Fashion Finance
Understanding today’s luxury buyer
Luxury is poised for continued economic resilience and steady growth. Despite market turbulence, the global luxury market grew 20% in 2022 reaching $1.65 trillion dollars.
Consumers are embracing luxury more than ever before, choosing to invest in higher-end items despite economic pressures. This surprising trend stands out in contrast to the expected behavior of consumers restricting their spend or trading down to less expensive items during times of financial stress.
Rakuten and Vogue Business partnered to survey 1,200 Vogue and GQ readers to gain new understanding of today’s luxury buyer.
Here’s what we learned.
Spend from younger luxury buyers is growing 3x faster than other generations.
By 2030 they’ll make up one-third of the market.
Spend from younger consumers is growing 3x faster
than other generations.
% of shoppers who bought luxury in the last 12 months
Gen Z buyers make their first luxury purchase at age 15, three to five years earlier than millennials did.
1 YR
ML
GZ
$
$
18%
46%
63%
60%
Gen Z has money to spend on luxury
Gen Z’s ability to spend keeps pace with older, more established incomes and they’re still early in the earning potential.
According to CNBC 48% of Gen Z lives at home,
they have minimal bills and they’re not rushing to change this.
Their ability to spend on luxury is not tied to income, rather it's tied to the amount of disposable they have.
All
Consumers
Millennial
Consumers
Gen Z
Consumers
0-$1K
$1K-$2K
$2K-$3K
$3K-$4K
$4K-$5K
$5K+
15%
26%
16%
11%
7%
15%
Luxury shoppers have redefined their value equation
71% are funding their purchases from personal income. Credit cards and BNPL follow. Luxury buyers are doing the math to optimize their cash flow and deals. Particularly as they look to be savvy with their budgetary investment.
Consumers are increasing their monthly fashion budget to invest in high-end pieces. They’ve become more intentional with their shopping, opting to purchase quality over quantity.
Funding from monthly income
71%
Personal monthly income
46%
Credit
(credit cards, BNPL)
37%
Personal savings
21%
Money Gifted
19%
Loyalty
points
Increasing the monthly fashion budget
13%
8%
10%
26%
GG
BB
GX
ML / GZ
Rewards and point-based programs are preferred to discounting based incentives
Rewards and point-based programs are preferred to discounting based incentives
Credit cards (e.g., Capital One, Discovery, Credit Karma)
Rakuten
Buy Now, Pay Later sites that have incentives (e.g., Klarna)
Honey
Retail Me Not
Air miles programs (e.g., United Points)
Rewards Style
56%
25%
18%
14%
12%
12%
8%
See it. Want it. Get it.
The new shopping occasion is always on.
They’re highly self-motivated adopting an ‘always on’ shopping behavior. It’s about getting the best value - a great deal without sacrificing quality and brand preference. These buyers are open to new platforms that provide access to what they want, at the price they want. For brands this means changing where you show up, how you speak and what you offer them.
When I see something I like in store or online
When there's a special offer/discount available
When I need something for a special occasion (e.g., birthday, holiday)
To reward myself for a personal milestone
As a gift for a loved one
When I see something I like on social media
To keep up with a new trend
70%
53%
50%
47%
33%
30%
23%
Purchasing luxury is as an investment, not a splurge
Consumers are shopping with intention, thinking of luxury pieces as investments, rather than splurges. They’re opting to purchase fewer, but significantly more expensive items.
AOV is expected to grow 17% in 2023, compensating for the decrease in units per order.
Average monthly YoY growth in last 6months
US, Adults 18+
BUYERS
Inflation and layoffs will decrease luxury buyers
ORDERS PER BUYER
Concentration of high-value customers
allows similar purchase frequency
AVERAGE ORDER VALUE
Concentration of high-value customers
allows similar purchase frequency
-2.2%
+.2%
+7.8%
Higher value items will further increase average unit price
60% of luxury’s revenue growth from 2019-2022 was driven by progressive price increases. Brands are opening the aperture for purchase, but they’re also raising prices in response to the aggressive demand for higher value items in higher price categories and the consumer’s willingness to pay.
Jewelry
Apparel & Accessories
Beauty
Fragrance
+4.4%
+5.5%
+6.8%
+12%
Hard luxury, leather, and apparel lead the luxury resurgence in a post-streetwear era.
Increased consumer focus on long-lasting and sustainable luxury goods.
Access to BNPL allows buyers to purchase their higher value items.
Fast fashion is short lived for Rakuten shoppers
In 2022, 64% more customers traded up to
higher-end brands from fast fashion than they did in 2021.
Customers who trade up spend 91% more per order. Overall, they spend 72% more in luxury than they previously did in fast fashion.
Resale will expand as luxury demand surges
The market for resell luxury rose to nearly $52B in 2022. As the demand for luxury good continues to surge, resale remains a strong access point for consumers.
Brands are looking to increase their direct control of the market, as global sales of secondhand pieces online continue to rise. The US and Europe still command the market, but Asia is accelerating as consumers begin to embrace resale platforms.
84% of luxury shoppers are willing to pay more for brands that deliver a desired brand image while also demonstrating environmental and social accountability.
Resale can drive three (3) critical initiatives for luxury growth:
• Access to a new audience.
• Safeguards market share from external
consignment and resell platforms.
• Supports circularity as a core tenant of
sustainability and can positively impact
related costs.
11%
25%
20%
14%
10%
12%
15%
37%
20%
9%
1%
14%
FAST FASHION
EVERYDAY FASHION
AFFORDABLE HIGH-END
GATEWAY LUXURY
HIGH-END LUXURY
Get started
Make it happen
Meet them
where they are.
Segmentation is the
new rubric
Bridge brand and go deeper
in new channels
Consider values and life-stage to create offerings that resonate.
New customers are playing
in new spaces. Invest.
It’s no longer about
one audience.
1
2
3
Baby Boomers
gen X
millennials
gen z
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