Members' Report 1/2014 is about future luxury. The report is divided into 3 sections - this is a sneak peek from the first section.
In the first section of the report the Institute provides its definition of luxury, and explores the relevance of studying luxury. Subsequently, this definition of luxury is unfolded in a socio-economic perspective, where examples and expert commentary are discussed. In the last part of the section, the Institute outlines a number of factors that will influence future luxury consumption and looks at the challenges that luxury producers will face in the future.
Why is it relevant to study luxury?
In spite of obvious vulnerability to economic ups and downs, the global luxury market and most producers of luxury haven't experienced any real negative side effects from the financial crisis.
What makes luxury so persistent a consumption category?
Among the most basic human needs, we find two that primarily relate to luxury and consumption. First, it is essential for most people to feel belongingness in a certain place or with group of people - and to exhibit this belongingness. Second, we constantly strive for upward mobility in social hierarchies in order to e.g. gain easier access to sexual partners and the recognition that status automatically gives. Many seek to fill both these needs through consumption. A look at the luxury market and its trends hence provides a unique picture of what values the consumer focuses on, now and in the future.
The sale of luxury products is expected to keep rising at the global level. This is because, among other things, luxury is democratised. The concept of luxury is being redefined and continues to expand, while at the same time, 'traditional' luxury products still sell. In figure 1 below, Euromonitor offers a projection of luxury market growth towards 2015.
In both the more mature Western luxury markets and the emerging global luxury markets we find a new segment with greater purchasing power: a growing middle class and a simultaneously growing upper class. McKinsey has mapped the expanding consumption of the growing global middle class.
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