR TRAVEL,
(% TRAVELING IN FUTURE 12 MO. - % TRAVELING IN PAST 12 MO.) FOLLOWED BY EASE AND SAFETY
12%
23%
1
20 + NIGHTS 38% 25% 40% MAKING UP FOR LOST TIME
31%
2
11-20 NIGHTS 33% TRAVEL IS EASIER THAN BEFORE
30%
63%
46%
28% 3
0-10 NIGHTS TRAVEL IS SAFER THAN BEFORE
27%
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NAVIGATING WHAT’S NEXT – A PULSE CHECK OF THE LUXURY CONSUMER
The Pioneer is
prioritizing
intangible luxuries
such as travel
Post-pandemic there is a renewed focus on travel, especially for experiences
which are one of a kind and luxury experiences.
TRAVEL-ORIENTED CAPSULE COLLECTION LUXURY BOUTIQUES AND POP-UPS AT EXPANSION VIA LIFESTYLE AND
DESTINATION FASHION SHOWS
(E.G. SKI RESORT) HOLIDAY DESTINATIONS COLLABORATIONS
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NAVIGATING WHAT’S NEXT – A PULSE CHECK OF THE LUXURY CONSUMER
A focus on mental
wellbeing
Intangible luxury also takes into account physical and mental wellbeing, with
the Pioneer prioritising mental health and personal development.
WELLBEING PERSONAL
57% 54%
2
US Beauty
Category expecting increased spend, largely driven by higher prices and
volume
BEAUTY TO SEE CONTINUED INCREASE IN SPEND… …WITH HAIR CARE AND BODY CARE EXPECTED TO SEE …DUE TO INCREASED PRODUCT PRICING AND VOLUME
THE HIGHEST INCREASE…
3 TOP REASONS CONSUMERS PLAN
TO SPEND MORE IN NEXT 6 MONTHS
2
+3% ALL BEAUTY PAST SPEND +13% BUY MORE PRODUCTS OF THIS TYPE
13% HAIR CARE 12% BODY CARE
(LAST 6 MONTHS)
3
+8% SWITCH TO MORE EXPENSIVE BRANDS
• NET CHANGE1 IN NO. OF CONSUMERS EXPECTING • NET CHANGE1 IN NO. OF CONSUMERS EXPECTING
TO SPEND MORE FUTURE/PAST (% SPENDING TO SPEND MORE NEXT 6 MONTHS (% SPENDING
MORE - % SPENDING LESS) MORE - % SPENDING LESS)
1. Net Change = Percentage of respondents spend a lot more or somewhat more minus percentage spend somewhat less or a lot less
Source: BCG Recessionary behavior Consumer Sentiment Survey, Aug 2022 (n = 2,041 for US, unweighted, respondents n = 416
for beauty category)
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NAVIGATING WHAT’S NEXT – A PULSE CHECK OF THE LUXURY CONSUMER
Beauty is more
than self-care,
it’s expression
For the Pioneer beauty is much more than self-care, it’s a critical party of their
toolkit when it comes to self-expression and experimentation.
80%
86%
Self Care
72%
2
64%
Like brands that have
unconventional approaches to
Con dence
beauty.
59%
Self-Expression
Beauty fuels
community
51%
2
Evolution of Community
NAVIGATING WHAT’S NEXT – A PULSE CHECK OF THE LUXURY CONSUMER
Evolution of Community
in the New Luxury
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NAVIGATING WHAT’S NEXT – A PULSE CHECK OF THE LUXURY CONSUMER
Community is
becoming more
niche and intimate
Whether its online or in real life, post-pandemic we are seeing a resurgence
in smaller, more intimate spaces. These spaces o er greater intimacy and
meaning but also an opportunity to discover trends rst, and thus, greater
social currency.
agree that when they agree that they feel are active on Discord/
see someone else large established social 23% are active on
wearing a brand they platforms like FB/IG BeReal
like, they feel as though have ‘too many people
they have something in on them’
common
& SOURCE: HIGHSNOBIETY, CULTURAL PIONEER PULSE CHECK, DECEMBER 2022
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NAVIGATING WHAT’S NEXT – A PULSE CHECK OF THE LUXURY CONSUMER
Cultural Pioneers
invest in their
immediate
community
Cultural pioneers are using their resources to develop relationships with their
family, friends and loved ones. Whether through travel or purchasing, the
Pioneer sees their time and money as equally precious resources to be spent
on those they care most about.
AUTHORS AUTHORS
Edward Campbell, VP New Business & Thought Leadership Pierre Dupreelle, Managing Director & Partner
Alex Rakestraw, Associate Strategy Director Nicolas Llinas, Principal
Sarah Willersdorf, Managing Director & Partner
INSIGHTS
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