Luxury: after accessories, intangible products show potential
2022 is set to be a record-breaking year for the global luxury goods market, driven chiefly by accessories sales, which are literally soaring, posting double-digit growth. Top of the list are leather handbags, jewellery and watches. Behind them, intangible products are beginning to emerge as a composite category that could turn into a new, interesting growth driver. The market for intangible products is in fact expected to be worth between €60 billion and €120 billion by 2030, according to a luxury market study by Bain & Co. for Altagamma, the association of Italy's top luxury names, that was recently presented in Milan.
“This year, all product categories have gained ground, including those that lagged behind in the recent past, like beauty, thanks to the rebound of make-up, and ready-to-wear, which is breaking away from streetwear. However, accessories have established themselves as the real front-runners, with two champions, leather goods and jewellery, and also thanks to a surprising boom in watches sales,” said Federica Levato, co-author of the study.
In detail, the watches market is set to grow in size by a remarkable 22% to 24% in 2022 (between 29% and 31% above its 2019 pre-pandemic levels), up to €52 billion, driven by sustained demand for premium products and iconic models. The sector is attractive to consumers of all generations. Purchases are motivated by the fact that watches are a mark of personal prestige, but they are also increasingly regarded as an investment. A consideration that has become even more significant given the resale market’s growth. “After years of stagnation, watch-making brands have managed to engage young people, sparking the interest of this specific clientèle,” said Claudia D'Arpizio, a partner at Bain & Co. and the study’s co-author.
Stimulated by considerable investments undertaken by jewellery brands, the jewellery market’s revenue is set to increase by between 23% and 25% in 2022 (and between 36% and 38% compared to 2019) to €28 billion, with costume jewellery posting robust growth. As for leather handbags, the category is set to generate a total revenue estimated at €80 billion, equivalent to a growth of 23%-25% over 2021 and 39%-41% over 2019 - when between 2016 and 2019 it had only grown by 7% - driven both by timeless models and the “it bags” of the moment. Brand name remains the main purchase motivator.
“This ever-successful category is central to the strategies of luxury labels, many of them relying on mini bags or maxi sizes to attract Gen Z consumers. The category has also benefited greatly from a pricing effect, as retail prices have been raised over the years. An effect that accounted for 50% of the growth recorded between 2019 and 2021, and for as much as 70% of the market’s growth between 2021 and 2022,” added D’Arpizio.
The study shows that a deliberate, effective elevation strategy has been deployed by luxury labels, both for products at the top end of the range and for entry-level ones, without penalising volume growth, and despite diffused scarcity of articles. “The accessories market, whether watches or handbags, has been lifted upwards between 2019 and 2022. Product status has shifted from icon to artwork almost, in other words a symbol worth investing in. With its limited editions and unique items, the market is increasingly comparable with art,” said D’Arpizio.
In parallel, we are witnessing the emergence of new technology-based commercial categories, currently accounting for 1% of the global luxury goods market. They are predicted to reach a share of 10%-20% by 2030, equivalent to a revenue of €60 billion to €120 billion. Bain & Co. includes in this category the new wave of 3D products as well as the possible developments fostered by the metaverse (NFTs, virtual replicas of clothes, virtual collectibles etc.).
Bain & Co. also includes in this sphere a host of other potential growth opportunities, such as the monetisation of the communities created by labels on social media via dedicated virtual events, the monetisation of data bases, and the revenue that labels could draw from their media content, whether films, music or art. Not to mention the web 3.0 experiences that could be offered in-store or in domains like travel and ultra-luxury hotels.
In this futuristic scenario, intangible products are also expected to contribute to making the luxury sector more sustainable. “This means that the industry could be able to grow by producing less, emerging as a revolutionary force at the forefront of culture,” concluded D'Arpizio.
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