Why Luxury Fashion Businesses Are Still Viable Assets
December 15. 2021
Demographic change is an issue that the luxury goods market grapples with every decade or so. There is always the fear that the upcoming generation might upend the status quo and hurt some businesses.
As Gen X and boomers prepare to exit the stage into retirement and old age, the time has come for millennials and Gen Z to dominate the luxury fashion market. In a sense, the prospect of transition across generations generates anxiety in the market, especially when it is a huge jump.
Interestingly, this appears to be the case with the transition to millennials and Gen Z dominated economy. For starters, the new generation’s consumer behavior differs starkly from the preceding one, primarily because of the digitalization of the economy. Therefore, businesses that will survive in the coming decades must reinvent themselves, mainly concerning their retail strategies.
From the preceding, several luxury fashion businesses are strengthening their retail strategies to exploit the revenue potential of social media. A great example is Gucci, which has millions of followers across major channels – Twitter, Instagram, and Facebook.
Gucci has more than 40 million followers on Instagram, and it has marketing deals with digital celebrities and influencers. Also, the company took an early decision to solidify its e-commerce business, which accounted for 6% of its revenue in 2019.
Another highlight of the post-boomers and Gen X era is that luxury fashion businesses generate increasingly higher revenue yearly. In a sense, the youth have higher spending power and are more inclined to buy when influencers and celebrities hype a particular product.
In 2020, the pandemic disrupted everyday life worldwide, which hurt economies and businesses. But, even then, the premium goods market was able to generate about $110.64 billion, according to ReportLinker’s Luxury Fashion Market report. Moreover, the report anticipates the market to launch a solid recovery that will see its value top $153 billion by 2026.
Despite fundamental shifts in market conditions and consumer behavior, luxury fashion businesses still have strong revenue potential. Nonetheless, the winners of tomorrow will be those businesses that will reinvent themselves in tandem with dominant trends.