The luxury brands market remains buoyant and is adapting to meet the needs of new and younger consumers. In South Africa, that trend is being driven by growing interest in the used, or pre-owned, category.
According to the latest edition of the Bain & Co-Altagamma Luxury Study, the global luxury brands sector, which includes everything from cars to personal luxury items, is witnessing a growth spurt.
In South Africa, the pre-owned market has seen an uptick in growth fuelled by a surge in “revenge spending” in the wake of Covid.
The State of the Luxury Market in Africa 2023 report, released by reseller Luxity, says stalwarts such as Louis Vuitton and Chanel have experienced a slight decline in resale values, while Balenciaga has demonstrated significant growth in resale value in the South African market, despite a global advertising controversy.
Last year the brand released a campaign featuring children holding teddy bears in bondage harnesses and costumes. Balenciaga claimed the props were accidental and later ran an apology interview in the fashion title Vogue.
Luxity co-founder Michael Zahariev says: “Our data reveals that the 2023 luxury landscape is characterised by a nuanced trajectory, with some brands consolidating and others retracting, and new trends emerging. Overall, the resale value of luxury brands seems to be converging between a band of 60% and 70% of retail.”
According to Bain’s research, the rising buying power of the younger generations, millennials and Generation Z, has been instrumental in the sector’s growth. But it’s the forthcoming influence of Gen Z and the nascent Gen Alpha (people born between 2010 and 2025) that is poised to redefine luxury’s future trajectory. These younger consumers, says the report, are diving into the luxury world much earlier than their predecessors, signalling a shift in luxury consumption patterns. By 2030, their combined spending is expected to account for a third of the market.
Jordan Major, strategy lead: culture & innovation at RAPT Creative, tells the FM: “Luxury’s historical debate has centred on the conflict of values between emotion vs function, and which is the leading motivator for buyers. Locally emotion seems to be the stronger motivator, with consumers flocking to the instantly recognisable brands across multiple categories. And when content across mediums is so prevalent and accessible, storytelling becomes important in connecting to potential customers and creating differentiation from other brands.”
Major says at the other end of the luxury spectrum is functional motivation — quality, craftsmanship and investment. This is most recognisable through the rise of what he calls “quiet luxury forgoing the logo-heavy, bling-bling, look-at-me mindset for something more discreet”.
He says the values around higher standards of quality and craftsmanship become front and centre, further leveraged through storytelling for a clear message of “money talks, wealth whispers”.
To get through tough times, luxury brands must recommit to fundamental values and motivators, he says.
The Luxity report also includes an analysis of watch and jewellery brands. Rolex and Cartier are dominant, boasting resale values of 97.6% and 74.6% respectively. TAG Heuer presented a contrast with a resale value of 58.8%.
Shoes and apparel accounted for 24.86% and 14.73% of search interest respectively, showing changed consumer attitudes towards these types of pre-owned items.
Zahariev says: “As luxury brands jostle for prominence and consumer loyalties shift, one thing remains constant: the enduring allure of luxury in Africa. The pre-owned luxury market continues to adapt and thrive in the face of economic challenges and shifting consumer tastes, making it a dynamic and compelling sector.”
According to Capgemini’s World Wealth Report 2023, the global luxury goods market had a value of $262.66bn in 2021 and is expected to grow at a compound annual growth rate of 5.63 % during the forecast period of 2023 to 2028.
The report notes that luxury goods companies are using technology to create eco-friendly advanced material, and focusing on the “high earners not rich yet” group whose members are likely to gain substantial wealth in the future and become important buyers.
This piece originally appeared in the Financial Mail.
