A 2024 Bain & Company report predicts, Gen Z consumers, born between 1997 and 2012, will make up nearly a third of luxury purchases by 2030, while millennials will account for over half.
As Gen Z is projected to become the wealthiest generation, their influence is expected to drive growth in luxury retail, travel, and technology sectors. Jason Dorsey, a Gen Z researcher, notes, although Gen Z's current spending power is lower than other generations, it will increase, making early engagement with this demographic crucial for brands.
The luxury market is shifting as Gen Z’s preferences challenge traditional brand loyalty. Claire Tassin from Morning Consult highlights, luxury consumers are increasingly ‘mercurial’ and prioritise quality over brand status. Despite their growing buying power, Gen Z's loyalty is less consistent compared to older generations. As per a report by McKinsey & Co, over 50 per cent of Gen Zers would switch brands for better value or quality, indicating a preference for authenticity and trendiness.
Brands face the challenge of appealing to both classic luxury shoppers and aspirational buyers, particularly with Gen Z's emphasis on authenticity and value. This balancing act is critical as overall luxury spending is expected to rise from €1.5 trillion ($1.67 trillion) currently to €2.5 trillion ($2.79 trillion) by 2030.
To succeed, luxury brands must avoid assuming that Gen Z lacks sophistication. Instead, they should recognise this generation’s diverse influences, inclusivity, and the importance of staying connected with trusted trends and information sources. Brands need to adapt to these evolving preferences to remain competitive and relevant in the expanding luxury market, adds the report.
