According to a recent study conducted by Boston Consulting Group (BCG) and Comité Colbert, luxury shoppers are increasingly concerned about sustainability and the metaverse. The study, which surveyed 2,000 luxury clients and non-clients and interviewed 40 luxury company executives across several countries, found that 65% of consumers consider a company’s commitment to sustainable development when making purchasing decisions.

Despite the challenges brought by the COVID-19 pandemic, the luxury industry is expected to experience significant growth of over 6% between 2021 and 2026. However, the study highlights that the sector is undergoing significant changes in a post-pandemic world. Nearly two-thirds of consumers now prioritize sustainability when purchasing luxury products. Moreover, 80% of respondents believe that companies have a responsibility beyond production and sales to ensure the entire lifecycle of their products. In response to these shifting consumer priorities, luxury brands are introducing initiatives focused on product lifecycle management, including digital IDs, resale, repair, rental, and other services.

While the study reveals that 62% of luxury customers perceive luxury products as durable, it suggests that the industry must do more. A majority of consumers (60%) believe that luxury brands should take the lead in environmental and societal transitions. The report emphasizes that luxury companies need to work collaboratively to address key environmental issues and develop scaled solutions.

The report also highlights the significance of the secondhand market in achieving sustainability goals. Driven by the preferences of the younger generation, the secondhand market is growing at twice the pace of the firsthand market. The study predicts that the secondhand market will exceed €50 billion by 2025.

Digital transformation is another crucial aspect for the luxury sector, particularly in attracting younger consumers. However, the study reveals that the luxury industry is perceived as lagging behind other industries in terms of its digital presence, as reported by 65% of survey respondents. To bridge this gap, luxury brands need to find a balance between their online presence and the premium in-store experience that consumers still desire. Investing in the metaverse, a virtual reality space, is seen as an opportunity for luxury brands to engage with current and prospective customers. Among 18 to 34-year-olds, 64% prioritize the metaverse, with 59% believing that it could eventually replace traditional social media networks.

China is identified as the future growth market for luxury, with the sector expected to experience two-thirds of its growth between 2021 and 2025 outside of Europe and the US. The report highlights the immense growth potential in the Chinese market, particularly for luxury perfumes. China’s luxury perfume market, which was ranked 10th globally two years ago, is projected to become the second-largest by 2025. Additionally, India is also expected to see significant growth, with a projected luxury market size of $3.7 billion by 2026.

However, expanding into new markets poses challenges for luxury companies, particularly those based in Europe and the US. The current environmental and geopolitical context requires companies to reassess the risks of globalization and ensure that their supply chains can quickly adapt to uncertain environments.

Overall, the study underscores the growing importance of sustainability and digital transformation in the luxury industry. Luxury brands need to prioritize these factors to meet the evolving expectations of their customers and tap into new growth markets such as China and India. Collaborative efforts among luxury companies and a focus on the secondhand market offer opportunities for scaling sustainable solutions. Furthermore, the industry must strive to enhance the digital experience to meet consumer demands and leverage the potential of the metaverse.

Useful links:
1. Boston Consulting Group
2. Comité Colbert