The luxury fashion sector is set to experience an uptick in sales over the next five years as gen Z and millennials take a new affordable approach to consuming and investing in luxury items. While the sector saw a 6% increase in sales in 2022, an average growth of 3% is expected until 2027.
This growth is spurred by a desire to invest in quality items and pay less in the long term, and that includes embracing new business models such as clothing rentals. According to Euromonitor, 38% of consumers have chosen to rent an item instead of buying it in the last year. Some factors driving new consumer trends is a greater consciousness of purchases and less emotionally driven shopping. Notably, new channels such as digital marketplaces and specialised platforms allow consumers to seamlessly access all types of products for the best investments at prices that aren’t prohibitive. This includes the sale of second-hand luxury fashion items that have the potential to increase in value over time. On the flipside, when it comes to luxury brand loyalty, that is set to drop – as consumers start to be less concerned with loyalty and more interested in experiences.
According to a study carried out by Samy Alliance last year, second-hand clothing is expected to surpass fast fashion by 2030, an optimistic statistic that signals circular fashion is starting to generate greater momentum amongst fashion fanatics. The movement is real, as commercial fashion giants such as H&M, Zalando and Zara are taking steps to make reselling of their items easier for their clients. The use of resell channels such as Vinted and Wallapop have also seen a boom over recent years. Vinted reached 800 million registered users globally in 2022 and is available in 18 markets.
As the luxury fashion industry represents 4% of GDP in Europe, with a contribution of 800 billion euros per year, there is great opportunity for a further re-shaping of the industry towards the circular model.