Are luxury sneakers becoming too expensive for Gen Z?

The luxury industry is worried that Gen Z, who are cash-strapped, might not be interested in bob hats at $300, $900, and $700 respectively.

These concerns are particularly relevant to young Chinese consumers. China has been a major growth driver for the luxury sector in recent decades. But, also, because the high-end product consumers in China’s second-largest country are often younger than their counterparts in other countries. Globally, luxury consumers are 38 years old. However, it is 10 years younger in China.
According to Gregory Boutte (head of digital and customer relations, Kering Group, owner of Gucci), young adults around the globe have been “a major growth driver [for the luxury industry] over 10 years.”

Recent statistics show that China’s economy has slowed unexpectedly in July. This has prompted the central bank of China to lower interest rates. However, the macroeconomic environment is adversely affecting the money that young people who were born in the early 2000s might be able to use to access the luxury markets.

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Inflation is the main problem in North America and Europe for young people. But it is not the case in China.

“Inflation is a major concern in the United States. It’s the primary worry for many luxury corporations (…).. According to Oliver Wyman, a consulting firm, Kenneth Chow, youth unemployment is the main concern in China.

According to Chinese government data, the July unemployment rate for young adults aged 16-24 in China’s metro areas was 19.9%. This record-breaking high comes against the backdrop of renewed lockdowns to combat Covid-19, and a slump in hiring by major technology companies, which often hire young graduates.

Chow stated that this may be the first time many Chinese young adults will face an economic impact. Therefore, it is important to track how they spend on luxury goods.

Jeffrey Huang, a 28 year-old TikToker, shared videos that show a lifestyle centered on luxury and travel.

A Plan B to Gen Z?

Oliver Wyman’s study revealed that luxury labels are experiencing a significant drop in sales for the Chinese market because of the current environment. The firm refused to identify the labels it studied.

Kering and LVMH published results that showed some resilience in the face economic headwinds. Luxury labels were able to benefit from post-pandemic spending surges by their most wealthy customers.

Consolidating high-end handbags sales has been prioritized over trying to attract new customers with entry-level products.

Yi Kejie (26-year-old marketing content manager) said that luxury groups could continue to appeal to Generation Z consumers by offering products they use regularly at attractive prices.

Popular products among Gen Z Chinese consumers are smartphone cases, luxury perfumes, and hair clips. She added that these products are affordable and allow you to access a specific logo or icon.

Some labels, such as Balenciaga or Dior are using the metaverse to appeal specifically to young adults and teenagers. Virtual sneakers like the Gucci ones have been a huge success.

However, even if the product is virtual, it still requires a substantial design investment.
There is good news for labels, however: there is still a lot of luxury goods on the market. Yi Kejie stated that young Chinese are enthusiastic about luxury goods. She added that neither lockdowns nor unemployment will change their long-term preferences.

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