High-End Brands Wane as the "No-Purchase 2025" Trend Among Gen Z Gains Momentum
Consumers have kept the economy chugging along, but the influence of inflation fatigue is undeniable. The latest buzzword in the retail industry is austerity, and it's hitting the high-end retail sector the hardest.
The consumer-driven economies of the world seem to be undergoing a transformation, posing a serious challenge to the retail sector, particularly in the luxury segment. Last summer, we discussed the Gen Z "underconsumption" trend on this very platform. Fast forward to now, and it's become a broader social media phenomenon - "No Buy 2025."
Younger consumers, notably from the US, have taken to this growing trend with enthusiasm. It encourages minimal purchasing, focusing on essentials only.
The long-term implications for the retail sector as a whole remain unclear. For now, it's the luxury brands that are bearing the brunt of these changes, with analysts warning of an extended downturn or, more dramatically, a fundamental shift in consumer culture.
LVMH, the industry's giant, reported a 2% sales decline in Q4, alongside significant decreases in net income and profit margin. The experts seem to concur that luxury brands made some fundamental mistakes, such as excessive price hikes or over-reliance on niche product categories.
A recent report by McKinsey & Company for The Business of Fashion surveyed the global fashion industry and predicted that 2025 could be a turning point for many brands. Factors include a sluggish global economy and evolving consumer habits, leaving some pondering, "Is luxury fashion doomed, or is this merely a temporary hiccup?"
According to Stéphane JG Girod, a Swiss professor who specializes in the luxury market, this slowdown is structural and affects not just apparel labels like Kering but also jewelry (Rolex) and car manufacturers (Porsche). In a recent column, she reported that luxury brands have lost 50 million customers over the last two years.
But why are wealthy consumers hesitant to spend, even with leading stock markets and property prices seemingly at their zenith?
Uncertainty plays a significant role, with geopolitical tensions escalating and equity holders considering selling a portion of their wealth as a precaution. However, many individuals living paycheck-to-paycheck share a rational instinct for self-preservation, embodied in the "No Buy 2025" slogan.
"No Buy 2025" has evolved into a rallying cry, feeling like a natural progression from "No Mow May," a movement encouraging people to let their lawns grow for the benefit of bees in the spring. Both echo a yearning for authenticity that appears to be gaining traction.
On TikTok, the "No Buy" trend went viral this winter, with one content creator garnering 2.6 million views for sharing tips on resisting unnecessary purchases. Gen Z may not control the purchasing power to transform consumer culture completely, but they possess a significant influence through social media.
Retailers and brands should pay close attention to this influential demographic. As this age group forms lifetime habits (such as staying home for meals and hosting game nights), they are fostering an authentic lifestyle that extends beyond materialism. Even if they lack substantial wealth, they influence their elders, who do.
Changes in consumer behavior, emphasizing financial mindfulness, sustainability, and responsible consumption, require retailers to adapt. Luxury brands must offer more affordable and sustainable products to remain competitive in this evolving market landscape.
- Gen Z consumers have embraced the "No Buy 2025" trend, promoting minimal purchasing and focusing on essentials, which is causing a ripple effect in the luxury retail sector.
- The retail industry is grappling with the trend of underconsumption among younger generations, as represented by the "No Buy 2025" movement, which is impacting the luxury shopping segment the most.
- By 2025, luxury brands might be faced with a pivotal moment, as predicted by McKinsey & Company, due to factors such as underconsumption trends and a sluggish global economy, potentially leading to a shift in consumer culture.
- The luxury shopping trend among Gen Z consumers is showing signs of fatigue, with the "No Buy 2025" movement gaining traction on social media platforms like TikTok, indicating a shift towards financial mindfulness and sustainability in their consumption habits.
