The Vogue Fashion Festival held on 9 and 10 November in Paris, gathered professionals from the fashion and luxury sector for conferences and meetings. A look back at the speech by Joëlle de Montgolfier from Bain & company, who tells us more about the challenges and the future of luxury.
The Vogue Fashion festival was an opportunity to discuss the future of the luxury sector. Joëlle de Montgolfier, Director of the Research and Studies Department of the consulting firm Bain & Company, confirms that the annual report, which will be presented this month, will reveal a total turnover of 280 billion euros for luxury personal goods (fashion, jewellery, leather goods, beauty, etc.).
This figure corresponds to an overall growth of 7% at constant exchange rates. “On the other hand, in view of the particularly high volatility of currencies this year, we will be below the range of 6 to 8% at current exchange rates” she says.
The recovery of the Chinese continental market is confirmed in 2018
The year 2018 confirms the progress established in 2017 “The recovery of the Chinese continental market is well confirmed in 2018, it is even accelerating”.
2018 sees the viability of Chinese customers on the world luxury scene. It is estimated that by 2025, 85% of new luxury consumers will come from China. These figures are explained by a younger Chinese middle class, the Millenials: “This new generation of buyers is influencing the transformation of luxury, we are witnessing a “casualization” of luxury with new categories: sneakers, jeans, down jackets, and even, boldly, plastic flip-flops” This phenomenon is likely to be observed for a long time, as luxury reaches unusual borders.
Customers are now demanding an experience that coats the product, but the experience consumed, such as in the automotive, restaurants and hotel industries, shows a higher growth rate. “We are witnessing a new code of luxury: we are moving from the historical definition of luxury, which includes exceptional, durable and even timeless goods that can be passed on from generation to generation, to a fleeting, experiential luxury where all we have left is memory.” We are no longer looking to acquire a product but to live an experience.
Luxury: Purchasing influenced by the Internet and sustainable development
With the rise of technology and digital, today, 70% of luxury purchases are influenced by the Internet. If you still buy in shops, the customer often gets information about the product beforehand. The exclusive in-store approach, with a sometimes intimidating experience for some consumers, is gradually fading in favour of digital, but will certainly not disappear.
According to the Bain&Company study, 10% of luxury customers say they would be willing to buy products from a specific house if it is committed to sustainable development. While this is not yet a real purchasing criterion, it is still a significant expectation, especially in the luxury sector, since 94% of customers admit that luxury brands need to be more committed.
This is why nowadays, we are witnessing the arrival of new professions and services that tend to develop more and more, to try to give a second life to their luxury product, particularly through rental, second-hand resale or recycling.
This year, the growth is expected to be +7% at constant exchange rates, Bain & Company’s estimate that for the coming years it will be +4% or +5%. “We will no longer be in a double-digit dynamic,” warns Joëlle de Montgolfier.