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How Nikos Koulis, Hilton and The RealReal are adapting to the changing luxury market
PLUS: A $5M ARR SaaS Idea for you to build in this industry
The Opportunity Scanner
February 13, 2025
Hello, welcome to this week’s edition. A few readers reached out to us saying the graphs and charts we include with our research are not easy to understand.
We feel you, these are from some of the top consulting reports and are hard for common people to understand.
So, with this edition, we have broken down each data point from the graphs like we’re teaching a 16-year-old, it’s like a conversation. We hope you enjoy these insights!
The Luxury Market's Correction: A Temporary Dip or Structural Shift?
The luxury market hit a rough patch in 2024, with its first decline in 15 years. The overall market (€1.48 trillion) saw high-end personal goods like bags and watches drop 2% to €363 billion. But here's the twist - it's not that luxury is dying, it's becoming more exclusive.
The super-wealthy now make up nearly half of all luxury sales, up from just 35% in 2021. Meanwhile, about 50 million occasional luxury shoppers have stopped buying since 2022.
Looking around the world:
Japan (+12-13%): Having a fantastic year, though cooling off lately
Europe (+3-4%): Strong in major cities, but UK and Germany struggling
China (-20-22%): Taking the biggest hit due to economic troubles
Americas (-1%): Slight decline as occasional buyers choose cheaper alternatives
What's really happening? The occasional luxury buyer - someone who might save up for a special handbag or watch - is becoming rarer. Instead, the market is increasingly catering to the ultra-wealthy.
Source: Bain & Company
Case Study: Nikos Koulis's Upmarket Transition
Greek jeweller Nikos Koulis exemplifies this trend by relocating his store to Athens' premier luxury shopping street and focusing on exclusive events and bespoke partnerships.
This strategic move has led to the luxury segment accounting for over 50% of Koulis's sales, demonstrating the effectiveness of targeting UHNWIs through enhanced exclusivity.
Read more about it here
Hidden Opportunities: The Rise of Value and Experience-Driven Segments
While traditional luxury products are struggling, people are spending big on experiences and smarter ways to enjoy luxury.
Source: Bain & Company
Let's break it down:
People are spending more on luxury experiences than ever:
Luxury hospitality (€242B, up 4%): High-end hotels and resorts are booming, especially those using AI to create personalized vacation experiences - think custom itineraries designed just for you
Fancy food and dining (€72B, up 8%): People are falling in love with unique dining experiences - it's not just about the food, but the whole experience
Luxury cruises (€5B, up 30%): This is exploding, especially for super-luxury trips and adventure cruises to exotic locations
Secondhand luxury (€48B, up 7%): The pre-loved luxury market is growing faster than new items - people are getting savvier about designer goods
Source: Bain & Company
Meanwhile, the "entry-level luxury" brands (think accessible designer labels) aren't doing so well. Interestingly, outlet shopping is doing better than regular stores.
And here's a surprise - online luxury shopping is actually down (1-4%), suggesting people might be tired of purely digital shopping and want more of a mix between online and in-store experiences.
Who is the New Luxury Consumer? A Shrinking Base and Changing Preferences
For the first time ever, we're seeing fewer people buying luxury goods - about 50 million fewer shoppers since 2022, dropping from 400 million to 350 million globally.
This is huge because luxury has always been about growing its customer base.
The really interesting part? The super-wealthy (the top 2% of luxury shoppers) now make up almost half of all luxury purchases, up from 35% in 2021. But here's the catch - even these big spenders are saying luxury shopping feels more like a transaction than a special experience.
The younger crowd (Gen Z and Millennials) who used to be crazy about luxury? They're not as interested anymore. Three big reasons:
They're getting tired of the same old luxury marketing
More than half think luxury prices are just too inflated
They're getting smarter with their money, turning to secondhand luxury instead
Speaking of secondhand luxury, that market is booming - it's now worth €48B and growing faster than new luxury items, up 7% last year. It seems like younger shoppers would rather get a pre-loved designer bag than pay full price for a new one.
Source: Bain & Company
A Start-Up idea to capitalise on the opportunities presented by these insights
VIC Social Network (Invite-Only) | |
|---|---|
Problem | Very Important Clients (VICs) feel luxury shopping has become too transactional and less exclusive |
Solution | Private, invite-only social platform connecting VICs with luxury brands for exclusive previews, events, and bespoke experiences |
Revenue Model | Subscription fees from luxury brands + commission on facilitated sales |
Here are a few resources to get started building this if you’re a non-technical person:
This edition is based on a Bain & Company Report titled - “Luxury in Transition: Securing Future Growth”
