Reuters: Gen Z Poses A Problem For The Luxury Industry
August, 17, 2022
From $300 bucket hats to $900 sneakers and $700 t-shirts, the high-flying luxury sector is fretting over the appetite among financially stretched Gen Z consumers for such "aspirational" purchases.
Executives are troubled in particular by a hit to young Chinese shoppers, not only because mainland China has been a major driver of the industry's growth in recent years, but also because high end consumers in the world's second-largest economy are a decade younger than the global average of 38.
Whereas in North America and Europe, inflation and a rising cost-of-living are hitting discretionary incomes of young consumers especially hard, China's problem is different.
"In the U.S., inflation is a huge issue, the major focus of a lot of luxury companies ... In China, it's the youth unemployment rate that's alarming right now," Kenneth Chow, principal at consultancy Oliver Wyman said.
Government data for July registers the unemployment rate of China's urban population aged 16 to 24 at a record 19.9%, exacerbated by the impact of COVID-19 lockdowns and a crackdown on big tech firms that traditionally hired droves of graduates.
"This might be the first time that a lot of young adults (in China) are facing (such an) economic impact, so it will be a testing ground on how these consumers are going to spend on luxury items going forward," Chow said.
Read the full article on: Reuters