Younger Demographics Drive Luxury Market Growth Forcing Brand Strategy Pivots

Generation Y, also known as millennials, and Generation Z accounted for all of the luxury market's growth last year. Analysts and luxury executives say the appeal of luxury brands to ever-younger consumers is tied to a surge in wealth creation over the past few years, along with social media. Luxury sales have so far been largely immune to rising interest rates, a slowing economy and high inflation. Luxury shoppers are getting wealthier and younger, with purchases by some of the newest consumers expected to grow three times faster than older generations over the next decade, according to a new report. Generation Y, also known as millennials, and Generation Z accounted for all of the luxury market's growth last year, according to a report from Bain & Co. Spending by Gen Z and the even younger Generation Alpha, or those under 13, is expected to make up a third of the luxury market through 2030, reflecting "a more precocious attitude toward luxury" among the younger ranks than older generations, the report said. Gen Z consumers are starting to buy luxury goods — everything from designer handbags and shoes, to watches, jewelry, apparel and beauty products — at age 15, three to five years earlier than millennials did, the report said. "By 2030, younger generations (Generations Y, Z, and Alpha) will become the biggest buyers of luxury by far, representing 80% of global purchases," it

Evan Fry was born in 2003, a point in human history when many people’s back pockets held a Nokia 1100 or the Sony Ericsson T610. Mobile phones had been displaying the time on their LCD screens for almost a decade by this point — and the anxiety of how they might replace the traditional wrist watch was already in full swing. “Many young people see them as obsolete as sundials,” read one 2005 newspaper article . “For them, cell phones are the new watches.” Throughout his life, the time has been available to Fry on iPhone screens, laptops, TVs, electric ovens, central heating systems, Nintendo DS’s and even beamed eeriely through bathroom mirrors . Which makes it all the more interesting that Fry has collected more than 35 watches, averaging between $1,000 and $2,000 a piece. So far, his prized possession is a Tag Heuer Carrera — a silver linked piece with a deep magenta bezel which he bought for around $3,500. One day, Fry hopes to have a H Moser on his wrist, though some models retail for roughly around $50,000 . He’s already tried on his favorite, featuring a vanta black dial and no indexes, in the shop. “It’s just to die for,” he said. Aged 22, Fry is part of a growing Gen Z cohort of watch lovers. According to secondhand luxury watch retailer Bezel, those under 30 account for a third of the company’s transactions. This group has been previously underestimated by legacy brands

Avy Punwasee is a Partner at Revenue Management Labs . We help companies develop and execute pricing solutions to maximize profits. Premium pricing used to mean exclusivity. A higher price implied higher status. That model no longer resonates. Gen-Z, an extremely informed and values-driven generation, is rewriting what “luxury” means. They no longer equate price with prestige. They assess whether the price feels justified, a reflection of transparency, personalization and ethics. According to a First Insight study, 73% of Gen-Z consumers are willing to pay more for sustainable product. Many are also looking for brands they perceive as authentic and ethical. Premium is no longer what costs more. It is what feels fair and personal. For Gen-Z, price is one factor in a larger equation. A Queue-it survey found 90% of Gen-Z shoppers will pay a premium for a brand they trust. Price is no longer shorthand for quality but a proxy for integrity. Meanwhile, PwC consumer trends show a paradox. Although 79% of Gen-Z consumers surveyed waits for sales, they often define value through emotional and social alignment. They want to understand what drives price, not just see a discount. Luxury resale platforms such as The RealReal and StockX democratize access to premium goods. They show that value today comes from inclusion, not exclusion. Gen-Z grew up in the subscription economy. Platforms lik