Millennials feel better about their future earnings than older consumers and spend more on luxury goods.
That’s according to a survey of more than 3,000 consumers across China, Europe and the US by UBS Group AG. Eighteen to 35 year olds have contributed 85 percent to growth in the luxury market last year and will represent 45 percent of total high-end spending by 2025, according to the report published Friday.
Gucci and Louis Vuitton are millennials’ favourite brands, according to the survey and social-media data analysed by UBS.
While the intent to buy online is higher in the age group than among older consumers, physical stores continue to feature highly among preferred places to shop.
Chinese millennials, a major driving force behind sales growth, allocate about 20 percent of discretionary income to purchasing luxury goods, a similar share as older generations.
Nearly 70 percent of Chinese Millennials expect their personal financial situation to improve in the next 12 months, compared to 65 percent of Chinese respondents aged 35 or more.
SEE ALSO : Understanding Chinese Millennials
That is good news for companies selling luxury goods, considering Millennials drove 85 percent of the sector’s growth last year. In fact, luxury fashion labels which have been performing well lately have a high percentage of sales from Millennials.
For example, UBS estimates 65 percent of Saint Laurent’s revenues to have come from this age group in 2017, while Gucci’s Millennial sales were estimated in 50 percent. Louis Vuitton obtained approximately 33 percent of its profits from consumers aged 21-37, as claimed by UBS.
Younger people in Italy and the US have higher spending budgets than their elders, according to the report.
(Source: Business of Fashion)