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Translated by
Nicola Mira
Published
Nov 20, 2021
Reading time
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Bain's Claudia D’Arpizio: 30% of new luxury consumers access segment through sneakers

Translated by
Nicola Mira
Published
Nov 20, 2021

Claudia D’Arpizio, an analyst and partner at consulting firm Bain & Company, where she heads the fashion and luxury office worldwide, has recently published the 2021 report on the global luxury market in collaboration with Altagamma, the association of Italian luxury brands. In this interview with FashionNetwork.com, she sheds light on the new challenges facing the industry, especially the emergence of new generations of consumers that are entirely different from their predecessors.


Claudia D'Arpizio - Bain & Company

 
 FashionNetwork.com: What are the luxury industry’s growth drivers today?
 
Claudia D’Arpizio: 
The three main growth drivers are China, digital technology and the young consumers that are bringing about a crucial generational change. The wealth of baby boomers, who have held major fortunes in their hands for a long time, has been transferred to Gen Z and Millennial individuals. Not just in Asia, but in the USA too. We are now witnessing the exit of the baby-boomer generation from the market, while new generations are entering it at an increasingly faster rate, a rate heightened by the pandemic. In the last two years, older generations have proved to be less amenable to e-tail and have undoubtedly been affected more heavily by the pandemic. Buying luxury goods was no longer a priority for them. Conversely, younger people have started to consume [luxury goods] again very quickly and disproportionately, as a symbol of vitality and of the return to normal life.
 
FNW: What is the profile of these young consumers?

CDA: The new generations are extremely diverse in their composition. For example, among young US luxury consumers, there are African-Americans, Latin Americans and people of Asian origins, each of these groups representing cultures that take great pride in their roots. These young people are notably on the lookout for instances of cultural appropriation by labels. They also survey closely what luxury houses do. The latter must therefore pay a great deal of attention in their interactions with this multiplicity of consumers.
 
FNW: What do young consumers aspire to?
 
CDA: 
The new generations are looking to become more involved and have a more inclusive relationship with brands. I believe that fashion in particular, as a symbol of historical change, can promote a message that is different from the usual one, focused on highly expensive, exclusive products. The luxury industry must therefore extend its scope to encompass a broader design culture, one that goes beyond the product. Added to this there is digital technology, which now makes it possible to sell virtual products that are extremely exclusive, for example NFTs. This considerably broadens the scope and potential of corporations.
  
FNW: What are the consumption habits of young consumers?

CDA: Young luxury customers no longer make purchases to symbolise social status. This no longer makes sense. Instead, they judge brands and buy their products depending on the values the labels embody. Labels are working to meet the needs of different market segments through a very extensive range of items, while still offering high-end products. But they no longer segment their range based on their customers’ spending power, as they used to do. Obviously, with sneakers and t-shirts as opposed to crocodile handbags, labels are aiming at different consumers, but they instil the same brand content and, in theory, the same creativity in each item. It is no longer a matter of simply featuring one’s logo ad infinitum on products that are more or less simplified.
 
FNW: How does this translate in business terms?

CDA: Between 30% and 35% of the business [of luxury labels] stems from ultra-exclusive products, the rest is generated mainly by entry-level products in various categories, which also serve to recruit new consumers. Specifically, 30% of new luxury consumers access the segment by buying sneakers or other products they use on a daily basis. What matters is to capture consumers that a label will then be able to retain, consumers who will start commenting favourably about it, creating a virtuous circle and generating organic traffic.
 
FNW: Does this require a lot of investment?

CDA: It does. New consumers are captured through very expensive marketing activities which expand the customer base, but at the cost of higher investment, chiefly in the marketing and commercial areas, through clienteling work, remote shopping tools and advanced CRM. The latter is carried out even by shop assistants now, in order to keep the conversation with customers going. It is a kind of daily work that is very different from what was done before, when labels simply launched sales campaigns and customers rushed to the stores.

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