Luxury is so exclusive that it has cut off not only the customers who aspire to consume it, but also the brands that would like to be part of it. As a result, the production chain suffers, mainly due to the simultaneous raising of prices and shrinking in sales volumes. But this is how business is moving: the ultra-rich, those who still hold the market up, believe the quality of the products is non-negotiable, but they face the challenge greater transparency in the supply chain.
Luxury is so exclusive
Two events took place in Milan on July 8: the opening ceremony of Milano Unica and the Altagamma Consumer & Retail Insight event: both starring luxury and analytics companies. The two parties converged on the fact that the luxury sector is still losing aspirational consumers, becoming increasingly dependent on the ultra-rich (to whom, however, not all brands are able to target). HNWIs (“High Net Worth Individuals”, people with assets of at least $1 million) make up just 0.1% of consumers, but are worth 37% of luxury sales thanks to an average annual expenditure of 360,000 euro. Boston Consulting Group’s “True-Luxury Global Consumer Insight” report states that the ultra-rich will grow both numerically (+9% by 2030) and in wealth (+8% by 2030), reports Il Sole 24 Ore.
Aspirational consumers
Conversely, luxury is losing touch with aspirational customers (those who spend less than 5,000 euro a year on high-end products). In 2013 they accounted for 74% of the industry’s consumption, today they are worth 61%. Meanwhile, 35% of them say they have reduced their spending on luxury goods in the past 18 months, partly due to price increases. Fortunately for made in Italy, 9 out of 10 high-spending customers consider product quality a must, although they believe transparency in the supply chain isn’t aligned with expectations.
Volume & Value
Claudia d’Arpizio of Bain & Company says that Q1 of 2025 for luxury ended with a 5% reduction in revenue, and she explained with simplicity what is happening. “By 2024, the volumes of high-end goods were reduced by 20-25%. To compensate for the decline, brands raised prices. A move that generated less production and distribution”. The Italian production chain has been affected. “Also undermining the supply chain is a growing pride in made in China: our competitive advantage is in danger of being lost”, warns d’Arpizio.
According to her, as a result of the disappearance of aspirational consumers, “by 2024 luxury has lost 15 million consumers out of about 400 million average annual consumers”, writes Fashion Network. D’Arpizio continues: “There is great disconnect between the perception of product value and its price, which has grown a lot in spite of little creativity. Today, luxury generates aversion because it is considered unaffordable. The industry needs to correct this cultural and political error”.
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